 Top international law firms such as DLA Piper, Cleary Gottlieb, and Simpson Thatcher & Bartlett have offices in Hong Kong’s Queen’s Road, a street well known for being the home of British law firms in East Asia. / Korea Times file |
By Yun Suh-young
Korean law firms are bracing for a challenge as a flood of foreign companies could inundate the local market from July following the ratification of the Korea-EU FTA.
Under the agreement, the Korean legal market will open its door in phases to European legal firms over the next five years.
Five giant foreign firms, Clifford Chance, Allen & Overy, DLA Piper, Linklaters and Freshfields, are already in the final stages of preparation to open offices in Seoul.
The market opening will take place gradually. The first phase, beginning July 1 until June 2013, will allow overseas firms to only consult on foreign law and will be prevented from practicing law.
The second stage, from July 2013 to June 2016, will allow foreign law firms to form partnerships with domestic practices. The final stage, from July 2016 onwards, will allow the merging of foreign law firms with Korean ones. Foreign firms will also be able to handle domestic legal cases from then on.
The Korean legal market will be entirely open to foreign law firms by the third quarter of 2016, eliminating boundaries between local and foreign legal markets.
Local law firms are nervous about what their future holds.
Wake-up call or tsunami?
When foreign law firms enter the domestic sector, they will not only take outbound cases (foreign cases regarding Korean companies) but also extend their work to include inbound cases (domestic cases regarding foreign firms). The latter has been the holy ground for Korean law practices.
As a solution, Korean law firms are focusing on strengthening their capacities. Some have established a task force with partner-level lawyers to prepare for the long run. Others are strengthening professional education and expanding overseas education opportunities to prevent the loss of talent.
However, the effects of the Korea-EU FTA on the Korean legal market will be miniscule, at least for the time being.
“There will be very little effect on Korean law firms from the ratification of the FTA in the short term,” says Jasper Kim, professor of law at Ewha Womans University. “It will simply be a wake-up call for Korean law firms.”
Domestic sentiment is that Korean law firms will suffer a blow from their European rivals. Yet experts are rather doubtful about such doomsday predictions.
“There is a fear factor about anything foreign coming into Korea,” said Kim. “But the effects won’t be traumatic. If you look at Japan’s case, foreign law firms had relatively little impact on the domestic market.”
The loss of talent to foreign law firms is another issue pending, yet, there is no need to worry, experts say.
“Korean lawyers will go where their services are valued,” said Kim who is also the author of “24 hours with 24 lawyers.” “Consumers shop in places where they find the best products. It’s a matter of free choice.”
It is difficult to generalize the loss of talent as an immediate effect of the opening of the legal market, others say.
“We can’t generalize the issue and say that Korean lawyers from major law firms will move to foreign ones,” said a lawyer from Kim & Chang. “Some who think they are competent enough to survive in the foreign environment will move; others who are more comfortable working in their own established field will be hesitant to move. Moving to a foreign firm doesn’t mean you’re guaranteed success,” she said.
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