Since opening its market to foreign law firms last year, Korea has seen some 20 U.S. and U.K. firms push forward with Seoul offices. They are joining a collection of several large and strong domestic firms in targeting an economy that’s less than one-sixth the size of China and barely a fifth that of Japan. In the face of such an ultracompetitive market, most firms have been modest about their ambitions in Korea.
Not Sheppard, Mullin, Richter & Hampton. At a joint press conference with other foreign lawyers in Seoul last July, Byoung Soo “Seth” Kim, the Los Angeles–based firm’s Seoul managing partner, boldly predicted that Sheppard Mullin could have up to 150 lawyers working in Korea in a few years’ time. In a more recent interview, Kim, who joined Sheppard Mullin as an associate from Duane Morris in 2004 and became a partner in 2009, downplayed his figure from last summer—though not his firm’s ambitions.
“We’re not sure if it’ll be 50 [lawyers], 100, 150, but there will need to be a critical mass in order to be fully functional rather than just an outpost office,” says Kim.
Any of those numbers would be far more than the three lawyers Sheppard Mullin now has in Seoul. They would also be more than most U.S. firms currently have in any one international office.
Guy Halgren, Sheppard Mullin’s San Diego–based chairman, expresses complete confidence that his 520-lawyer firm can emerge a market leader in Korea. “I’ve never felt more confident about an office than Seoul,” says Halgren.
For now, international firms in Korea can only compete for cross-border matters. The free trade agreement that opened the market prohibits foreign firms from practicing local law or hiring Korean-qualified lawyers until 2017. A number of firms, including Paul Hastings, Cleary Gottlieb Steen & Hamilton, and Simpson Thacher & Bartlett, have already said publicly they have no interest in building out a local practice capability in Korea to compete with large local firms.
Sheppard Mullin takes a different view. Kim says several of his U.S. clients have already asked Sheppard Mullin to launch a Korean law practice as soon as it’s permissible. He says the long-standing relationship he has with these clients means that they would be unlikely to use a local firm in Korea.
"That understanding will be tough for Korean firms to replicate,” says Kim.
He says the firm will recruit Korean lawyers as necessary, building a team with top talent from the local firms.
But the prospect of competing with large, well-regarded Korean firms like 600-lawyer Kim & Chang and 400-lawyer Lee & Ko for either talent or work is a daunting prospect even for those firms that are old hands at building local practices around the world.
Baker & McKenzie Seoul managing partner Won Lee says his firm has yet to make a decision on whether to launch a Korean law practice when it becomes allowed. “We need more time to consider whether it would work at all,” he says.
It wouldn’t be cheap. Top Korean lawyers can earn as much as their counterparts at Western firms; Lee thinks even Cleary would have trouble putting together a package attractive to the biggest-name partners. Bae, Kim & Lee partner Eui Jong Chung figures a top-level Korean practice of 150 lawyers would have a payroll of well over $100 million.
"If you’re going to the market and recruiting 150 Korean layers who are very capable, then it will cost them a lot," he says.
A foreign firm could recruit lawyers from second-tier Korean firms, but David Waters, a former Kim & Chang foreign lawyer who is now general counsel for IBM Korea, isn’t sure that would be worthwhile. "The better-quality lawyers are at the bigger law firms,” says Waters. “So if the top lawyers are still at Kim & Chang in 2017, that’s going to be the main driver for me in choosing outside counsel."
Halgren acknowledges that there may be some obstacles, and says Sheppard Mullin hasn’t made a firm decision yet about having a large local practice. "That’s a decision that will be made over the next few years as the regulations are drawn up and we see what our client demands are," he says.
But, even before 2017, can Sheppard Mullin emerge from the pack and take on those international firms that are more typically thought of as market leaders in Korea?
Halgren agrees that Cleary, Simpson, and Paul Hastings might have better-known Korea practices, but he says he “absolutely” sees Sheppard Mullin, which is best known globally for its entertainment practice, competing at the same level as those firms and all the rest.
"We’ve developed a nice Korean practice over the last 10 to 15 years, and maybe it’s flown under the radar, but we represent a number of high-profile Korean clients," says Halgren. He says Sheppard Mullin has advised the Samsung and Hyundai conglomerates on matters including U.S. litigation, antitrust, and intellectual property, though both he and Kim declined to describe any of these matters in detail or name other Korean clients.
Halgren contends that firms like Cleary and Simpson focus mainly on capital markets in Korea, leaving an opening for Sheppard to lead in other areas. "I think Cleary and Simpson have fabulous practices,” he says, “but they don’t do everything.”
Other lawyers in the market say that Sheppard Mullin, which ranked 71st in terms of revenue in the most recent Am Law 100 and had 2012 profits per partner of $1.27 million, has a long way to go before it becomes a market leader in Korea.
"I think it’s fair to say they haven’t been a strong presence in the Korean market historically, certainly not a leading presence," says Cleary’s Seoul managing partner Yong Lee, who was on the panel with Kim last July. "I’m sure Sheppard Mullin has done some [similar kinds of legal work in Korea as us], but it’s just not in the same league."
Paul Hastings Korea practice head Jong Han Kim, who was also on the panel with Seth Kim, takes a similar view. "We have not been across the table from Sheppard Mullin on any matter, whether it’s capital markets, [mergers and acquisitions], or litigation,” he says.
Both lawyers point out that most firms in Korea, whether international or local, can count Samsung or Hyundai as clients. Indeed, one of the major problems facing lawyers in the market is that top-end legal work is dominated by a handful of giant conglomerates with inordinate pricing power.
Seth Kim allows that the firm’s plans may change with more experience on the ground. “From now to 2017, we’ll figure it out," he says.
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