Summarized in English from Hankyung Business magazine article: http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=101&oid=050&aid=0000044618

Results of HMP & Korea Economic Daily joint survey

The Age of Unlimited Competition among Law Firms is Upon Us

Keys to Survival?

1.      Major Companies’ Preference for Big Korean Firms

-          Major companies prefer Korean law firms due to (i) easier relationship building and (ii) the fact that a lot of foreign legal consultants with outstanding talent work at Korean law firms as well. However, considering the coming full opening of the Korean legal market, major companies will possibly move towards foreign law firms.

-          Despite costly legal fees, major companies prefer big law firms because (i) not only do they have more available manpower to reduce companies’ workloads, (ii) they have also have more experience and know-how in a variety of industry fields. Moreover, (iii) the major companies are reluctant to take the risk of selecting small firms for fear of losing a case.

-          On the other hand, some companies seek out boutique firms for a couple of reasons. If (i) a small law firm has more professional expertise in a specific industry and (ii) there is a specific connection between an in-house counsel and a lawyer from a small firm, companies prefer smaller firms. Also, (iii) cheaper legal fees usually attract clients, especially when dealing with small cases.  

2.      Expected Surge in Fair-Trade Advice

-          Law firms like M&A deals, because they are very profitable. Due to their inner complexity and uncertainty, labor and human resources issues also comprise major parts of the work that law firms do.  

-          Companies prefer large law firms in matters of corporate legal advice for their convenience in forming a specific taskforce. Often, in order to obtain the best solution for corporate legal work, it is necessary to put various types of experts together. In that sense, major law firms have the advantage of managing different professionals such as lawyers, accountants, and patent attorneys into one team to avoid unnecessary work. In other words, companies can avoid the problem of having to hire both lawyers and other professionals from other firms, which would duplicate legal costs.

-          Demand for legal advice on fair-trade issues is expected to surge. President Moon Jae-in’s Administration plans to repeal the exclusive right of the Fair Trade Commission to prosecute unfair trade activities. The abolition of the exclusive right will enable not only civic groups but also minority shareholders to press charges regarding fair trade and antitrust issues.

-          The incumbent administration is also aiming to establish a Department of Investigations in the Fair Trade Commission. As government regulations become stricter, law firms will have more opportunities to provide legal services to corporations seeking fair solutions regarding the drastic changes in antitrust matters.

-          The field of IP rights disputes has also grown rapidly lately. According to an annual report from the Korea Economic Research Institute, the number of international IP disputes by Korean companies rose fourfold, from 58 in 2010 to 244 in 2014. Following this and other trends, major companies are expected to ask major law firms to handle their IP legal affairs. Mid-sized law firms will possibly gain more opportunities to deal with small IP cases as well.

3.      Professionalism in Law Firms

-          When it comes to selecting a law firm, major companies mostly regard professionalism as a top priority, followed by experience and cost. In order to fulfill their clients’ needs, law firms are also making strenuous efforts, by developing their human resources and by retaining retired high ranking officials as advisers, to enhance their professionalism in specific areas in which they are particularly interested.

-          With regard to professionalism, some survey participants expressed dissatisfaction with their law firms, for things such as lack of prompt responses to inquiries, misunderstanding of industries they are currently working on, lack of communications with clients, and so on. These answers may be regarded as a result of Korean law firms’ ongoing tendency to consider themselves as elite legal service providers, and lack of focus on client care. 

4.      The New Era of Over 30,000 Lawyers

-          The number of lawyers in Korea will likely reach 30,000 by 2021. Though the situation makes it difficult for young lawyers to seek secure jobs, the quality of legal services will increase alongside intensifying competition. For example, pro bono legal services will be extended into various industries as more lawyers will feel an obligation to do so. Moreover, more lawyers will work in public sectors so that many people can enjoy the benefit of quality legal services at relatively lower fees.

-          Some in-house counsels feel concern about the rising oligopoly of major law firms in the domestic legal market, as the market is becoming more and more competitive. Recently, some major law firms have begun to accept small claims cases, which in the past were mostly handled by small firms.