Major Korean law firms are at a historic crossroads as we begin 2012. This year will probably bring a massive entry of foreign law firms into South Korea, which will introduce sweeping changes into the legal marketplace.
The free trade agreement between South Korea and the European Union opened the door to EU-based law firms on 1 July 2011. On 1 January 2012, the agreement with the United States went into effect. We at Walker Clark already know of at least five U.S.-based firms with definite plans to open offices in Seoul this year to advise on U.S. law, as well as seven others that are considering it carefully. We also know of at least five major international law firms based in the United Kingdom who have similar plans.
The future of the Korean legal market has arrived.
Threats and opportunities
Leading national firms like Kim & Chang, Lee & Ko, and Bae, Kim & Lee have simply run out of time to develop well-informed and realistic strategic responses to these changes. Their inbound flow of instructions as local counsel are in jeopardy. Among all of the law firms in Korea, these traditional market leaders face the greatest risks, we believe, of a substantial erosion of their enviable current positions in the international legal market. If they wait until after the foreign firms open their doors — some of them in just a few months — these firms will suffer the significant disadvantages of having to play “catch up” against larger, much better financed competitors.
By contrast, smaller firms with well-developed sophisticated specialties may have great opportunities to provide local expertise and service quality at a level that it might take the foreign firms several years to achieve. These firms need to move quickly and efficiently to identify and take advantage of these opportunities, which are not likely to be repeated.
Strategic priorities for 2012 and beyond
2012 will be a year in which Korean law firms, both large and small, must focus very clearly on their best strategic priorities and develop efficient action plans to maintain and — equally important! — to improve their competitive positions. This is not a time for just a defensive strategy. Instead, Korean firms should use the leverage of their great experience, expertise, and local industry knowledge to advance their position, even against much larger opponents. In other words, use the size and strength of the global giants against them.
Many of the leading Korean law firms already have strategic plans; and some of them are very good. However, the entry of foreign law firms into the Korean legal market changes everything. Every law firm needs to apply a new measure of intellectual rigor to evaluating its strategic assumptions and objectives, in order to make sure that they are still relevant to the new competitive realities of 2012 and beyond.
This will require, among other things:
- Strategic investment decisions based on facts and a realistic view of the market, not on visions or aspirations
- A crystal clear understanding of the needs and expectations of each firm’s best clients
- A willingness to forego current profits in order to make investments in modern management systems and quality assurance
- The courage to take prudent risks
- The discipline to agree a set of strategic actions and to follow them through to successful completion
One final requirement
Above all, it will require optimism. Few things in business are more powerful in motivating performance than optimism demonstrated by every leader in a law firm. Our firm’s knowledge and experience in the Korean legal market convinces us that Korean lawyers and law firms are capable of meeting all of these challenges. We believe that, one hundred years from now, the introduction of foreign competition into the legal market will be acknowledged universally as one of the best things ever to happen to Korean law firms.
For more information about how my colleagues and I can assist Korean law firms to define and achieve their most important strategic priorities in 2012 and beyond, click here or contact me directly at +1.305.432.9860 (ext. 100).
Norman Clark