On March 2, 2009, the Korean National Assembly passed new legislation, the Foreign Legal Consultant Act (FLCA), permitting foreign lawyers to register as "foreign legal consultants (FLCs)" and foreign law firms to open offices in Korea, which are called "foreign legal consulting offices (FLCOs)" under the Act, provided that the countries of jurisdiction where they are licensed have signed and ratified free trade agreements (FTAs) with Korea, including liberalization of the legal services market. The Act is to take effect September 26, 2009, six months after its promulgation, so foreign law firms from countries that are parties to effective FTAs with Korea will now be able to operate foreign legal consultancy businesses in Korea.
Opening the Korean legal service market has been discussed for a long time in connection with the WTO’s Doha Development Agenda, and the passage of the FLCA is the first step for Korea to open up its legal services market to foreign lawyers and law firms from countries that have effective FTAs with Korea. The envisaged liberalization of the Korean legal services market under the FLCA is only partial, because the scope of permitted services by FLCs under the FLCA is limited to consultation of laws of the FLCs’ country of license; consultation of treaties of which FLC’s country of license is a party or generally recognized international customary law; and representation in international arbitration where the applicable law is foreign laws or international public law and the venue of arbitration is Korea (Articles 2 and 24). Also, FLCs or foreign law firms’ FLCOs in Korea remain prohibited from hiring Korean lawyers, patent attorneys, certified public accountants or tax attorneys; from forming partnerships, joint ventures or other kinds of business affiliations with them; and from running businesses and sharing profits together under the FLCA (Article 34). According to the Korean Ministry of Justice ("MOJ"), the full opening of the market is expected to begin around 2016. Currently, the United States and the Association of Southeast Asian Nations ("ASEAN") have signed FTAs with Korea, but ratification of the agreements is still pending in the party states. In addition, countries that are in the process of negotiating FTAs with Korea involving the legal services sector include the EU, Canada and India.
The opening of the Korean legal services market under the United States-Korea FTA, which was signed by the two governments in June 2007, is phased in three steps. Under the first phase, which is conditional to the pending ratification of the treaty in both countries, lawyers who are licensed in the United States are allowed to provide counseling on U.S. laws and treaties to which the United States is a party, and U.S. law firms are permitted to open a branch office in Korea that is an FLCO under the FLCA. During the second phase, which is scheduled to begin within two years after the FTA becomes effective, U.S. law firms are permitted to form an affiliation with Korean law firms and are allowed to take cases where both U.S. and Korean laws are involved with Korean law firms and share profits together. Under the final stage, which is set to begin within five years after the FTA takes effect, U.S. law firms are permitted to form a partnership with Korean law firms and hire Korean lawyers under certain requirements. The recently passed FLCA provides rules governing the first stage of the Korean legal market opening.
A good number of foreign lawyers, largely licensed in the U.S., have already been working in Korea as foreign legal consultants employed by Korean law firms, but there has been no registration system to recognize their status as foreign attorneys until the new legislation was passed. The FLCA now provides qualifications for FLCs to be registered with the Korean Bar Association ("KBA") upon approval by the Minister of the MOJ. To become an FLC under the Act, an applicant who is licensed in a foreign country which has ratified an FTA with Korea must have at least three years of work experience in the foreign jurisdiction where he or she is licensed (Article 4 Section 1). If the applicant performed legal services concerning the laws of his or her country of license in another foreign country, the period of such experience can be counted toward the required years of experience, subject to the Presidential Decree to the FLCA (Article 4 Section 2). The Act also provides that in case the applicant has worked in Korea primarily doing research, study or report on laws of the country where the person is licensed for his or her employer, up to two years of such experience may be acknowledged as part of the required years of experience, subject to the Presidential Decree (Article 4 Section 3). FLCs under the Act are required to reside in Korea for at least 180 days a year (Article 29), and may work as a partner or associate of an FLCO or may be employed as an FLC by Korean law firms (Article 25). FLCs registered under the FLCA must present themselves as a "foreign legal consultant", indicating their country of license, and may add besides what they are called in their home jurisdiction in their languages (i.e. an attorney at law) and "attorney" in Korean with their countries of license indicated (Article 27 Section 1). Furthermore, FLCs must indicate their country of license and the scope of their services to a client before engaging in a retainer regarding foreign legal consulting (Article 27 Section 5).
The FLCA also sets forth the procedure for foreign law firms to establish an FLCO to be registered with the KBA upon approval of the Minister of the MOJ. To limit the entry of disqualified foreign law firms in the Korean legal service market, the Act requires that the main office of a foreign firm that has decided to open an FLCO in Korea must have at least five years of normal operation in its home country which is a party to an effective FTA with Korea (Article 16 Sections 1.1 and 1.2). Also, the main office of the foreign firm is required to guarantee civil or commercial liabilities relating to its FLCO’s business (Article 16 Section 1.4), and the representative of its FLCO must have at least seven years of experience, including at least three years of experience in his or her own jurisdiction (Article 16 Section 1.3). In addition, the countries of license for each and every FLC at an FLCO must be indicated in and outside the office (Article 27 Section 4).
While Korea’s new legislation partially liberalizes its legal services market, the new rules will not apply to U.S. law firms unless and until the United States-Korea FTA is ratified by the U.S. Congress and the Korean National Assembly, respectively. These developments still remain to be seen.