As a result of two recent landmark free trade agreements between South Korea, the European Union and the United States. The South Korean legal market will now be open for American and European law firms.
According to Ranajit Dam’s article in Asian Legal Business, South Korea’s legal market is valued between two and three trillion Won (equivalent to over 2.2 billion dollars). Making it a significant player in the Asia-Pacific region and the world. As the 4th largest market in Asia and the 12th largest in the world. South Korea offers ample opportunities for growth and expansion in the legal industry.
AsiaOne News reports in a February 17, 2012 article by Yang Sung-jin entitled. Foreign Law Firms Rush into Korea that interest in the Korean legal market is “in line with the rapid growth of Korean companies on the global market. The article states that with the opening up of the Korean market under the bilateral trade deal, American and European law firms specialise. The local market is expected to provide legal services to American and European companies entering the Korean market.
“To secure potentially big corporate clients in Korea, American and European law firms are planning to form partnerships with Korean law firms, heralding a round of heated competition for forging better networks.” “Korean law firms are hiring more lawyers and establishing more foreign partnerships to strengthen their competitiveness to better compete with American and European law firms” the article concluded.
The Agreements: An Overview
The EU-Korea Free Trade Agreement (FTA). Which will open up the legal services market remove virtually all tariffs between the EU and South Korea from July 2011, according to the Law Society of England and Wales. These landmark agreements are expected to be worth an extra £500m a year for UK law firms, the Law Society outlines. The Korea-U.S. Free Trade Agreement (KORUS) between the United States and the Republic of Korea entered into force on March 15, 2012 as detailed in a report by US law firm Venable LLP. which states: “Given Korea’s $580-billion services market, broad market access thereto is especially important for U.S. service providers.
More Legal Work will Result from Increased Trade
Law firms with expertise in serving companies entering or expanding their operations in South Korea are likely to see increased business opportunities as a wide range of industry sectors benefit from these agreements. According to Venable, “As of March 15, 2012 approximately 80% of consumer. And industrial exports from the United States to South Korea became duty-free.
Further, the treaty eliminates tariffs on 95% of bilateral trade in consumer and industrial products within five years. In addition to tariff reductions, KORUS eliminates or restricts many non-tariff barriers for both goods and services. KORUS commits to broad market access for services in many economic sectors. Including, but not limited to energy, entertainment, audio-visual, healthcare, financial services. Insurance, professional services (e.g., legal, accounting), distribution, express shipment and telecommunications.”
How the Process of South Korean Legal Market Entry Will Work
According to the UK’s Law Society, The EU-Korea FTA will see a three-stage process in opening the Korean legal market. which mirrors the legal services agreement of the US-Korea FTA (KORUS):The agreements envision three stages for market entry for US and EU law firms into the South Korean market.
The first stage will permit the establishment of a branch office to offer advice on foreign and international law.
The second stage will begin two years after the agreements are in force. And will permit a foreign law firm to fee share with Korean law firms. The third state will begin five years after the agreement begins and will permit Korean and foreign lawyers to go into partnership together. as well as allow foreign law firms to employ Korean lawyers.
US law firms Ropes & Gray, Paul Hastings, Sheppard Mullin. Others have already applied to the South Korean Ministry of Justice for permission to open a representative office in the country. Britain’s Magic Circle law firm Clifford Chance has also applied, reports Nathan McMurray in Korea Law Today.
The firms will be permitted to begin operations in July of this year. Already there is cooperation as two Korean Law firms (smaller firms than the largest 5 South Korean firms) represented two US law firms in their applications. So cooperation among domestic firms and their overseas new market entrants is moving forward.
Korea’s “Big 5″ largest law firms, Kim & Chang, Bae, Kim and Lee, Shin & Kim, Lee & Co. Yulchon can now expect a much more competitive environment for both domestic as well as overseas clients.
Another interesting development is that as a result of the agreement. The International Bar Association recently announced its’ decision to open only its fourth office. The IBA’s new office in South Korea will complement already exisiting offices in London, Brazil and the UAE.