A number of new measures intended to revamp and improve Korea’s legal industry have initiated debate among those working in the profession.
A government-commissioned report by research firm Korea Development Institute (KDI) has made a number of recommendations designed to boost the competitiveness of the country’s legal industry.
Among the measures recommended are that the number of newly qualified lawyers be raised; advertising restrictions on lawyers and firms be removed; ‘multidisciplinary’ firms that offer legal, accounting and patent services be created; and the power of supervision and disciplinary action be shifted from the Korean Bar Association to a government authority. The most controversial of all, however, is the proposal to allow non-lawyers to own stakes in law firms.
“If these proposals come into law, the [implications] will be huge,” said Bae Kim & Lee partner Jeong Han Lee (pictured, left). “It will really affect the Korean legal market.”
The Korean Bar Association has said it opposes the measures on the grounds that it will reduce the quality of legal services. Local lawyers said they are opposed to proposals to allow non-lawyers to own law firms because, in a similar sentiment to the Indian legal industry, the legal profession is not a business.
“I personally think that it will be difficult for lawyers … to accept the idea that non-lawyers can share the profits and both own a business,” said Shin & Kim partner Beomsu Kim. Traditionally the Korean legal profession has not been perceived as a business, so those changes will take a lot of time and effort to get through.”
The KDI’s proposal to boost the number of local lawyers may be advantageous to meet the incoming competition from better-resourced foreign law firms (with the ratification of free trade agreements with the US and EU), but some lawyers feel that the measure may not necessarily be beneficial.
BKL’s Lee said that lawyer supply is already outstripping demand. “Ten years ago the annual number of lawyers passing the bar was 300, but that’s now been increased and currently we have around 2,000 candidates,” he explained. “Three years down the road, we don’t expect that such a large number of lawyers will be utilised or necessary given where the Korean market is presently – there is criticism already that the number of lawyers is too high.”
The measure could open the legal market to foreign firms in advance of the FTAs taking effect, since foreign law firms who don’t have a local licence may hire Korean lawyers, Lee added.
The KDI’s other proposal – to create multidisciplinary firms by removing regulations that separate patent and tax legal services – has also been received with some concern. Currently in Korea, lawyers qualified as patent and tax attorneys have different licences from general lawyers, but this measure would allow the creation of full-service firms in line with international practices.
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“If you take the incoming foreign law firms and this initiative together, this could allow all licence holders to form JVs in a very concentrated company where all kinds of professional services – from legal to accounting and others – can be provided by one firm,” said Kim (pictured, right).
But Lee said that this measure will allow anyone to own a law firm, even foreign companies.
Despite the market’s reception to the measures, the KDI’s report is at an early stage and will take a number of years and processes towards implementation, if at all.
Lee said that the country’s Attorney’s Act must be amended, but that is only a formality and will go through other stages. Professor Chul Choi of Hankuk University of Foreign Studies said that relevant statutes need to be amended, which will itself require review by the Korean National Assembly.
“A number of issues and oppositions will be raised and a long debate will follow,” he said. “In my view, having acknowledged the certain need for deregulation on the service markets, the measures need to be carefully reviewed and discussed before implementation to reflect the public aspect of legal services.”
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