1/26/2016

Legal & Accounting Assistance for Startups in Korea

My law firm is, regrettably, not known for assisting SMEs and startups, because of our representation of your lawyers working with some well known multi-national companies.

However, we do have a number of forward-thinking startups and SMEs that we assist in Korea and in China.  We love working with these companies, since we love being an active part in developing systems within businesses that allows growth with less of the compliance risks.

We, also, love being a part of the business of companies.  Many of our attorneys and business professionals have experience with managing companies and assisting companies to find new opportunities and we love to see this experience help our clients succeed.

For example, we work with:

  1. A 50 employee American online advertising agency;
  2. A startup British cyber-security company;
  3. A startup American mobile technology company;
  4. A startup Chinese entertainment company;
  5. A 15 employee American-owned grocery store;
  6. A 5 employee Korean-owned distribution company;
  7. A startup Canadian-owned brewery; 
  8. A Italian restaurant franchise owned by an Italian; and 
  9. A 220+ employee nano-materials company.  
We work with these clients based on, often, low monthly retainers and flat-fee services.  Yes, legal services are not cheap, however, I doubt you will find many of our clients complaining that are services did not add value to the respective business.  

We, also, have many clients that we have introduced to new business.  Yes, little guys can, often, utilize the services of lawyers.  

Regrettably, few lawyers, in Korea, are capable of dealing with the needs of startups and SMEs in Korea, thus, my law firm has created a team to address and handle the needs of these clients.  

You will see, over the next few weeks, more articles tailored to the needs of clients requiring the need for small-business focused lawyers. We, also, will have an accountant at our firm write a few articles.  
Please check back soon.  

You can subscribe to the blog via a field in the right column of this blog.  
Also, I love to talking to anyone.  Setup a time for a call with me and I am happy to discuss with you the needs for your business.  

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

Sean's profile may be found at: Sean C. Hayes

1/22/2016

Business with North Korea: The Growing North Korean Economy

In a little break from writing about mundane Korean legal topic, here is an article from the Washington Post that sheds a little light on the North Korean economy.  Well worth a read.

The economy in North Korea is growing, mainly, because of the contributions of Korean workers working outside North Korea in Chinese owned textile mills, mines, restaurants and other industries shunned by the, increasingly, wealthy Chinese workers.
 
The Washington Post has a great article on this situation.  The article, notes, in part that:
North Korean Gaesong Industrial Complex Law
Gaesong Industrial Complex in North Korea
"In the clothing factory, the women work 13 hours a day, 28 or 29 days a month, and are paid $300 each a month — one-third of which they keep. The rest goes back to the government in Pyongyang.
'Even though I want to pay them more, I have to send a certain amount home to my country, so this is all I can give them,' Kim said in his office at the factory.
On his desk, an open laptop revealed that visitors had interrupted his game of solitaire.
The women work on the third floor, wearing their coats inside to guard against the cold, and live on the second floor in shared, dormitory-style rooms decorated with a banner declaring, “Let’s realize the revolutionary ideas of Kim Il Sung and Kim Jong Il” alongside portraits of the two former leaders, grandfather and father, respectively, of Kim Jong Un. Signs on the doors read, 'Call each other comrade.'
North Korea is thought to have at least 50,000 workers outside the country earning money for the regime, and 13,000 of them work in Dandong.
This neon explosion of a city contrasts starkly with the North Korean city of Sinuiju, on the opposite bank of the river, where there is only a smattering of light at night."
The article may be found at: North Korea's Growing Economy and America's Misconception About it. Worth a read.  Back to the boring legal article for tomorrow. 

The Chinese government, near the Chinese boarded, has established textile manufacturing zones run by Korean workers. 
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/12/2016

Waivers of Liability in Korea: Civil Liability Basics

Waivers of liability, in Korea, are often deemed invalid by courts when the actions of the business is considered negligent by the Korean court.

However, it is still advisable for a company operating in a business that is inherently dangerous to have liability waivers in contracts with their customers (e.g. scuba, paragliding, and skiing).
Korea Law Liability Waiver

In most cases, the courts will deem the waiver to be limited to injuries caused, directly and soley, by the actions of the injured plaintiff.

Thus, for example, if you are skiing and you hit a tree that you claim was negligently placed too near to the exit of a ski lift, you likely, will lose the case, since the injury was caused by your actions of skiing into the lift.  This assumes that the lift or tree was not placed in an area that has caused many similar accidents. 

However, if the lift breaks and you fall to a snowy death and you successfully find that the maintenance of the lift was completed by Mork & his friend Mindy, you likely will prevail.

