Archives for April 2008

Korea, Land of 10,000 Lawyers

by Brendon Carr

It’s good to have friends who know what I like. While I’ve been swamped today (for three weeks running, really, since I foolishly took a few days to attend a short conference in China) working on a securities-law matter, Korea Law Blog readers have been forwarding interesting law-related tidbits. (I also got a complaint from an old Navy buddy who says it figures that your Uncle B would have a “Korea Law Blog” with little law-related content. So this comes just in time!)

The Chosun Ilbo English edition reports that Korea now has 10,000 private-practice attorneys:

Nation’s Lawyers Top 10,000 Mark

In 1906, Korea produced its first three lawyers. Now, 102 years later, the number of lawyers in the nation has topped 10,000.

According to the Korea Bar Association, the number of registered lawyers in the country reached the 10,000 mark as of April 1 and totaled 10,127 on Monday. This is 27 years after the figure reached 1,000 in 1981, and six years after it reached 5,000 in 2002.

Korea’s new American-style law schools will begin producing about 2,000 graduates every year from 2012, so the nation’s army of lawyers will likely exceed the 20,000 mark by 2015.

The country produced its first female lawyer in 1954. The number of women lawyers in Korea crossed the 100 mark in 1999, and the figure is expected to reach 1,000 this year, the KBA said.

The prevailing trend in the legal industry is toward large firms with multiple attorneys working together in the same office. In 2003 there were just 250 law firms in the country; that figure topped 400 this year. In fact some 55 to 60 percent of all lawyers in the country work in firms.

But experts point out that there still aren’t enough lawyers to meet Korea’s demand for quality legal services. Even with 10,000 lawyers there’s just one for every 4,800 people. The OECD average as of 2006 was one for every 1,482 people.

Another chronic problem is the excessive concentration of lawyers in the Seoul metropolitan area. Of the nation’s 10,000 lawyers, about 6,200 belong to the Seoul Bar Association. It is estimated that about 50 percent of local administrative regions nationwide have no lawyers at all.

No kidding. Lawyers don’t want to get far from Seoul. Sixty-two hundred in the Seoul Bar Association—how many in the Incheon and Kyonggi Province Bar Associations? These are basically the outskirts of Seoul. I’d bet those two have another 2500 members.

Proximity to Seoul makes it easier to line them up against the wall when the revolution comes.

It’s important to note that these figures do not include judges and public prosecutors as “lawyers”—this is a private-practice headcount only. And foreign-admitted legal consultants certainly aren’t included either. Still, the number 10,000 is still just a drop in the bucket. My Washington State Bar Association number, from 1997, is 27252—and Washington has only about 4.5 million people.

The bar admission number has been increasing by 1000 a year the last five years (not all of them went into private practice, though; some become judges and prosecutors). Before that it had climbed to 1000 from a level of only 300 per year. So the bar association skews quite young—or at least new. What this means is that the population of experienced lawyers, to say nothing of English-speaking experienced lawyers, is still extremely constrained—there is still a need for Uncle B and also for opening of the Korean market to foreign law firms.

April 30, 2008 | Filed Under Legal Market | 1 comments

Why No Scientology Center in Korea?

by Brendon Carr

I am not a member of the Church of Scientology, nor do I believe I ever will be interested in joining simply because of Tom Cruise’s membership. (I’m still angry he married Katie Holmes, a project I had been reserving to myself. Plus, they’re crazy.)

But I find it interesting and a bit disturbing that the Republic of Korea (South Korea) shares with the Democratic People’s Republic of Korea (North Korea) and the People’s Republic of China a complete absence of Scientology Centers—you can verify this at the Scientology website. (Don’t ask—I can’t remember how I got there.) Scientology appears to be big in Taiwan, and also present in Japan and the Russian Far East. The ridiculously overproduced Scientology website helpfully offered driving directions from Seoul to the Vladivostok center. (Step one: Fly to Vladivostok. Step two: Buy a car.)

I feel like I have a connection to the Church of Scientology, because one of my favorite University of Washington School of Law professors, Meade Emory, in the 1980s apparently helped craft the legal framework for the Scientologists to control their assets and incidentally to harass dissenters with copyright claims. Prof. Emory was a real colorful character when I knew him in law school and a great teacher (he made tax tolerable for goodness’ sake, and we all could tell he loved the subject). I don’t know if he is, or was, a Scientologist, or whether Prof. Emory is still part of their power structure, but a lot of the dark conspiracy stuff you can find from a Google search for the name “Meade Emory” is amusing.

