9/28/2011

Why are Legal Fees at Korean Law Firms Higher Than New York and London: The Good, the Bad and the Ugly

I had a client note that their former Korean law firm was charging them double than what they would have been charged in NY for a similar project.

The Good:
The Hourly Rates in Korea, Normally, are Lower than Hong Kong, London, New York, Tokyo and Paris.
  • Increased competition has brought down rates to levels equal to a decade ago.
  • Korea is increasing the number of students that pass the bar exam.
  • More international attorneys (American, British, German and Chinese) have entered the market, thus, increasing competition.
  • More firms with international attorneys are capable of handling matters for foreigners.
Competition is quickly bringing down the cost, however, foreign clients without knowledge of the market are still choosing the ubiquitous Korean law firm because of their misguided notion that they are the only "capable" and "connected" law firms in Korea.  

The Bad:
The Larger Law Firms, in Korea, are Typically Charging More for like Projects than Anywhere Else in the World.

  • Office Rent in Korea is alarmingly high. One floor in a typical 20 story building is likely costing a firm in excess of USD 50,000/month. 
  • Korean law firms are incredibly inefficient. Often Korean law firms have two or more staff per attorney with a majority of the staff doing nothing more than dusting book, serving coffee and chatting through the computer.
  • Many law firms in Korea are very top heavy with the top doing little to no heavy lifting and consuming most of the Firm resources.  These individuals are simply used for marketing purposes.  Ill informed foreign clients, often, believe that these individuals can obtain government benefits because of their former government connections. 
The Ugly:
Some Law Firms in Korea are Known For Manipulating Bills (I am trying to be nice)

  • Some of the largest Korean law firms are known for gang tackling. I saw one criminal case where over 15 lawyers were working on one criminal matter and the Firm was sending bills to the client (bill only came after three months of work) in excess of USD 700,000 per month.   We were defending the employees and charged a small fraction of their bills and successful prevailed with four attorneys. 
  • Some invoices may be manipulated.  I have no information concerning this, but some of the bills I have seen are ridiculous.  I have seen times entries that noted: "6.5 hours:  Worked on Case."
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SeanHayes@ipglegal.com