Thus, for enforceablility of these waivers of liability, typically, a court would need to find that no responsibility of the business in the accident.

Yes, you have a good question - what the heck is the use of the waiver?  Shouldn't a court, only, award damages if a party is negligent.  You got a great point.  The waiver seems to do nothing, but raise a strict liability standard (usually when one party is hurt by the actions/inactions of another party - compensation is provided, in Korea, not withstanding negligence).  The waiver may, in some cases, bring the standard to a true negligence test. 
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw. Sean's profile may be found at: Sean C. Hayes

1/11/2016

The Law of Self-Defense in Korea: Criminal Law Basics in Korea

The affirmative defense of self-defense is available in Korea.  A court, in Korea, that rules that an act was perpetrated in self-defense must dismiss or mitigate the punishment of the defendant.

Korean Court
Typical Korean Court
Criminal Act Article 21 (Self-Defense)
(1) An act which is performed in order to prevent impending and unjust infringement of one's own or another person's legal interest shall not be punishable if there are reasonable grounds for that act.

(2) When a preventive act has exceed normal limits, the punishment may be mitigated or remitted according to the extenuating circumstances.

(3) In the case of the preceding paragraph, an act performed through fear, surprise, excitement, or confusion in the night or under other extraordinary circumstances shall not be punishable. 
Regrettably to many, Korea interprets the preceding Article 21 of Korea's Criminal Act very narrowly.  There is, only, one reported cases in the past 25 plus years where someone accused of murder has prevailed in a claim of self-defense.  The only case I can find is the notorious Kongneung-Dong Murder Case.  The case involved a break-in to a home that lead to the death of the burglar.  The burglar was armed and he killed one person in the apartment. 

The accused claimed, inter alia, that his act of killing the burglar was performed to "prevent impending and unjust infringement" (more injuries) of his "legal interest"(his life).  He claimed that his only means of protecting his life was his actions.  Additionally, the act of the burglar was at night.

The following charges still lead to charges by the police.  The prosecution decided not to indict.

Other articles that may be of interest:
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw. Sean's profile may be found at: Sean C. Hayes

1/05/2016

Korean M & A Due Diligence Checklist: Mergers & Acquisitions in Korea

This Korean Merger & Acquisition Due Diligence Checklist is not a substitute for retaining an attorney to assist with your M & A.  Please, only, use this checklist as an initial guide and to insure that your attorney is checking off all of the boxes.  

Korean companies often are, often, very poor at keeping accurate records that reflect a rational reality.  Thus you must know where to find the red flags.  This skills comes with experience in Korea. We do work, also, in China. The flags are found in different places in Korea, than, in China and in the West.

M & A Due Diligence Checklist
  • Company History
    • Company History/Background
    • Founder, Family & Key Individuals in Company
    • Historical Profitability
    • Credit Rating
    • Primary Customers, Suppliers & Vendors
    • Reason for Sale or Merger
    • Stinky Fish & Stinky People
    • Old Hats
  • Financials & Shareholder Distributions
    • Audited Financial Statements
    • Tax Returns, Tax Certificates, Tax Filings & VAT Receipts etc.
    • Government Filings, Government Notices and Tax Office Communications
    • Local Taxes & Communications
    • 4 Insurances
    • Cash Flow, Current Financials & Year End Statements
    • Shareholder Distributions
    • Interested Transactions
  • Company Formation Documents
    • Business Licenses, Tax License & Commercial Register
    • Articles/Constitution, By-laws, Amendments etc.
    • Shareholder Agreements/Joint Venture Agreements
    • Government Approvals & Certificates
    • Interested Directors, Officers, Share Holdings
    • Representative Director & Directors Acceptance Documents
    • Formation Docs
    • Insurance Contracts
    • Seal Certificate
  • Assets & Receivables
    • Receivables List & Records
    • Real Property List & Records
    • Movables List & Records
    • IP (trademark, patents, copyrights, licenses etc.)
    • Registration documents for IP
  • Liabilities & Lawsuits
    • Lawsuits & Administrative Actions
    • Government Liabilities
    • Loans & Guarantees
    • Interested Transactions
    • Licenses
    • Contingents
    • Liabilities to Shareholders, Employees, Family & Directors
  •  Customers & Relationships
    • Major Customers
    • Agreements & POAs
    • Customer & Vendor Relationship Issues
    • Customer Relationship with Key Employees Leaving
  • Employee/Directors
    • Employee List
    • Job Specs
    • Employment Contracts
    • Government Obligations
    • Severance Obligations
    • Director Contracts
    • Former Director List
    • Employees Terminated in Last Year
    • Independent Contractor Contracts
    • Employment Related Tax Obligations
    • Labor Union Representatives/Union
    • Disciplinary Dismissals
  • Real Property
    • Title, Lease, Property Records
    • Adjoining Landowners
    • Tax Assessment
    • Mortgages, Liens & Encumbrances etc.
Please search for other articles we have written on Due Diligence and Mergers in Korea via the labels to the right.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

12/31/2015

Getting a Divorce in Korea: Hire a Korean Divorce Lawyer?