So, if anyone knows, why aren’t the Scientologists in this country? At the very least there should be a Scientology Center. A free society like Korea’s ought to be able to accommodate these characters too. All manner of non-mainstream (okay, nutjob) religious groups are active in Korea, including the Raelians and, of course, the Unification Church. Creepy or not, it is and always should be people’s free choice to join or not to join any religious group they want. If the conduct of the group is wrongful, the conduct can and should be sanctioned. But they should all be allowed to exist in free countries.

April 28, 2008 | Filed Under Personal | 6 comments

Balanced Regional Development Proving A Real Menace to Economy

by Brendon Carr

There are 19,948 unsold apartments now on the market (18,770 of which are in provincial areas outside Seoul), according to this Dong-A Ilbo story I noticed over the weekend. (You may be noticing how the residential real estate bubble is a hot issue in my mind. This is because it affects every citizen.)

An apartment complex was constructed a year ago in Suseong-gu, which had been considered Daegu’’s wealthy district. But few residents have moved into the apartment as many lots have not been sold. Until recently, an apartment resident had worked as the head of the apartment complex control office. He decided to lead the control office by himself since a series of problems had appeared due to the large number of unoccupied homes.

“Tens of millions of won of electrical and water fees are overdue since this apartment complex is not full of residents who can share the burden,” he said. “Relevant authorities even informed us that they would not supply electricity and water any longer. It’’s helpless.”

“Ghost town” apartment complexes seem to be a source of social problems like the foreclosure-wracked suburbs emerging in the United States.

Chillingly, the Dong-A story reports that there are another 110,000 units in the pipeline also expected to fail to find buyers. That’s almost six times the current inventory overhang—with no word as to how many of those units are in Seoul.

These apartment complexes are the fruit of Roh Moo Hyun’s “balanced regional development” plans, whereby it was much easier to redevelop apartments outside Seoul than in Seoul. This is because Roh wanted to improve living conditions in the provinces—without understanding the role that jobs, and, therefore, local income potential plays in how much house people can afford. It turns out that people in the provinces are so brokety broke that they need smaller apartments than have been built (which makes sense, because they have fewer children and their kids all move away to Seoul).

In a related vein, Good Schools Have Ripple Effects is an editorial I saw in the Chosun today. It reports how the Ministry of Education has identified the lesser opportunities for 24/7 cramming as a cause of poorer economic development and depopulation in the provinces, and will be investing $5 million in each of 88 public boarding schools in the provinces so that those students never get a moment’s respite. (See this thread at Marmot’s Hole for more—New York Times article is discussed and prompts scathing comments from foreign teachers at Korean elite preparatory institutions.)

April 28, 2008 | Filed Under Economic News, Real Estate | Leave a comment

More Notice of South Korea’s Jury Experiment

by Brendon Carr

A little bird tipped me to a short piece in the National Law Journal by University of Dayton law professor Thaddeus Hoffmeister, concerning the Republic of Korea’s tentative first steps toward trial by jury. NLJ is one of the most widely-read professional publications for the legal industry, which means that most of the American legal profession (at least its ruling class of corporate lawyers) now knows about Korea’s jury-trial innovations.

Interestingly, Prof. Hoffmeister notes Japan is also reintroducing trial by jury after an absence of 65 years—Since 1943? Guess it was suspended by Japan’s military government during the war—raising the possibility that these two outposts of American imperial power are being seduced by Yankee TV, but also points out that the wisdom of lay participation in criminal justice is also spreading to China and Russia:

Another explanation is that authoritarian countries or those with fledgling democracies see juries as a way to foster stronger democratic values. Besides voting, few rights are more essential to maintaining or creating a democracy than that of individuals, rather than the government, sitting in judgment of citizens. Juries serve as a check on governmental power and build trust in legal institutions. Also, public input into the legal process results in greater transparency and increases the likelihood that society will better understand and accept the verdict regardless of how the case is ultimately decided.

