May 01, 2015

ABA concerned about proposal for implementing legal services provisions of Korea-US FTA

The ABA expressed concerns this month about a proposed draft amendment to the Foreign Legal Consultant Act issued by the Korean Ministry of Justice that is far more restrictive than what is required under the Korea-US Free Trade Agreement (Korea-US FTA).

The draft amendment, which would be part of legislation necessary to implement the third stage of the legal services provisions of the Korea-US FTA, defines a “joint venture” to include only a separately capitalized de novo judicial person with a foreign law firm partner and a Korean law firm partner as equity holders.

Other restrictive measures would: require a majority number of Korea-qualified partners; restrict the amount of distribution that may be made to non-Korea qualified partners of the joint venture; and require the Korean law firm partners in the joint venture to have been in existence for a certain number of years and have a minimum number of Korea-qualified partners.

In a May 7 letter to the Korean Ministry of Justice, ABA President William C. Hubbard maintained that the draft amendment will prevent U.S. law firms from offering integrated service in demand by Korean and U.S. clients alike, which was the expectation of U.S. law firms that have entered the Korean market and made substantial investments to establish their operations.

The ABA, he said, would support a model that would allow a U.S. law firm to maintain its current representative office structure and hire Korean partners and associates or to combine and integrate fully with a Korean law firm.

“To put in place such restrictive measures as those included in the draft amendment to implement the third phase of legal services market liberalization is effectively to not implement it at all,” Hubbard wrote. He explained that the ABA has long supported liberalization of access to the legal services markets, both in the U.S. and abroad, as a means to enhance the ability of lawyers and law firms to serve their clients effectively through cross-border practice. 

Hubbard emphasized that allowing these activities is critical to fulfilling the goal of the Korea-US FTA to promote the robust growth of trade and investment between the two countries.  

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