Intensifying conflicts before proxy season feeding law firms

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KL Partners benefits from multiple chaebol family feuds

By Park Jae-hyuk

Multiple chaebol family feuds and shareholder activism that will heat up the general shareholders meetings of several listed companies here later this month appear to be creating ample opportunities for domestic law firms to make handsome profits.

In addition to Kim & Chang and other large law firms that have scaled up their teams dealing with corporate law and governance structures to cope with the recent Commercial Act revision, boutique law firms are also going all out to take advantage of intensifying conflicts over the control of several conglomerates.

At this moment, KL Partners is viewed as the top beneficiary of this year's proxy season.

The boutique law firm, which was founded in 2015 by corporate law experts from Shin & Kim, one of the leading legal advisory companies in Korea, has drawn attention for its involvements in the two ongoing family feuds over the management of Hankook & Company, and Kumho Petrochemical.

Last month, Hankook & Company Vice Chairman Cho Hyun-sik hired KL Partners in an attempt to fight against his younger brother, CEO Cho Hyun-bum, who became the successor to their father, Chairman Cho Yang-rai, after inheriting a 23.59 percent stake in the tiremaker's holding company last year.

Until late last year, the vice chairman had worked with One Law Partners, so his switching to KL has raised speculation that the sibling war could intensify further.

While the siblings are facing a showdown at the general shareholders meeting slated for March 30, KL Partners is aggressively supporting its client by issuing press releases under the names of lawyers Lee Eun-nyung and Kim Seon-ho.

Kumho Petrochemical's largest shareholder Park Chul-whan hired the same law firm earlier this year to prepare for a conflict with his uncle, Chairman Park Chan-koo, over influence on the board of directors and bigger dividends.

After filing for an injunction with the Seoul Central District Court late last month asking for the court to force the petrochemical company to discuss his proposals at the general shareholders meeting this month, the nephew is attempting to win backing from other shareholders by opening a website named “Go Beyond, Kumho Petrochemical” that displays the contact information of KL Partners lawyer Jeong Doo-ri.

“The company has no reason to deny our client's shareholder proposals,” KL Partners said in a press release, refuting the Kumho Petrochemical management's claim that some of his proposals could have procedural errors.

Among the nation's leading law firms, Bae, Kim & Lee (BKL) has come to the fore for its involvement in a dispute over the management of Hanjin Transportation.

HYK Partners, an activist fund that has condemned Hanjin Group heiress Emily Lee Cho for strengthening her influence over the logistics firm, hired BKL to file for an injunction procedure last month to demand a court order the company to debate its shareholder proposals at the general shareholders meeting later this month.

The private equity firm, which is also the second-largest shareholder of Hanjin Transportation, has asked for the logistics company to give board seats to people it has recommended to prevent the owner family from making arbitrary decisions.

One & Partners sides with minority shareholders

Some law firms are diverting their attention to minority shareholders.

One & Partners, led by former prosecutor Jeong Byeong-weon, helped minority shareholders of Sajo Industries prevent the company's owner family from merging with Castlex Seoul and Jeju.

The minority shareholders alleged the merger could enable the golf clubs to shift their losses onto Sajo Industries. After they hired One & Partners last week, the company eventually decided to withdraw the plan at a board of directors meeting Monday.

The law firm has focused on supporting groups of minority shareholders of several listed companies, including Mason Capital, Supex BNP and E-future. Earlier in February, it established a center for supporting minority shareholder movements to help retail investors fighting against poor management by major shareholders.

“We will play the role of representing the rights of minority shareholders, who have been marginalized due to arbitrary decisions by management, despite their status as the actual owners of the listed companies,” Jeong of One & Partners said.