I agree with his conclusion about the difference between rule of law and mob rule, too:

However, the biggest hurdle will be educating and preparing the country as a whole for those occasional verdicts that run contrary to the values and beliefs of Korean society. For it is only after the public accepts those verdicts will we know whether South Korea’s grand experiment has worked.

Good stuff—I recommend the whole article. Apparently Prof. Hoffmeister concentrates his research on juries—my guess is, although I don’t know, the guy is attracted to the democratic elegance of the idea, despite the occasional grotesque outcome. I remain convinced that fear of being beaten up in the parking lot—China style—was a key motivating factor for the judges in the first Lone Star trial to render a guilty verdict and punt the thing to the next trial level.

April 28, 2008 | Filed Under Criminal Law | 1 comments

Average Seoul Apartment Price Exceeds W500 million

by Brendon Carr

Paging Doctor Housing Bubble! Is Dr. Bubble in the house?

Thanks to the Roh housing policy, the average price of 900 square-foot Seoul apartments (pitifully small, hardly large enough for Battlestar Galactica’s Rekha Sharma to lounge around in nude) now exceeds W500 million, less than two years after the price for similar apartments passed the W400 million level, the Maeil Kyungjae reports today:

30-pyong Seoul Apartments Pass W500 Million

The average price of a 30-pyong apartment in Seoul has surpassed W500,000,000.

According to real estate advisory firm Budongsan Bank on the 20th, the average price of an 85m² apartment has broken through the W500 million level to reach W511,800,000. It’s been only a year and 10 months since the price passed W400 million on June 4, 2006.

By district, Kangnam-gu and Seocho-gu were in first and second place with average prices of W1,477,100,000 and W983,970,000, respectively; other districts came in at W773,910,000 in Songpa-gu; W744,140,000 in Yongsan-gu; W629,580,000 in Kwangjin-gu; W531,600,000 in Chung-gu; W525,130,000 in Seongdong-gu; W521,670,000 in Mapo-gu. Nowon-gu, after its recent sharp spike in apartment prices, remains below the W500 million level at W429,330,000.

Here’s the original Korean text, if you’re interested:

서울 30평대 아파트, 평균 5억 넘어

서울 30평대 아파트 평균 매매값이 5억원대를 넘어섰다.

20일 부동산정보업체 부동산뱅크에 따르면 서울에서 전용면적 85m² 아파트 평균 매매가는 5억118만원으로 5억원대를 돌파했다. 2006년 6월 4억원을 넘어선 지 1년10개월 만이다.

권역별로는 강남구와 서초구, 송파구 등 강남권이 9억2112만원으로 5억원을 훨씬 넘어선 데 비해 비강남권은 4억3088만원에 불과했다.

구별로는 강남구가 10억4771만원, 서초구는 9억8397만원으로 1ㆍ2위를 기록했다. 이어 송파구 7억7391만원, 용산구 7억4414만원, 광진구 6억2958만원, 중구 5억3160만원, 성동구 5억2513만원, 마포구 5억2167만원 순이었다. 노원구는 최근 집값이 큰 폭으로 상승했으나 4억2933만원으로 5억원을 밑돌았다.

The foregoing reported prices are average prices across Seoul, pulled up quite a bit, as you can see, by extremely high average prices in the nouveau riche areas of Kangnam-gu and Seocho-gu, followed by up-and-coming Songpa-gu and Yongsan-gu. Elsewhere in the Maekyung I stumbled across an article describing how the Myong-dong corner location where the Pascucci Coffee is located is Korea’s most expensive plot of commercial real estate at W200 million per square meter. Let’s take a look at the dizzying heights of Korea’s most expensive bubble residential neighborhoods:

The most expensive residential neighborhood is Dongbu Centreville apartments at 670 Daechi-dong. At W12,100,000 per square meter (W39,300,000 per pyong), it approaches the level of W40,000,000 per pyong, an increase of 15.2% over last year’s price (W10,500,000 per square meter).

The second most expensive residential neighborhood was i-Park at 87 Samsung-dong, priced at W11,800,000 per square meter (W38,940,000 per pyong), and Dogok Rexle Apartments at 527 Dogok-dong was third at W11,000,000 per square meter (W36,300,000 per pyong). These two were also up over last year—12.4% and 10.4%, respectively.

