For Law Firms, Bigger Is Better
By Kim Tong-hyung
The biggest law firm in Korea hires about 300 lawyers. The top U.S. firm hires more than 3,000.
Ahead of the phased-opening of the legal services market, Korean law firms are preparing to compete head-on with multinational competitors, possibly British and American law firms, hoping to be the David to their Goliath.
``Despite the opening, there would be no strategic dilemma between specializing on what you do best and expanding in size to diversify your services,’’ said Lee Jung-hoon, senior partner of local law firm, Bae, Kim & Lee, Korea’s second-largest law firm with a legal staff of 149.
``At a time when companies are looking for a single law firm that can deliver seamless services for a variety of legal work, providing them with a `one-stop’ solution, quality can only come with size,’’ he said.
Lee’s comment reflects the current state of the legal services market undergoing mergers and alliances as law firms compete to increase size ahead of the market opening.
Bae, Kim, & Lee, which is engaged in a close battle with rival Lee & Ko over the No. 2 spot in the local market, hired about 30 new lawyers this year to strengthen its litigation division. The firm is also looking to strengthen its business consulting services for corporate clients.
Kim & Chang, the country’s largest law firm with 280 lawyers, has also been putting more focus on litigation, hiring about 30 former judges and prosecutors over the past five years to add more assets to what is already an all-star lineup of attorneys.
``It would be easy to say that the foreign firms will focus on advisory services and Korean firms will have litigation for their own, but things are not so simple,’’ said Lee, who also has a license to practice law in the U.S. states of New York and California.
``Foreign firms will land here with the clear objective of practicing Korean law through joint ventures with local partners and hiring local talent. They will have the ability to handle litigation services, which could easily be provided to their corporate clients,’’ he predicted.
Lee believes that local law firms will be more vulnerable to foreign competition compared to their counterparts in Japan as customer loyalty is relatively weaker here.
The top five law firms in Japan remain Japanese, but a significant number of mid-sized law firms have been absorbed by larger American and British law firms.
Lee sees a similar fate for Korean second-tier firms and believes some of the big firms could be forced to affiliate with their foreign competitors unless they retool themselves.
``Everybody talks about American firms, but our real worries lie with the British firms that have established offices in the U.S. which could advance to Korea after the FTA is put into effect,’’ said Lee, pointing out that only a few U.S. firms, such as Baker & McKenzie and White & Case, hire a significant part of their legal staff overseas.
``Unlike American firms, which seek a balanced relationship with regional law firms, British firms employ a full-fledge approach and seek to dominate local firms, as they have a smaller base market at home compared to American firms. They will advance to the Korean market no matter what,’’ he said, adding that a number of London-based firms, such as Linklaters, are already providing legal services to Korean clients.
Of Bae, Kim & Lee’s 149 lawyers, 35 of them have licenses to practice overseas, including the United States and Britain. Lee believes the proportion of lawyers with multiple licenses will grow significantly in the next few years.
``We can’t compete with mega multinational players which have an extensive global network. Companies will be able to handle a lot of legal issues overseas without buying a plane ticket,’’ said Lee.
``But the lucrative business deals that happen in Korea, such as mergers and acquisitions (M&A), are regulated by the Korean law and the clients will look for the best local firm to do the job. We are confident that that would be us,’’ he said.