As Korea has inched towards liberalization of its legal market over the past several years, there has been much speculation about which international law firms will be first into Seoul. Now, with the U.S. Congress ratifying a free trade agreement with Korea last month, the time for action is close at hand.
So the race is on, right? Not exactly.
Though a number of firms have been vocal about their desire to enter Korea at the earliest opportunity, many leading Korea practice lawyers privately express reservations about relocating to Seoul, citing everything from children’s school commitments to a preference for the warmer weather, lower taxes, and more expat-friendly environment of Hong Kong, where most international firms currently base their Korea practices.
To be sure, the road to Seoul isn’t clear just yet. The treaty with the United States has yet to clear the Korean National Assembly and has become a political hot potato in the face of opposition from the minority Democratic Party, which claims the deal is unbalanced in favor of the U.S. Nevertheless, the ruling Grand National Party could pass the bill on its own, and the expectation is the FTA will eventually squeak past the post.
That would remove the last major obstacle to international law firms opening offices in Korea. Theoretically, U.K. firms could have done so earlier this year, as Korea ratified an FTA with the European Union in July, but many of their top Korea lawyers are actually U.S.-qualified and would not have been able to work in Korea under the European treaty. British firms like Clifford Chance, Allen & Overy, and Linklaters have active Korea practices and, along with U.S. firms like Cleary Gottlieb Steen & Hamilton, Simpson Thacher & Bartlett, and Paul Hastings, have long been thought likely to move into Seoul.
Jinduk Han, the currently Hong Kong-based head of Cleary’s market-leading Korea practice, is noncommittal on a move to Seoul, but he says a launch in Korea by international law firms would be more about addressing perceptions–and at best expanding existing workloads–than filling a gap in their practices. “Korean clients are really savvy users of legal services,” he says. They have ready access to communications technology, he says, and are comfortable with the notion of consulting overseas lawyers.
One partner active in another firm’s Korea practice, who asked to remain unnamed, says he thinks more than half of the senior-level Korea lawyers now based in Hong Kong would hesitate to move to Seoul because they have school-age children. Seoul has fewer international schools than Hong Kong, and many parents would not want to force their children to adapt to a new educational system.
“That’s the number-one hold-up of relocation to Seoul,” says the partner. “My kids go to international school. Until they go to college we’d have to stay in Hong Kong.”
Another Korea practice partner notes that cultural differences between Hong Kong and Korea may also deter some from relocating. Though modern and cosmopolitan in many regards, Korea is also a more traditional society than many other East Asian countries, with a strong patriarchal bent.
“It is a difficult place for foreigners to integrate culturally,” says one partner who leads his firm’s Korea practice. “Women might find it particularly difficult, given that the Korean society is based heavily on Confucian values, which provide for less gender equality compared with Hong Kong or the West.”
Not everyone is hesitant though. Jong Han Kim, the head of the Korea practice for Paul Hastings, has publicly said for years that he wants his firm to be one of the first, if not the first, into Korea. He still is shooting for that goal. “It’s another demonstration of commitment to the Korean market and to Korean clients,” he says.
But even if other firms harbor similar ambitions, it’s not clear their lawyers do.
Clifford Chance has also said it intends to open in Korea at the earliest opportunity, but its Korea practice leader, Hyun Suk Kim, says he is so far unsure whether he’ll be a part of the team that goes into Seoul. He says he sees the establishment of a new practice as a potentially rewarding challenge, however.
One Korea practice head says those firms that already have extremely solid relationships with key Korean clients–like Cleary and Simpson Thacher–have little to gain from a physical presence in Seoul. But if some make the move, others are bound to follow as a defensive measure, he says.
Communication is an issue for some other lawyers. Unlike Hong Kong for example, where English is widely understood and used in business, Korean language skills are essential for integration in Korea. Hyun Kim of Clifford Chance says some of the firm’s associates who would otherwise be suitable for relocation are not fluent enough in Korean.
The alternative is to hire locally. It won’t be a free-for-all: The FTA sets a five-year period during which foreign firms will not be able to form affiliations or merge with Korean firms. Crucially, during that period, they will also not be able to hire Korean-qualified lawyers.
That doesn’t apply to the large numbers of U.S.-qualified lawyers in Korean firms, though. At leading domestic firm Kim & Chang, for example, four of the ten capital markets attorneys listed on its Web site are New York-qualified.
“A law firm that has a less significant practice and wants to expand its practice may see some of the more senior Korean-American lawyers as rainmakers,” says Jong Han Kim. Although he says there are few foreign attorneys who have the right credentials, a limited amount of judicious hiring could help firms that don’t have a deep bench of Korean lawyers to get access to key clients quickly.
That’s definitely not the issue for some firms, though. Han says Cleary has 17 Korean-speaking lawyers in Hong Kong, and about the same in New York. “We don’t think there would be any need for us to go out hiring,” he says.