The South Korean legal market saw a lot of activity in 2019, with some global firms opening offices and others closing them, lawyers making lateral moves, and Brexit causing so much uncertainty that one international firm closed its Seoul office for four days.

But one development is expected to continue into 2020 and shake up the Korean legal market: Seoul office closures.

In July of last year, McDermott Will & Emery closed its office in the Korean capital, becoming the second international firm to do so after Simpson Thacher & Bartlett in November 2018. Both McDermott and Simpson Thacher were part of the first wave of global firms to set up shop in Seoul in 2012.

Youngjin Sohn, who opened and headed Simpson Thacher's Seoul office until it shuttered, expects the office closures to continue. "There are too many foreign law firms here in Korea," said Sohn, who is now a partner at Kim & Chang, the largest domestic firm in Korea.

There are currently 29 foreign firms in the Korean capital, although it will soon drop to 28, as Dentons is preparing to close its Seoul office after it completes its combination with midsize local firm Lee International.

Most of the international firms in Korea, including McDermott and Simpson Thacher before they left, focus on corporate activity, which is highly competitive, said Laurie Lebrun, a Tokyo-based partner at legal recruiter Major, Lindsey & Africa who has placed lawyers for global firms in Seoul since Korea liberalized its legal market. "The fact that local firms in Korea are relatively stronger than in other Asian markets, and have hired teams of highly competent foreign-qualified corporate lawyers, makes this all the more difficult," she noted.

The Korean legal market is dominated by six domestic firms: Kim & Chang; Bae, Kim & Lee; Lee & Ko; Shin & Kim; Yulchon; and Yoon & Yang. Collectively called the Big Six, they hold 90% of market share, according to local media reports. Kim & Chang, which has 988 lawyers, ranks 53rd in the is the Global 100 — the highest-ranked Asian firm in the annual ranking. It reported $901 million in gross revenue in 2018. Bae, Kim & Lee and Lee & Ko are both in the Global 200, with gross revenues of $279 million and $263 million, respectively.

"It's hard to build a new practice in the highly competitive Seoul legal market while charging clients international firm rates," Lebrun said. "There is a lot of pressure, particularly on corporate lawyers, to get enough high-value work to keep the wheels turning."

Sohn noted billing rates are flexible and a lot lower at his new Korean firm. "That helps," he said, adding that the $1,500-an-hour some senior partners at Wall Street firms charge is "unbelievable."

Adding to the pressure of competing for high-value deals, U.K. firms' Seoul offices were under threat last year because of the uncertainty of Britain's exit from the European Union. Foreign firms can only operate offices in Seoul if the country where the firm is based has a free trade agreement with Korea. At the time, Korea had an FTA with the EU but not with Britain, meaning U.K. firms' Seoul offices faced the possibility that they would need to close until a Korea-U.K agreement was signed.

The uncertainty affected four U.K. firms: Allen & Overy, Clifford Chance, Linklaters, and Stephenson Harwood. The Anglo-Australian firm Herbert Smith Freehills, which originally registered its Seoul office in 2013 as part of a U.K. firm, closed its office for four days in March to re-register as part of an Australian firm as a precaution. "Regulators require that our office closes for legal services until the new registration is received," Herbert Smith Freehills Seoul partner Mike McClure explained to Law.com's The Asian Lawyer in March. "We respect that requirement and see it as a short-term price to pay for the longer-term certainty to operate without issue after Brexit."

Fortunately for the four U.K. firms, Britain signed an agreement with Korea in June establishing that that there would be trade continuity between the two countries after the U.K. officially leaves the EU, which is set to happen at the end of this month. Until then, Britain and the U.K. firms' Seoul offices will continue to be covered by the Korea-EU FTA.

While more closures may occur, three foreign firms opened offices in Seoul last year, demonstrating there is still strong interest in Asia's fourth-largest economy. The three are Arnold & Porter Kaye Scholer, Shearman & Sterling and China's Yingke Law Firm. Yingke, which is the second-largest firm in the world after Dentons, became just the second Chinese firm in Seoul after Beijing-based intellectual property specialist Lifang & Partners in 2018.

Shearman and Yingke relocated lawyers for its Seoul office, while Arnold & Porter recruited a team of three partners from White & Case, including its former office head James Lee. It was the first major lateral team move in Seoul among international firms and immediately made the Washington, D.C.-based firm one of the larger global players in Korea, where most just have a small outpost with one or two partners.

"It's a competitive environment with plenty of international firms vying for work," Lee, who now heads Arnold & ­Porter's Seoul office, told Law.com in September. "In order to be strong [in Korea], you need to be committed to the market."

Another major lateral-related development in 2019 occurred when Sohn joined Kim & Chang from Simpson Thacher, affirming that Korean firms are a serious option for Seoul partners at international firms. Sohn is the third—but the most significant—partner to have made the jump to a domestic firm, after former Paul Hastings partner Woojae Kim last year also joined Kim & Chang, and the former Korea head of McDermott Will & Emery, Lee In-young, jumped to Lee & Ko in 2017.

Sohn said Korean firms are now an attractive option for senior global firm partners as Korean firms are operating more and more like international firms, and now appreciate foreign lawyers for their international experience and problem-solving skills.

And it's a good time to be a partner at a top Korean firm—they are doing better than ever. Last year, Bae, Kim & Lee's gross revenue broke the 300 billion Korean won (about $273 million) mark for the first time in its 33-year history, boosted by headline-grabbing deals and work for the Winter Olympics in Pyeongchang. Lee & Ko, which made about $263 million in 2018, is also on track to reach the milestone.