The following Korean divorce information is provided by the Seoul Global Center.  Non-Koreans are capable of obtaining a divorce in Korea even if no party to the divorce is a Korean national.

In many divorce cases, no divorce attorney in Korea will be needed.  However, in most cases involving non-Koreans, it is advisable to seek assistance, because of the need, often, for among other things, a detailed marital separation agreement prior to divorce, language issues and the inability of the parties to resolve all matters in an amicable manner. In all but the most contentious of divorce actions, the legal fees will not be a great burden.  

The following is a clip of the advice noted by the Seoul Global Center on the Seoul Global Center Blog.  IPG has not edited any of the content, thus, errors have not been corrected.  I may be contacted via the email below or via phone. 

Please, also, see the following articles on divorce/separations in Korea that may of use to the reader:
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.
 
From the Seoul Global Center Blog
Korea’s divorce rate nearly quintupled between 1980 and 2004 (from 0.6 to 2.9), whereas average divorce rates have remained relatively low for the 25 OECD countries (1.7 to 2.3 between 1980 and 2007). Overall, average divorce rates have more than doubled for 4 Asian economies between 1980 and 2007 (from 0.9 to 2.0)

Another report released by Korea National Statistical Office the (KNSO), divorce rates are rapidly rising for international couples (meaning one Korean spouse and one foreign spouse) living in South Korea. Based on last year’s figures, divorce statistics show some 11,255 international couples divorced in 2008, representing a 29.8 percent increase from 2007 compared to a 7.5 percent increase for Koreans and their Korean spouses over the same period.

General Validity of Divorce
The general validity of divorce shall be governed by one of the following laws in the given order of priority, provided that in cases where a party to the marriage has his/her habitual residence in Korea, the divorce shall be governed by the 「Civil Act」 of the Republic of Korea (Article 39, Private International Act):

1. The same law of the habitual residence of both spouses
※ ’The habitual residence’ means the actual location where the couple resided for a given period of time.

