South Korea: Defence force

Its legal market is destined to open up to US and European firms soon. Korean players are finding ways to power up for the challenge

It has been more than two years since Ropes & Gray, Sheppard Mullin Richter & Hampton and Clifford Chance became the first foreign firms to be allowed to open offices in South Korea. So far, 20 international firms have set up foreign legal consultant offices in Seoul.

Most of these offices have just a handful of lawyers. Not yet allowed to hire local lawyers or advise on local law, they are largely for managing client relationships and capturing outbound work. For now, at least, top Korean firms enjoy a dominant position on their home turf.

Home wins

Bae Kim & Lee (BKL), one of the country’s top five firms, has been enjoying growth for 20 years. Despite increased competition it achieved 5 per cent revenue growth in 2013, hitting the KRW200bn (£115m) mark for the first time. But the speed of growth has slowed compared to 2012, when turnover rose by 11 per cent, from KRW170bn to KRW190bn.

“Last year our revenue increase was lower,” says Sky Yang, corporate partner at BKL. “We’re heading towards a more competitive environment following an influx of foreign firms into Seoul.”

Although competition is on the rise, corporate activity and trading conditions are also trending up. For BKL, M&A – particularly domestic and inbound investment – has been a strong area. Samsung Display’s sale of a $2.3bn (£1.4bn) stake in Samsung Corning Precision Materials to American manufacturer Corning was one of the biggest M&A deals in Korea last year.

south korea city

Korean private equity firms have also been driving up M&A activity. In another big transaction last year Cleary Gottlieb Steen & Hamilton and Kim & Chang advised MBK Partners on its $1.7bn acquisition of ING Life Korea from ING.


In contrast, outbound investment, a big reason behind foreign firms’ entry, has fallen. According to the ministry of finance, overseas direct investment dropped by 11
per cent in 2013, from $39.5bn to $35.1bn.

“Often, Korean companies’ overseas projects are driven by their chairmen,” says Yang. “Many chairmen have been involved in investigations or criminal charges. As a result, some overseas projects have been put on hold and overseas investment flows have slowed.” 

For Korean firms, the country’s tougher stance on white-collar crime, corruption and competition means increased demand for litigation and regulatory advice.

To meet clients’ increasing demand for litigation and investigation legal representation, many Korean firms have been building up their dispute resolution practices by hiring former judges and prosecutors. Lee & Ko, for example, has recruited around 30 senior advisers from the bench and national or district prosecutors’ offices this year.

The firm is one of the fastest growing in the country, as its lawyer headcount increased by 72 – 22.5 per cent – to 392 in 2013. Revenue has also risen by 15 per cent, to KRW182.8bn from KRW159bn. Lee & Ko’s managing partner Jae Hoon Kim considers 2013 a “record year”. A large part of its growth in 2013 is the result of the firm’s strong litigation group. Among its highlights, it acted for Samsung as Korean counsel in its mammoth global patent legal battle with Apple, and recently represented Posco (formerly the Pohang Iron and Steel Company) in a $1.3bn trade secret case against Japan’s Nippon Steel.

“Foreign firms’ offices in Seoul haven’t really had an impact on the big local firms yet,” says Kim. 

He expects the top-tier locals to retain their leading position even when the market fully opens up.

“We have more than 20 years’ experience in cross-border M&A transactions and many lawyers have worked in international firms and are experienced in drafting and negotiating deals,” he adds.

Lee & Ko has more than 50 foreign legal consultants under its roof, so has good reason to be confident.


While the six largest firms are responding to pressure from international rivals, firms focusing on the mid-cap market are also finding ways to move on in anticipation of liberalisation in 2016/17. Under free trade agreements with the EU and the US, firms from these jurisdictions will be allowed to offer Korean legal services.

Two firms in the next tier down have recently resorted to international tie-ups. Hwang Mok Park has signed a co-operation agreement with Bird & Bird, while DR & AJU has entered into an association with Taylor Wessing.

“The legal market opening up has caused many changes, and we expect many more,” says Hwang Mok Park managing partner Kun Su Mok. 

This will include the movement of Korean lawyers and teams to foreign firms as well as salary increases, according to Mok.

“The market opening up and all the coming changes provided impetus for our tie-up,” he adds.

The rationale behind DR & AJU’s alliance is not that different. 

“Korea’s ever-changing legal market is a big challenge to most firms,” says Jin Han Kim, the firm’s founder and managing partner. “In 2017 the market will be liberalised. We don’t know what will happen then, but we are trying to transform and want to be proactive in improving our market position.”