Youngjin Sohn, senior foreign attorney at Kim & Chang.

Late last year, as Simpson Thacher & Bartlett decided to pull out of South Korea, Seoul office head Youngjin Sohn could have gone to another global firm. But after practising at Wall Street firms his entire legal career, Sohn ended up deciding to be a partner at Kim & Chang, Korea's largest law firm by any measure.

Sohn's move was significant for the Korean lateral market, according to Laurie Lebrun, a Tokyo-based partner at legal recruiter Major, Lindsey & Africa. "I see this as a potentially important shift," said Lebrun, who has also placed lawyers for international firms in Seoul since the Korean legal market liberalisation in 2011, adding that senior lawyers at top international firms may now view top Korean firms as a serious career option.

More lawyers have made similar moves recently. Former Paul Hastings partner Woojae Kim also joined Kim & Chang last year, and the former Korea head of McDermott Will & Emery, Lee In-young, jumped to Lee & Ko – another leading Korean firm – in 2017.

Korean firms are already known for employing large numbers of U.S.-qualified lawyers, often hired from international firms. Notable examples include Edward Kim and John Kim, who joined Lee & Ko in 2012 and 2011, respectively. Edward Kim was a partner at Fried, Frank, Harris, Shriver & Jacobson for six years, and John Kim was a partner at Quinn Emanuel Urquhart & Sullivan for a year.

But lateral hires as senior partner or office head are rare. Sohn and Lee practised at Simpson Thacher and McDermott, respectively, for two decades.

Sohn said Korean firms wouldn't have been attractive or considered a comparable option for senior global firm partners like him in the past. That has changed, in large part, because the top Korean firms are now operating more like international firms, he said.

Sohn said leaders of top Korean firms have made conscious efforts to learn from global firms. Korean firm leaders often ask over lunch or dinner about how firms like Simpson Thacher are run, he said. They are keen to learn about best practices in areas such as corporate governance and partner compensation, and have evolved in every direction over the years, he said.

Korea's top domestic firms – namely Kim & Chang; Bae, Kim & Lee; Lee & Ko; Shin & Kim; Yulchon and Yoon & Yang – have good reasons to learn from their larger global peers. They have become increasingly globalised themselves in recent years.

All six Korean firms were ranked among the 50 largest Asian law firms by headcount in 2017; that compares with only four Japanese firms and two Singaporean firms on the list. And they've all been expanding abroad: all six firms have offices in Vietnam; four are in China; Bae, Kim & Lee has an office in Dubai; and Yoon & Yang has an outpost in Uzbekistan's capital city, Tashkent.

Meanwhile, foreign lawyers are also better appreciated at Korean firms.

"I could see that foreign lawyers in Korean firms were treated as second-class citizens 10 or 20 years ago," Sohn said, referring to the time when foreign lawyers were primarily hired for their English language skills and were only given minor work.

Now, Korean firms are seeking foreign lawyers for their international experience and problem-solving skills, Sohn noted, and some are even leading teams. "The roles foreign lawyers can play in Korean firms are a lot larger than I thought when I saw from the outside," he said. "I was pleasantly surprised at how big a role foreign lawyers can play."

The expansion of foreign lawyers' roles at domestic firms came after the legal market liberalisation in 2011; since then, foreign firms have been allowed to set up shop in Seoul. Currently, 28 foreign firms are operating in Seoul, including top Am Law firms like Cleary Gottlieb Steen & Hamilton; Skadden, Arps, Slate, Meagher & Flom; and Latham & Watkins.

For Korean firms, these international firms brought the competition for outbound work closer to home. They had to react.

"They see how well the global firms are serving their clients, so they have to improve their own quality of service," Sohn said. So the Korean firms turned to their international firm-trained foreign lawyers to help match the global firms' standards.

While the improving standards of Korean firms and increasing appreciation of foreign lawyers are pull factors, there are also push factors – the instability of foreign firms' Seoul offices, for example.

In 2016, Korea took a step back in liberalising its legal market, putting off global firms' plans to make significant investments in their Seoul offices. The government amended the Foreign Legal Consultant Act, the law that governs foreign lawyers in Korea, imposing restrictions on foreign firms' ability to form joint ventures with local firms and practice Korean law.

No foreign firm so far has pursued a joint venture, which Seoul office heads of global firms have described as too restrictive and unacceptable. Under the amended law, foreign firms can only own a minority stake in the joint venture, but they would be solely responsible for the entirety of it.

"The restrictive amendment of the Foreign Legal Consultant Act greatly changed the original expansion plans for some of the offices of global firms in Korea," Lebrun said. "The rules currently make the addition of a local practice essentially impracticable."

"As a result, there's less growth than you might have anticipated and less hiring between firms," she added.

The change of local legislation is one that many could not have predicted. Moreover, some firms are having second thoughts about having an office in Seoul in the first place. "Firms are starting to evaluate whether it makes sense to continue to invest in Korea or not," said Lebrun.

Two firms already decided not to. After Simpson Thacher closed last year, McDermott Will & Emery also shuttered its Seoul office last month. Both firms were part of the first batch of global firms to open offices in Seoul in 2012.

"Global firms have their own priority in terms of resource allocation and profitability," noted Sohn.

But at Korean firms, lawyers can be assured that management will not change their mind about Korea. "Obviously, there is security and stability [at a domestic firm] when your strength is limited to a certain region," he said.

"If you're a Korean lawyer, Korea is the world."

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