Tower Palace at 467 Dogok-dong, despite being valued at W19,700,000 per square meter (W65,010,000 per pyong), is an “officetel” (jusang bok-hap) building zoned for commercial use, and so is not included in the rankings of residential areas.

Recall that the original Maekyung piece concerned a hypothetical 30-pyong spread in Seoul—915 square feet, with two or usually three bedrooms. If we take those average prices, the Dongbu Centreville comes in at W1,179,000,000; i-Park at W1,168,200,000; Dogok Rexle at W1,089,000,000; and the Tower Palace an alluring W1,950,300,000. So cheap, let’s buy two.

And again, here is the original Korean language:

주거지역 중에서 가장 비싼 곳은 대치동 670 동부센트레빌이었다. m²당 1210만원(3.3m²당 3993만원)으로 3.3m²당 4000만원 선에 바짝 다가섰다. 지난해 공시지가(m²당 1050만원)보다 15.2%나 상승했다. 동부센트레빌은 5년 연속으로 가장 비싼 주거용지 자리를 이어갔다.

두 번째로 비싼 주거지역은 삼성동 87 아이파크로 m²당 1180만원(3.3m²당 3894만원)이었고 도곡동 527 도곡렉슬이 ㎡당 1100만원(3.3m²당 3630만원)으로 3위를 기록했다. 이들 단지도 지난해보다 12.4%, 10.4%가량 올랐다.

주상복합 건물인 도곡동 467 타워팰리스는 m²당 1970만원(3.3m²당 6501만원)이었지만 상업지역에 들어선 건물이어서 주거지역 순위에는 포함되지 못했다.

UPDATE 4/25: Welcome Korea Beat readers. You might also be interested by the following Korea Law Blog posts on this topic:

Home Prices Actually Sink in Songpa! Let’s Buy Two
In Which I Advise the Minister of Construction
Korea’s Own “Sub-Prime” Housing Crash in Sight?
It’s a Housing Crash All Right
More Property Craziness Under MBnomics
900 Sq. Ft. Korean Apartment Construction Cost $150K
More on Land-Use Regulation and Housing Prices, Plus News From Seattle
Housing Bubble: Home Supply Down 30% in 2008
More Property Fallout: Kwangju Regional Construction Group Foundering
Builders Having Trouble Moving Apartments in Seoul
Yikes! Unsold/Unsaleable Housing Problem Spreading to Seoul
Watch the Construction Companies: Korea’s Canary in the Mine
Is There Really a “Glut” of Housing in Korea?
Housing Policy and the Korean Dream

April 21, 2008 | Filed Under Economic News, Real Estate | 9 comments

China Law Blog on How to Maintain Control of Korean Joint Venture

by Brendon Carr

Okay, not really. But Seattle-based Harris & Moure, through its excellent China Law Blog, once again offers another one of those warnings that could be applicable to Korea after a find-and-replace job: Chinese Joint Ventures—The Information The Chinese Government Does Not Want You to Know.

Dan Harris writes about his partner Steve Dickinson’s short piece in the AmCham Beijing China Brief magazine entitled Avoiding Mistakes in Chinese Joint Ventures (Adobe Acrobat PDF; 376Kb), wherein Steve warns on the cost of foreign investors mistakenly assuming their 51% share ownership gives them control over a joint venture company, and suggests that foreign investors must bargain to hold onto the following three powers:

The power to appoint and remove the JV’s representative. The side that appoints the representative director will have significant control over operations. The usual practice of conceding the power to appoint a key officer or director to another investor is a mistake.

The power to appoint and remove the general manager of the joint venture company. It must be made clear that the general manager is an employee of the joint venture company who is employed entirely at the discretion of the representative director. The common practice of appointing the same person as both representative director and general manager is a mistake.

Control over the company seal, or “chop.” The person who controls the registered company seal has the power to make binding contracts on behalf of the joint venture company and to deal with the company’s banks and other key service providers. The power over that seal should be carefully guarded. Ceding control over it as a matter of convenience is a mistake. There is a long, documented history of this seemingly minor consideration dooming EJVs.

