The Future of the Korean Legal Services Industry
By Bryan Hopkins
( Originally printed in the Korea Herald, April 23, 2012)
The recent Korea US FTA has not only resulted in a discussion of the pros and cons of such an agreement but a debate regarding the entrance of major international law firms into the Korean legal marketplace. What will be the impact on Korean law firms now that the major US and European law firms announced they will soon open offices in Korea? Most of the international law firms ( Paul Hastings, DLA Piper, Clifford Chance, etc. ) have offices in Hong Kong, Singapore or Shanghai besides the US and Europe and it is questionable if such firms truly need to open offices in Seoul. Most of the international firms have been providing sophisticated legal services on cross border transactions, out bound deals, M&A and project financing for years without having to open offices in Korea. But the opening of the Korean legal services market is causing concern.
Korean law firms have been grumbling about the opening of the legal services market and are trying to protect themselves from US and European competition by hiring foreign trained lawyers. The problem however, is not that Korean law firms need more foreign trained lawyers as much as the Korean legal services market needs to produce more highly trained internationally focused lawyers to compete in the legal market place. Failure to produce internationally focused lawyers will result in the eventual collapse of many Korean law firms as they are acquired or merged into the stronger international firms. To prevent such a result, the Korean legal services industry must provide the following : a pool of well qualified lawyers who are fluent in English, focused on international business and comfortable representing foreign and domestic clients, either in a law firm or a corporate setting.
At the present, more and more Korean companies are involved in international litigation, arbitration, cross border transactions and project financing than ever before. However, most of the major international deals and litigation are not handled by Korean lawyers at domestic firms but by lawyers ( Korean or foreign) in the major international firms. Why is this?
Far too long, the Korean legal services market has been closed to international competition. Korean law schools failed to graduate lawyers fluent in English or failed to emphasize the importance of international legal issues concentrating instead on domestic law. The problem is that Korea is an export driven economy with world class companies such as Samsung or LG that expect and demand world class legal talent. Such demand has not been met by the domestic legal marketplace and is currently being
met by the large international firms or sophisticated regional firms out of Hong Kong, Singapore, the US and elsewhere. Korean companies wishing to expand internationally are finding that local Korean law firms are ill equipped to handle international issues and are forced to use US or European law firms to address the host of international issues and problems they face.
As a former General Counsel, I dealt with international issues on a daily basis. What I have noticed is that many Korean lawyers are unable or unwilling to communicate with clients in English, though English is the language of international business and commerce. Many Korean lawyers do not appreciate the needs and demands of corporate clients, especially in an international context. US and European laws governing litigation, M&A, antitrust , data privacy, etc are complex and need to be understood by Korean law firms if they wish to remain relevant in today’s business world.
At present, Singapore, Hong Kong , Tokyo as well as Shanghai offer well trained internationally focused lawyers capable of handling complex transactions in English. Those lawyers are more competitive in the international legal marketplace than many Korean lawyers. The Korean lawyers who have an international focus have been trained by the international law firms in Hong Kong or NY and tend to stay with the international firms that provide them with the necessary skills and training. Where does this leave the Korean law firms and the Korean legal services market?
In the coming years as Korean industry expands abroad and increased foreign investment takes place in Korea, the Korean legal services market must provide well trained international lawyers from a pool of domestic and foreign lawyers. How to do this?
First, Korean law schools have to educate a large number of bilingual world class internationally focused lawyers. Law schools must attract well qualified foreign law professors with international law experience. An emphasis must be placed on graduating bilingual law students who can think on their feet and not just pass bar exams. A premium must be placed on business and legal acumen in an international context. Lawyers need to have a basic understanding of business to advise clients in the fast paced commercial world of today especially in light of instant communications that every business faces in the current global environment.
Second, to become seasoned world class lawyers, a significant amount of training must take place. Korean law firms as well as corporate law departments, must mentor and train up and coming lawyers, provide additional training in English and educational opportunities. This can be accomplished by seconding young lawyers to international law firms or law departments of world class companies such as GE, etc. Most Korean companies have not created law departments on the scale and experience as many of the US and international companies have . The US companies in particular, can provide excellent training to young lawyers. Only through training and an emphasis on handling the needs of international clients can Korean lawyers hope to compete with those lawyers from major international firms. In other words, Korean law firms have to elevate their game.
Last, Korean law firms must attract and keep well qualified foreign trained lawyers. Foreign lawyers bring with them a great deal of international experience that is necessary when advising foreign based clients . They can also help mentor and train young Korean lawyers as well.
As international business increases, Korean companies are exposed more and more to the laws of the US, Europe and China. If Korea wishes to compete globally and emerge as a center of international finance and business in the Asia Pacific region, it needs world class legal services capable of providing lawyers who can handle not only the needs of Korean companies but foreign investors and banks . Currently, many Korean law firms cannot handle this. However, as the Korean economy grows and competition for legal talent increases, I am optimistic that the Korean legal services market can emerge as a leader in the international legal services arena. It requires a retooling of Korean law schools and an emphasis on bilingual internationally trained lawyers.