2. The law of the area that is most closely relevant to the couple.
※ Whether a specific area is most closely relevant to a couple shall be determined by comprehensively considering specific factors such as how long the parties stayed there, what they stayed for, whether their family members reside in the same area, whether their work is in the area, etc.
Divorce by Agreement under Civil Act(Article 834,Civil Act)
Element Requirements
For a married couple to divorce by agreement, the following requirements must be satisfied:
  1. The parties to the marriage should agree to divorce.
  2. The parties should have the will to divorce not only when they write the divorce report but when the court receives the report. (Supreme Court Judgment 93Meu171 dated June 11, 1993)
  3. Since the agreement to divorce requires the parties’ mental capacity, if a party to the marriage is an incompetent, he/she must get consent from his/her parents or guardian. (Article 835 and Article 808.(2) and (3); 「Civil Act」).
Procedural Requirements
  1. Guidance and Reconsideration Period – Any person who intends to divorce by agreement shall first seek the guidance on divorce provided by the Family Court and, if necessary, the Family Court may recommend the parties to take counsel with a professional counselor who has expertise and experiences in counseling. (Article 836-2.(1), 「Civil Act」).
  2. The Family Court confirms the intention to divorce after 3 months has passed since the couple received its guidance on divorce if the parties have any child to take care of, and 1 month if not. (Article 836-2.(2), 「Civil Act」). The parties shall submit a written agreement on who would foster and/or have custody of their children or seek adjudication of the Family Court. (Article 836-2.(4), 「Civil Act」). 
  3. The Family Court may exempt the couple from or shorten the above-indicated period if there is an urgent circumstance to proceed with the divorce procedure such as, for example, when a party is expected to suffer unbearably from domestic violence. (Article 836-2.(3), 「Civil Act」).
  4. Divorce Report – A divorce by agreement shall take effect upon reporting it in accordance with the 「Act on the Registration, etc., of Family Relationship」 after obtaining the confirmation of the Family Court. (Article 836.(1), 「Civil Act」).
  5. Nullity/Revocation of Divorce by Agreement – Even if a divorce report has been filed, a divorce by agreement is null if the parties did not agree to divorce, and any person who declared the intention of divorce by fraud or duress may make a claim to the Family Court for revocation of such divorce. (Article 838, 「Civil Act」).
Judicial Divorce under Civil Act (Article 840, Civil Act)
Causes for Judicial Divorce
- You may file for a divorce with the Family Court in any of the following cases (Article 840, 「Civil Act」):
  1. If your spouse has committed an act of unchastity – An act of unchastity’ is a broad concept that includes a wide range of unfaithful conduct, which may fall short of adultery. (Supreme Court Judgment 89Meu1115 dated July 24, 1990)
  2. If your spouse has maliciously deserted you – Malicious desertion’ refers to the conduct of failing to implement the obligation to live together with, financially support, and aid the other spouse with no justifiable reason.
  3. If you have been extremely maltreated by your spouse or his/her lineal ascendant;
  4. If your lineal ascendant has been extremely maltreated by your spouse;
  5. If whether your spouse is dead or alive is unknown for three or more years; 
  6. If there exists any other serious cause that makes it difficult to continue the marriage – Any other serious cause that makes it difficult to continue the marriage’ refers to a situation where the couple’s communal life, the essence of a marriage that is based on mutual affection and trust, has been irrevocably damaged and therefore forcing the continuation of such marital life exposes a party to the marriage to unbearable sufferings. In judging whether there indeed is such situation, various factors and circumstances should be considered such as whether the parties have the will to continue the marriage, which party is responsible for the failure of the marriage and to what degree, how long they have been married, whether they have children, how old the parties are, and whether the parties can earn their livelihood after a divorce. (Supreme Court Judgment 90Meu1067 dated July 9, 1991). 
Procedure of Judicial Divorce
  1. Conciliation – Since a judicial divorce is subject to family litigation of Category B, anyone who intends to file for a judicial divorce shall first make a request to the Family Court for conciliation proceedings. (Article 50.(1), 「Family Litigation Act」).
  2. If you institute litigation without going through the conciliation process, you will be sent back for conciliation; provided that the same shall not apply when deemed that it is impossible to summon one or both of the concerned parties unless resorting to a service by public notice, or that it is impossible to constitute conciliation even if the said case is referred to conciliation. (Article 50.(2), 「Family Litigation Act」).
  3. Litigation Procedure – If there has been a decision not to have conciliation, conciliation has not been constituted, or a decision amounting to conciliation has been made invalid upon an objection, the litigation is regarded to have been instituted when the conciliation request was made. (Article 49, 「Family Litigation Act」; Article 36, 「Judicial Conciliation of Civil Disputes Act」).
  4. A divorce takes effect upon the divorce judgment (Article 12, 「Family Litigation Act」; Article 205, 「Civil Procedure Act」), and the person who instituted the litigation should report the divorce within 1 month from the time when the final divorce judgment is made, by submitting a certified copy of the litigation document and its confirmation certificate. (Article 78 and 58, 「Act on Registration, etc., of Family Relationship」).
Effects of Judicial Divorce
  1. General Effects – Upon a divorce, a marital relationship is dissolved, all kinds of rights and obligations that presupposed the continuation of the marriage expire, and affinity relations created through the marriage get terminated as well. (Article 775.(1), 「Civil Act」). Both parties may remarry.
  2. Effects on Children – If there are underage children when a divorce is established, the parents shall decide and agree on who will have the custody of the children (Article 836-2.(4), 「Civil Act」), and in addition, determine matters related to fostering of the children such as protection of the children and fostering expenses (Article 837, 「Civil Act」).  The children and the parent who does not take care of such children shall have the visitation right (Article 837-2.(1), 「Civil Act」); provided that the Family Court may limit or forfeit such visitation right on its authority or upon the request of a party if such measure is deemed necessary for the welfare of the children (Article 837-2.(2), 「Civil Act」).  The above-indicated’visitation right’ means that the parent who does not take care of his/her children has the right to meet and talk with such children. Included activities are, for example, exchange of letters, talking on telephone, exchange of gifts, staying with the parent over weekends, etc.
  3. Effects on Property – Upon the establishment of a divorce, a party to a marriage may claim the division of property against the other party within 2 years from such establishment. (Article 839-2, 「Civil Act」).  The party may also claim damage compensation against the negligent party. (Article 843 and 806, 「Civil Act」).
FAQ
Q1: I’m a foreigner presently married to a Korean woman for the last ten years and we have a child with both nationalities (until they come of age to choose one).  What happens in case of divorce? Do I have to leave Korea? Is my visa going to be cancelled? If so, how can I take care of my child (see them regularly) if the mother is in Korea and I can’t stay because of visa problems? Do you know? Can I stay in Korea or not? If not, that is going to be extremely unfair and harsh on everybody.
A1: According to the Immigration office, first you need to clarify your type of visa status to get the appropriate information. The reason is that it can be different procedures what types of visa you have. If you want to prolong the duration of visa, you need to report the divorce and verify the reason to stay in Korea to the Immigration Office.
For F-5 visa holders, the visa won’t be affected by the result of divorce. They don’t have to surrender their F-5 visas or have to leave the country either.
For F-2-1 visa holders, the visa will be valid until the visa expiration date. Immigration Office will allow you to extend your visa on the following cases.
  • When your divorce is caused by your Korean spouse
  • When you have custody of the child born in the marriage
Q2: We are a couple, both foreigners, considering getting divorce under the mutual agreement while we are here in Korea. Can the Korean government do that?
A2: Except in the case when mutual agreed divorce is not accepted by the law in your country, as long as you both have an alien registration card issued by the Korean Government, foreigners can process their divorce in Korea. Those who are residing in other cities in Korea, still need to process the divorce at the Seoul Family Court. Required documents are alien registration card, passport, a marriage certificate both in Korean and English, and an interpreter.
**The Seoul Global Center provides free legal advice service every Monday, Wednesday and Friday from 2pm to 5pm.