The Korean story is almost identical, except that in the usual Korean practice there is no separation between the “Representative Director”, who is a member of the Board of Directors, and the day-to-day general manager of the company. They are for all intents and purposes the same person. While there is no legal bar to the Representative Director of a Korean corporation being a non-resident (or non-citizen), as a practical matter it is unwieldy to have a non-resident Representative Director and there will be a power vacuum in the local company that results from such a choice.

In all cases where a foreign investor wants to maintain control, or even have knowledge, of what’s going on in the local business, it’s essential to retain control over the company seal. The company seal in Korea is a totem which gives its holder all the powers of the Representative Director—including “signatory” authority over bank accounts and the power to make any contract or commitment on behalf of the company. Leave the seal in a secretary’s desk, and run the risk of being surprised by a legally-binding “contract” guaranteeing the secretary 20 years of employment, for example, or promising five years’ salary upon resignation. 

I second China Law Blog’s advice: If you’re a foreign investor and you let go of the company seal, might as well write off your investment. It’s that serious an issue. And yet so many foreign investors let themselves get buffaloed by objections from local staff.

April 19, 2008 | Filed Under Corporate Governance, Foreign Investment | 7 comments

Battlestar Galactica! Holy Cow It’s Good

by Brendon Carr

Via the magic of the Internet, I’m able to see Battlestar Galactica almost immediately after it airs in the United States. Holy cow, this is a good show. After watching the emergence of the formerly-nondescript background character Tory Foster in the last two Galactica episodes, I’m really curious to know how many visitors will find Korea Law Blog via the keyword search “Rekha Sharma nude”.

Galactica‘s in its fourth and final season on SciFi. There are 19 episodes left. The three seasons of Galactica thus far make one wonder what we might have gotten had Firefly not been on Fox.

If you’re not such a nerd that you’re home watching the SciFi Channel on Friday nights, you should be. But you probably wouldn’t be searching for “Rekha Sharma nude”.

UPDATE 4/20: It appears not too many pages on the Internet contain the keywords “Rekha Sharma nude”, which is borne out by the fact that this page has risen to the #1 Google search result for those keywords. To those of you who have come to Korea Law Blog due to that search, my apologies. Suckers!

April 19, 2008 | Filed Under Personal | 7 comments

Franchise Disclosure Statement Registration Starts in August

by Brendon Carr

Last year the Franchise Act was amended, introducing, among other things, an obligation for franchisors to register their disclosure statements with the Korea Fair Trade Commission, which would make the disclosure publicly available. Previously, although there was a recommended form promulgated for use by franchisors, its use was not mandatory. For international franchisors appointing a single franchisee or licensee in the Korean market, whom they reasonably believed could read and understand English, it was lawful to use their already-prepared disclosure statements from the home market.

The Franchise Act amendment became effective February 4, 2008. But because the KFTC’s computer systems and internal processes were not ready to accommodate the new legal obligation to store and publicize franchise disclosure statements, the agency has postponed the effectiveness of the disclosure-registration requirement until August 4, 2008.

This month I’ve received five incoming franchise-agreement matters (thank you, referral sources!), and all of them have been concerned about compliance with the registration requirement. So we’ve been doing some checking and double-checking with regulators concerning the interpretation of the August 4 deadline. Do franchisors have to conclude the entire franchise agreement on or before August 3, or is it sufficient that disclosure shall have been made by that date?

The answer is: So long as disclosure is made by August 3, 2008, the franchisor has no obligation to register the disclosure statement with KFTC. On or after August 4, the disclosure must be registered—which means it must be prepared in the Korean language in accordance with a format yet to be promulgated by KFTC. That will be more expensive for foreign franchisors, so we recommend that any international franchisor considering a Korea franchise get their disclosure out by August 3.

For ease of understanding by the franchisee, we do recommend a Korean-language “wrap letter” as a roadmap to content in the English-language disclosure statement. Still, this is optional, and franchisors concerned about costs (and willing to leave themselves open to arguments that there was no mutual understanding between the parties, since the legalese in the disclosure statement and franchise agreement were so dense) are free not to do so. At least until August 4.

Remember, the execution of the franchise agreement—and, more importantly, acceptance of any franchise fee including “holding fees” for discussions—must be delayed at least 14 days from delivery of franchise disclosure (or seven (7) days in the case the franchisee appoints an attorney to receive disclosure).

