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Foreign envoys protest limits on foreign law firms

The U.S. envoy to Korea visited the National Assembly on Monday to renew his calls for easing of restrictions on foreign law firms here citing the bilateral free trade pact, prompting criticism from Korean lawyers’ groups over the envoy’s “intervention in domestic affairs.”

Mark Lippert, the U.S ambassador to Korea, visited Rep. Lee Sang-min, head of the parliamentary legislation and judiciary committee, to deliver a joint statement protesting the current bill on the opening of Korea’s legal market. He allegedly said during the meeting that the bill fails to comply with the "spirit" of Korea-U.S. Free Trade Agreement, voicing concerns over possible diplomatic dispute if the bill is passed without amendments. 

“The revision contains several terms restricting foreign law firms from setting up a joint venture here. We urge the parliament to adopt a bill opening Korea’s legal services market more completely,” Lippert and three foreign envoys representing the U.K., European Union and Australia said in the statement. 

U.S. Ambassador to Korea Mark Lippert sits for talks with Rep. Lee Sang-min (right), chairman of the parliamentary judiciary committee, over bills concerning the opening of the legal market at the National Assembly on Monday. Yonhap
U.S. Ambassador to Korea Mark Lippert sits for talks with Rep. Lee Sang-min (right), chairman of the parliamentary judiciary committee, over bills concerning the opening of the legal market at the National Assembly on Monday. Yonhap

The four ambassadors have relayed complaints of their respective countries about Korea’s regulations on foreign firms, largely taking issue with clauses banning foreign law firms from owning a stake of more than 49 percent in a joint venture with a Korean firm and requiring them to retain more than three years of experience in the local legal industry.  

“We believe from our own experience in the UK that having an open legal services market ultimately strengthens the sector. It creates jobs, attracts investment and enables all firms in the sector to compete regionally and globally. So would be a great benefit to the Korean economy,” Nick Duvivier, a spokesperson for the U.K. Embassy told The Korea Herald.

The foreign envoys asked the parliament to seek a solution to satisfy all the parties involved through sufficient consultation before legislating the vote.

As Korea agreed to fully open its market to the EU by July 2016 and the U.S. by March 2017, the Justice Ministry proposed a revised draft of the Foreign Legal Consultant Act last August to implement the final stage of the legal market liberalization under the free trade agreements with the countries.

Under the revised bill, the foreign law firms are allowed to set up joint ventures with Korean counterparts, hire Korean lawyers and partially practice domestic law as the final step. But they are banned from representing clients in Korean courtrooms, owning a stake more than a Korean firm in the joint venture and handling domestic cases related to labor, inheritance and government affairs.

A total of 26 law firms from the U.S. and U.K. have opened their offices in Seoul since the trade deals came into effect in 2012 and 2011, respectively, with most of them focused on offering consulting services for mergers and acquisitions, intellectual property, initial public offerings and cross-border litigation.

According to sources in the legal community, South Korea’s legal market is estimated to be worth around 3 trillion won ($2.5 billion), though the official figure is not available.

The Justice Ministry maintained that the revision complies with the free trade agreements as the pact enabled Korean government to set conditions of the Foreign Legal Consultant Act. 

“The Justice Ministry has sufficiently collected opinions from academia, domestic and foreign lawyers‘ groups to write the bill in accordance with the free trade agreement,” an official from the Justice Ministry told The Korea Herald.  

“The Justice Ministry imposed the condition of minimum experiences for foreign law firms to guarantee a minimal level of legal services quality for Korean consumers,” the official said. 

"As Korea is in the initial stage of opening of the market, there should also be a platform for local firms to contribute to the legal services market."

In response to the foreign envoy’s visit to his office, Rep. Lee Sang-min said that he would take more time to review the bill in the committee to prevent possible diplomatic clashes arising from the bill.

“Acknowledging the complaints from the trade partner countries, I have not tabled the bill for a vote,” Lee told reporters after the meeting. “I asked the Justice Ministry to make efforts to minimize the diplomatic dispute after consulting the countries, foreign and industry ministries to map out a comprehensive stance at the national level.” 

Lee hinted that he would pass the bill in the parliamentary committee within next month and submit it to the plenary session of National Assembly for a vote in May to legislate it. The Assembly is currently in deadlock over other economic related bills with the new parliament slated to be elected on April 13.

Earlier this month, Lee delayed putting the bill up for a vote at the parliamentary legislation and judiciary committee upon complaints from  the ambassadors.

But his decision to put off the vote triggered criticisms among lawmakers and lawyers’ groups that the parliament caved in to foreign pressure which was an intervention in the nation’s sovereignty.

“The protest visit made by four countries’ ambassadors to Korea to protect their law firms’ interests is clearly violation to South Korea’s sovereignty,” Korea Bar Association said in a statement. “They are forcing the parliament to discriminate against local law firms for the sake of foreign law firms, an action that is beyond their authority.”

Another lawyers’ group Seoul Bar Association aired similar concerns, vowing to send formal complaints to the foreign embassies later in the day. “It is an intervention in domestic affairs that ambassadors protested the National Assembly’s legislative power citing diplomatic dispute."

Refuting the accusations, Rep. Lee said that it was “old-fashioned” to bring up the sovereignty issue when South Korea has signed free trade agreements with several countries. “Some media reports suggest that I yielded to the foreign envoys’ pressure, but it is not true. They did not even put pressure on me."

The U.K. Embassy explained that its action was not at all to infringe on Korea’s sovereignty. 

“As Chairman Lee Sang-min said this afternoon to US Ambassador Lippert, it is natural for an embassy or a country’s representative to raise concerns with the host country‘s government or parliament, particularly on matters specifically relating to FTAs,” the spokesperson for the U.K. said.

“The UK Government has worked closely with the Korean government on regulatory reform, and in trying to boost the service sector,” he said. “We are keen to continue working with Korea to share our experience of growing these sectors.”

The foreign envoys plan to have a meeting with an official from the Justice Ministry to talk through the issue sometime this week.

By Ock Hyun-ju (
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Korea Herald daum