Korean Law Firms' Global Expansion Is "On Track"... But Developed-Market Entry and Institutional Support Remain Challenges

Expanded Southeast Asian Footholds, but No Entry into Major Markets Like the U.S. and Europe

Large Companies Deal Directly with Anglo-American Law Firms

Mid-Sized Companies Left in Legal Deserts by High Costs

Turning Overseas as the Domestic Market Saturates

Urgent Need for Local Networks and Government Support Infrastructure

South Korea's major law firms are expanding their reach in the global legal market in an effort to shed the “homegrown law firm” label. Lee & Ko established an Indonesia Desk on October 23, while Jipyong marked the 20th anniversary of its Vietnam office on October 15, signaling that Korean law firms' overseas expansion is gaining momentum.

The driving force behind law firms' overseas expansion is surging demand for “outbound” legal services related to Korean companies' expansion abroad. Of the 358 trillion won in corporate merger transactions reviewed by the Fair Trade Commission last year, 85% involved foreign companies. The value of acquisitions of foreign companies by Korean firms also nearly doubled from the previous year.

Korean Law Firms Face Surging Demand for Overseas Legal Services

According to legal industry sources on October 28, the biggest obstacles facing Korean companies expanding overseas are unpredictable local regulations and administrative practices. As extraterritorial application of domestic laws expands, including the U.S. Inflation Reduction Act (IRA) and the European Union's Foreign Subsidies Regulation (FSR), Korean companies are increasingly being caught off guard by investigations or penalties. In emerging markets, permit requirements can be reversed simply by a change of government. Immigration status issues for dispatched employees have also emerged as a key risk, as illustrated by last year's large-scale immigration raid at a battery plant construction site in Georgia.

Major law firms are also making every effort to adapt. Rather than merely acting as intermediaries, firms are increasingly adopting a “lead counsel” model, in which the home office directs the overall transaction structure and schedule and selects and manages local law firms. Major firms, including Kim & Chang, Bae, Kim & Lee, Shin & Kim, Yulchon, Yoon & Yang, and Jipyong, have their home offices serve as a single point of contact, leading strategy development and drafting contracts. They focus on reducing time-zone and language barriers, as well as legal costs, by engaging local firms only for essential local-law issues. Yulchon, for example, brought together around 50 trade experts this year to launch its Global Trade Center and U.S. Investment Task Force. In a similar vein, Bae, Kim & Lee provided counsel on its own, without a local law firm, when LG Chem and General Motors established a joint venture in the United States.

Little Presence in Developed Markets

The barriers law firms face on the ground remain high. The four major law firms outside Kim & Chang—Bae, Kim & Lee, Lee & Ko, Shin & Kim, and Yulchon—have each surpassed 400 billion won in annual revenue and are approaching combined revenue of 2 trillion won next year. Yet they remain unable to venture into developed markets, while cutthroat competition intensifies over a limited domestic market. “Korean major law firms have so far expanded only into emerging Asian markets. They have not even entered developed markets such as the United States and Europe,” an industry source said. This stands in contrast to around 30 global law firms from the United States and the United Kingdom that have entered and dominated the Korean market, as well as five or six major Japanese and Chinese law firms that established a presence in the United States long ago.

A senior executive in charge of management at a major law firm said, “Although a boom in U.S.-bound investment-related regulation has emerged recently, Anglo-American law firms ultimately capture all the benefits of legal issues involving U.S. laws. Japanese companies use local law firms through their home-country firms when investing in the United States, but among Korean conglomerates, a practice has taken hold of bypassing domestic law firms and dealing directly with U.S. firms.” This is partly because, even when conglomerate holding companies want to use a Korean law firm as a control tower to cut costs and improve efficiency, there are often major disagreements with affiliates or dissatisfaction with Korean firms' ability to handle matters on the ground.

Need for Institutional Support

Law firms agree that the government needs to comprehensively upgrade its institutional infrastructure to support the global expansion of Korean law firms and companies. One proposal is to formally place the “resolution of imbalances in reciprocity” in legal market access on the agenda at free trade agreement (FTA) or trade negotiations, to lower barriers to entry in partner countries. There are also calls to expand dedicated infrastructure beyond existing programs such as the Ministry of Justice's International Legal Support Group for Companies Expanding Overseas. This infrastructure would provide ongoing support by sharing country-specific regulatory information, building networks with local governments and institutions, and cultivating global talent through long-term overseas assignments and exchanges with law schools.

Practical support is also urgently needed for small and midsize partner suppliers that expand overseas alongside large companies. One assessment is that support should be increased for the costs of initial legal due diligence and contract reviews, which are currently given low priority in export-support programs. “Small and midsize companies have no experience working with foreign law firms, and they cannot afford U.S. law firms' fees of $2,000 per hour (about 2.8 million won)—twice the rate in Korea—leaving them without access to legal support,” a partner at a law firm said. “Legal service support is needed to meet this demand.”

This content was produced with the assistance of AI translation services.