UPDATE 4/23—English translation of the revised list of required disclosure elements is now available for download (69Kb Adobe Acrobat PDF). This is something we’ve put together in the last three days; hopefully the language is clear and artful, but we may need to revise later. If you have any suggestions or comments please let us have them.

April 19, 2008 | Filed Under Franchise and Distribution | Leave a comment

Korea’s Odd Price Differentials: What, Me Worry?

by Brendon Carr

So I spent the last few days in Beijing, where I was scheduled to speak at the American Bar Association International Labor Committee’s mid-year meeting. Alas, events conspired to make my participation less than I’d hoped; one of the bad things about travelling to conferences in the same or similar time zone to where you normally work is that the same people who’d normally be hectoring you at the office can still find you.

Anyway, while I was there I noticed the incredible array of reasonably-priced consumer goods, both Chinese and foreign brands. In the diplomatic districts there are a number of supermarkets catering to the foreign residents of Beijing and the weird things—like cheeses—that foreigners like to eat. Strangely, the prices of imported foodstuffs in Beijing are nowhere near the punishing levels found here in Seoul. And the local produce is really quite cheap, assuming you have a first-world income. I’m sure for Chinese who make $300 a month things seem more dear.

The local press here in Seoul is starting to highlight how the citizens of Korea are being ripped off every day by their leading companies. Yesterday, a Korea Law Blog reader forwarded a Korea Times article (Gap in Local, Export Prices of Automobiles Troubles Automakers) in which the lower US pricing of the Hyundai Genesis is again discussed. I wrote about this on Korea Law Blog a few days ago when this was first reported.

The Chosun Ilbo today comes very, very close to explaining why this is—see Why Koreans Pay More for Electronics Than Americans. But note how the blinders of Korean nationalism make the Chosun pull up shy of the real conclusion one ought to draw from this kind of story:

But the fundamental reason behind the price gap is the difference in the size of the markets. In the U.S., the world’s largest electronics market, numerous companies compete fiercely to secure a foothold. However, the Korean market is well out of the top 10 in the world, and is dominated by the two domestic giants, LG and Samsung. Without threats from other companies, there is thus no reason for the two firms to lower their prices. [emphasis added]

Where, oh where would “threats from other companies” come from? For the life of me, I just can’t figure it out…

The premise offered at the beginning of this paragraph also bothers me. I’ve travelled to other, smaller markets, and haven’t noticed the inevitable oligarchy that the Chosun seems to find natural for Korea. The Netherlands is a small market, for example. Has anyone noticed a dearth of competition there?

One might say that the Netherlands is a bad example, because although it’s a small country the Netherlands is part of a large common market in the European Union. But there are other countries to look at too. For example, in 2002 the International Bar Association conference was held in Durban, South Africa. South Africa is a middle-income country (US$4000 GDP or something like that), poorer than Korea, with a population size similar to Korea’s.

It also has its own car industry. But unlike Korea, where two carmakers (Hyundai/Kia with 70%, and GM Daewoo with 28%) have been permitted to acquire and maintain a duopoly, the roads in South Africa are brimming with the brands of every major carmaker in the world—including Koreans Hyundai, Kia, and Daewoo. Why is it that consumers here put up with this kind of exploitation?

Personally, I think it’s also because most Koreans can’t speak or read English, and are therefore cut off from information flows from around the world. They depend on news outlets like the Chosun to relay information—and thanks to the blinders of nationalism, the Korean press soft-pedals messages like “open markets and foreign competition are good for consumers”.

Still think Lee Myung-bak’s government is going to fundamentally improve English education? Somehow, I don’t believe Korea Inc. really wants that.

April 17, 2008 | Filed Under Competition and Fair Trade Law, Economic News, Free Trade Agreement | Leave a comment

English Teachers in Korea: Where To Go For Legal Help

by Brendon Carr

It’s no secret within the Korea blogosphere that your Uncle B, a corporate lawyer, doesn’t welcome phone calls and inquiries from English teachers. It’s not because I am a cold-hearted bastard—it’s because a top Korean commercial law firm serving Fortune 500 clients is not really the right tool for the job.

