This year is proving to be an eventful one for South Korea, as it welcomed a new justice minister and put up with the antics of a nuclear-armed neighbour. Law firms in the country share what such developments actually mean for legal work.

It’s been a frenetic 2017 so far for South Korea. President Moon Jae-in fi nally appointed a new justice minister, Park Sang-ki, in late July after his first pick withdrew over questions about his ethics and views on women.

More recently, North Korea has cranked up its nuclear and missile threat, escalating the tension between the two Koreas to the highest level since the Korean War in the early 1950s.Meanwhile, South Korean companies have continued to invest abroad, particularly in Southeast Asia, with law firms following their clients and setting up bases there.

All these developments mean that law firms in South Korea have their hands full, as they need to keep up with latest business and economic conditions and provide sound advice to their clients.

REFORMS IN THE OFFING

Park will be a core figure in reforming the country’s prosecutors’ office, which has been long criticised for its excessive power and political bias. The new justice minister will aim to ensure its independence from politics – one of President Moon’s key campaign pledges. He will also work to establish a new investigation agency dedicated to fighting corruption among high-level officials, and some law firms have been preparing to quickly respond to police investigations.

“The key point of the reform is to reduce the power of prosecutors by transferring the authority to investigate high-ranking public officials to a new organisation and recognising the independent authority of investigation by the police to a certain extent,” explains Jinsu Jeong, managing partner of Yoon & Yang.

While such policies are not likely to have an immediate impact on the domestic legal market, law firms will need to reinforce their access to and network with the police so that they can respond more effectively to the possible increase in investigations into the activities of high-ranking officials and the expansion in the investigative authority of the police, says Jeong. At present, the police are obligated to conduct their inquiries under the prosecution’s supervision.

Together with the implementation of the Improper Solicitation and Graft Act last year as well as similar laws in worldwide, such as the U.S. Foreign Corrupt Practice Act, the UK Bribery Act, the OECD Anti-Bribery Convention, and the United Nations Convention against Corruption, more companies are expected to need advice on matters regarding anti-corruption and compliance.

Yoon & Yang, for example, is keeping pace by actively hiring attorneys who used to be police officers, adding to the two attorneys at the firm who served as police cadets.

OVERSEAS OPPORTUNITIES

South Korean companies have been expanding their business abroad, particularly in Southeast Asian countries like Vietnam, where Korea is the largest foreign investor, thanks to companies like Samsung and LG, which use the country as a manufacturing base.

Since 1988, South Korea has invested more than $50 billion in foreign direct investment to Vietnam across 5,773 projects, according to data from Vietnam’s State Capital Investment Corp.

In light of this, Yoon & Yang opened its first Vietnamese office in Ho Chi Minh City – the country’s largest – in November 2016, and set up another one in the capital Hanoi last month. The two offices will be expanded to house a total of 12 attorneys and will serve as a bridge to the legal markets of other Southeast Asian nations like Cambodia, Indonesia and Thailand.

“Yoon & Yang has strengthened its marketing efforts towards Korean companies expanding their businesses abroad and foreign companies entering the Korean market since 2015 by organising the International Practice Group, which consists of around 10 senior partners,” notes Jeong.

Indonesia is also an attractive destination for Korean investments. South Korea is Indonesia’s third largest investor after Singapore and Japan, investing a total of $7.5 billion across 7,607 projects in the country in the past five years. Last year, South Korea and Indonesia’s two-way trade totalled $16 billion.

In June, Yulchon opened a Jakarta desk at Roosdiono & Partners, ZICOLaw network’s member firm in Indonesia, becoming the first among Korea’s Big Five law firms to do so. The move allowed the Korean firm to support and provide legal services locally for Korean companies planning to invest in the country, as well as Indonesian companies thinking of investing in Korea.

NORTHERN THREAT

While law firms in South Korea are talking about the new justice minister and overseas investments, the news dominating most conversations – and elsewhere in the world – is North Korea, its nuclear-armed neighbour.

As of writing, North Korea’s nuclear and missile threat is the most serious, with the country firing a ballistic missile over Japan’s Hokkaido island in late August. This prompted a safety warning that urged citizens in the island to take shelter in a sturdy building or basement. The hermit kingdom then said its missile launch was the first step of its military action in the Pacific aimed at “containing” the U.S. island territory of Guam.

Despite North Korea’s missile launches, Yun Sai-ree, managing partner of Yulchon, believes it won’t really affect legal work in South Korea. “There have been many instances of a similar nature in the past, and they did not have a significant impact on the work done by law firms,” he explains. “We do not expect this particular instance to be any different.”

While North Korea has done several missile tests before – two dozen in 2016 – the growing tension between the two Koreas could affect business.

“While it is still too early for predictions, in the event that the North Korea nuclear issue escalates to the degree that it slows down the economic activities of companies, large law firms with corporate clients may be negatively affected,” says Jeong. 

“If the tension between South Korea and North Korea escalates, corporate activities will be negatively affected and the government will also change its regulatory policies, posing a potential risk for all Korean companies, including law firms.”