Content Provided by: Seoul Global Center Blog
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com

12/28/2015

Execution of Foreign Judgments in Korea: Collection Basics in Korea

Question:  I have a final judgment against a Korean individual from a New York state court.  How can I enforce this judgment in Korea against this Korean individual?

Korean Curts
Korean Central District Court.  
Answer:
A foreign judgment, in Korea, can be executed based on meeting the requirements of the Civil Execution Act of Korea and Civil Procedure Act of Korea.  The relevant provision are Article 26 and Article 27 of the Korean Civil Execution Act and Article 217 of the Korean Civil Act.

The process of recognition and enforcement of a foreign judgment, often, is complicated, because of the need for translations of foreign judgments, the different style of foreign judgments and the, often, lack of familiarity of these foreign enforcement actions by Korean courts.

The action must be filed in a Korean court to be executed in Korea.  No Korean administrative agency handles these actions in Korea.

Requirements for Enforcement of a Foreign Judgment in Korea

1.  "Judgment" Must be Rendered by a Foreign Court
The Supreme Court has recognized "default" judgments when a Korean plaintiff was properly served, had the opportunity to be heard and the judgment was a final and conclusive judgment.

Thus, for a Korean court to recognize a judgement/order as a valid judgment the plaintiff:
A. Must have had an opportuity to be heard;
B. Must have been properly served; and
C. The judgment must be a "final and conclusive judgment."

2.  Recognition of the Foreign Court
Korea, broadly, recognizes the "international jurisdiction" of foreign court.  Korea may not recognize the judgments of courts that are perceived to not have transparent legal systems or that Korea does not have diplomatic relations with.

3.  Proper Service of Process
In most cases services must be via an international treaty on the service of process called the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ("Hague Convention on the Service of Process").  The procedure to serve under the Hague Convention on the Service of Process may be found at: International Service of Process.  In some cases, the formalities of the Hague Convention does not need to meet.

4. Reciprocity
The foreign court must be deemed a court that recognizes the judgment of Korean courts.  Most courts in the world recognize Korean court judgments.

5. Good Morals and Social Order
The judgment must, also, not violate good morals or the social order of Korea.  This is a catch-all rule that has been applied to not enforce punitive damage awards and some judgments that were deemed to be obtained in a fraudulent manner.

**This is the first in a weekly blog post that I will begin writing that answers the questions of those with basic legal needs that may not require the active assistance of an attorney in Korea.  I envision that the majority of the readers will be small business owners and individuals. 

Many years ago I was asked to write a column for a local newspaper.  The article answered questions of readers - I will bring this column back to life.  The column was called Lex Pro Bono - I will keep this terrible name for this weekly blog post also.**

Please direct your questions to: SeanHayes@ipglegal.com and place the word: LEX PRO BONO in the subject field.  Please do not expect all questions to be answered.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

Sean's profile may be found at: Sean C. Hayes