Rotten hagwon cram school operators, like most smaller Korean employers, are generally lawless snakes. And like any lower-order reptilian creature, hagwon owners really aren’t cowed by an attorney’s demand letter, as the law operates on a different level from the snakes. Snakes don’t read letters and aren’t persuaded by rhetoric. They do, however, respond to being struck with a sharp implement, like a hoe or rake or something.

That sharp implement is the District Labor Office of the National Labor Relations Commission (NLRC). NLRC has two powers: (i) an administrative tribunal to adjudicate employment-related disputes, such as disputes over severance pay; and (ii) police power to conduct investigations and refer charges for criminal violations of the Labor Standards Act (LSA) to public prosecutors. While the snakes don’t fear some civil law firm’s call, they really are afraid of NLRC and the public prosecutors.

Unfortunately, as any Korean government agency, the NLRC is sometimes reluctant to do its job and needs a nudge. Plus, there is the question of exactly what the English teacher needs to illustrate, as a matter of law, to satisfy the NLRC investigators. And since this is Korea, one had better be able to write it all up in Korean. That’s a real burden, and a lot of English-teacher plaintiffs are discouraged by the burden of doing this alone.

Well, a few days ago I went to a restaurant frequented by expats, and picked up a copy of Eloquence magazine—kind of a “What’s On Seoul” for a market where global brands have a hard time. On page 40 of April’s Eloquence (maybe it’s been there all along, and I just don’t read the magazine often enough) I noticed a column entitled “Korean Law and You” by one Gerald Staruiala, a Canadian who apparently is working as a nonlawyer legal assistant in a nomu-sa (labor advocate) office called Kangnam Labor Law Firm.

I happen to know Kangnam Labor Law Firm and its principal nomu-sa Mr. Bong-Soo Jung. First of all, Mr. Jung has successfully represented, in labor-tribunal proceedings, at least two foreign lawyers I know of who have had severance-pay disputes with the Korean law firms at which they worked. Both lawyers spoke very highly of Mr. Jung, and the results he achieved for them as plaintiffs. He’ll definitely be getting my business if Hwang Mok Park tries to get funny with me in the case I were to leave this firm. (Point of clarification: There’s no plan, so far as I know, for me to be leaving or for HMP to cheat me out of severance pay.) So, foreign lawyers in Seoul use and recommend the guy.

Additionally, Mr. Jung has authored a bilingual English-Korean reference on employment and labor law. It’s a great reference, and has gotten better with each of the two editions I’ve seen. Some of the language is a little clumsy, of course, because Mr. Jung writes first in Korean and then translates to English—and there are very few good copy editors in this country.

And now, with a native English-speaking assistant to screen matters, Mr. Jung’s firm has even more ability to serve an English-speaking community of angry plaintiffs. There are over 40,000 of you just on E-2 visas alone—that must mean 10,000 of you have legal claims.

So Korea Law Blog’s advice to English teachers is this: Stop trying to “sue” your scummy hagwon owner with a $500/hour big law firm. Talk your case over with Gerald Staruiala, then pay Mr. Bong-Soo Jung his fee to file your complaint with the District Labor Office. This starts a process of administrative tribunal backed by criminal prosecution (i.e., the power of the State)—the most effective implement to deal with a snake.

This is not a solution to your criminal problems, landlord-tenant disputes, or your need to get divorced. Nomu-sa labor advocates are licensed to represent clients in administrative proceedings before the NLRC only—they cannot appear in court or meet with prosecutors on behalf of defendants. So if you have those other problems, don’t take advice from any nomu-sa, including the good Mr. Jung.

Where to Find Kangnam Labor Law Firm: Champs Elysee Center, 11th Floor (Seollung Station, Exit 1) - Tel (02) 539 0078 0098.

April 9, 2008 | Filed Under Employment Law | 4 comments

“I Don’t Care What You Charge; Whatever It Is, It’s 15% Too Much”

by Brendon Carr

Today we got an inquiry (through a referral from their New York lawyers, actually) from one of the peculiar breed of corporate clients who has demanded a 15% across-the-board discount.

Problem is, this new client hasn’t asked for our normal fee structure. Without knowing our rates, fee structure alternatives (such as fixed pricing), general staffing habits (i.e., do we “gang-bang” the client with a bunch of lawyers, or are we generally pretty lean?), the client already knows our prices are too high and that a 15% discount is what ought to be granted by our firm.

