Foreign law firms eyeing advance into Korean market

Clifford Chance, the biggest law firm in the U.K. and No. 3 in the world, has filed a preliminary application for approval of its qualifications to serve as adviser on foreign laws to enter the Korean legal market.

The application was the first of its kind filed with the Korean government by a foreign law firm seeking to do business in Korea. The Justice Ministry in Seoul is conducting a review of Clifford Chance`s application.

Multinational law firms are eyeing to enter the Korean market following the effectuation of the Korea-European Union free trade agreement in July last year and the imminent implementation of a similar pact with the U.S.

○ Global law firms keen on Korean market

The Justice Ministry will review Clifford Chance’s qualifications and documentation under a preliminary screening period of two to four months. If the firm receives first-stage approval, it will go through a formal review that usually takes about a month. Under Korean law, a foreign law firm must be approved by the Korean government and win permission to set up an office in the country.

Around 10 international law firms based in the U.K. or the U.S. are interested in advancing to Korea. Several of them are reportedly preparing for applications for approval. The Chicago-based McDermott Will & Emery LLP announced Wednesday that it will open an office in Seoul.

“Due to legal restrictions, there has been little international law firm presence in South Korea,” said McDermott Co-Chairman Jeffrey E. Stone. He added that his company will be one of the first Western law firms to practice in Korea following the ratification of the Korea-U.S. free trade agreement. Lee In-yeong, head of the firm’s Korea practice group, will likely head the Seoul office. McDermott has nine offices in the U.S. and seven abroad, with about 1,000 lawyers.

○ Korea’s legal market to be opened five years after agreement`s effectuation

Korea’s legal market is open to companies in countries with free trade deals with Korea, including the EU, the U.S., Chile, Singapore, the Association of Southeast Asian Nations, India and the four-member European Free Trade Association. Among them, accords with Chile and Singapore exclude the opening of the legal services market.

Korea agreed with India and the European Free Trade Association to just the first-phase legal market opening, but none of their law firms have come to Korea. The deal with the Southeast Asian group stipulates up to the second phase of legal market opening but no law firms of member countries have entered into Korea yet.

Under a law passed in March last year, Korea’s legal market will be opened in three phases after free trade deals take effect. Under the first-phase opening to last two years after effectuation, foreign law firms can set up office in Korea but their business is limited to advising on foreign laws.

In the second phase, which lasts for three years after the first, they can practice only in areas where foreign and domestic laws are mixed. Up to this point, foreign law firms cannot handle domestic lawsuits because they are not allowed to hire Korean lawyers.

From the third phase, which begins five years after the effectuation of a free trade agreement, foreign law firms can hire Korean lawyers and handle all kinds of legal services.

jefflee@donga.com mickey@donga.com