Over more than a decade in Korea I’ve run across this kind of client from time to time. Usually, they are bad clients who bully with the promise (undelivered, in almost all cases) of future volumes of work. Or they think their brand name is so awesome that I get some kind of value out of association with their awesome company. In respect of this latter point, they’re onto something—hey, how about a limited trademark license agreement, so I can use your Awesome Corp. logo on my “representative clients” list?

The last time was a large computer systems-integration firm with a strong global brand, the kind of client with whom I’d like to work, actually. I like computers, know their industry pretty well, and thought I’d deliver good value. But I refused the discount in the end, suggesting instead that we work on a fixed-price basis for specific projects—if the fixed price was acceptable to them, they could hire us knowing exactly what the cost (and value) would be. Isn’t that better than a 15% discount on an untold number of hours?

Unfortunately, the systems integrator’s contact attorney was a relatively junior corporate counsel in an Asia-Pacific branch office, and that meant she had no discretion to do anything other than robotically repeat her department’s “But you must give us a 15% discount” demand. Plus she had no authority to pass me along to a more senior counsel who could make a value-based decision.

The idiotic “across-the-board 15%” demand merely promotes gamesmanship, posturing, and an unhealthy confrontational attitude—right from the outset of the relationship between the law firm and the client. If you think I’m a crook, why are you hiring me? And the solution, for some law firms (especially many Korean firms, for whom the request for “lean staffing” is laugh-out-loud funny), is easy: You want me to cut the rate? Fine, choke on these hours, cheapskate!

Or, Sure, you can have a 15% discount. Let me mark up the rate 25% first.

Life is too short for that kind of nonsense. It presumes, and encourages dishonesty on the part of the lawyer. And I’m fundamentally an honest guy, so I choose not to roll that way.

Meanwhile, I’ve got other client relationships which have gone as long as my time here in Korea—over 10 years. For one of those dear, cherished clients (a top global brand name which knocks everyone’s socks off), I haven’t raised my rate for six years—not because they demand blood from the turnip, but because we are in a deep and (hopefully mutually) satisfying partnership together.

By the way, Discount Demanders, the client I’ve just described now pays exactly 50% less for my time than new clients (yes, our partnership has noticed this discrepancy and complained to me about it). But I love the client: They don’t treat me like an anonymous, disposable vendor, and I treat them like family.

So, what to do about this new potential client? Well, although I am ashamed to say this—I am going to accept the demand for discount, do this initial bit of work, and then evaluate whether it’s worthwhile. The referring party says that “time is of the essence” and advice is necessary tomorrow. This makes me reckon if I were to refuse, my referral source—a friend from the IBA whom I wouldn’t want to put in a jam—would be disadvantaged for having made the referral. And I value his friendship and professional reputation enough not to want that.

But I’m not all that optimistic about the new client.

Dear Reader: As this is a topic of interest to lawyers here in Korea, to clients here and abroad, and especially to the new crop of young lawyers-to-be, I’d love it if you’d leave a comment below. The discussion would do us all some good.

April 8, 2008 | Filed Under That Guy (Don't Be), Personal | 14 comments

Home Prices Actually Sink in Songpa! Let’s Buy Two

by Brendon Carr

A Korea Law Blog reader forwarded a story from the JoongAng Ilbo’s English edition about the super bargains coming available in the Songpa-gu area, one of the burgeoning eastern fringe regions of the Seocho-Kangnam-Songpa-Seongnam bulge belt preferred by affluent or striving residents of Seoul.

The headline has it “Home prices actually sink in Songpa”, but upon closer review we learn that the newly-constructed 33-pyong (1100 gross sq. ft.—remember, the yield is about 70% usable space) apartments in Songpa are a bargain at W800-900 million won, while the same size in Kangnam goes for W1.1 billion to W1.4 billion. So cheap, let’s buy two!

The top 10% richest urban households in Korea have an annual income of W107 million per year, according to a recent story in the Korea Times. So that tiny apartment in Songpa still costs the top 10% of wage earners about eight times their annual income—before money is wasted on things like taxes, or food.

We also learn that the average Korean household earns W44 million. Even if we use the metric eight years’ salary for the average family, that makes the average apartment price W350 million. What does that buy you in Seoul? A box down by the river.

Speaking of which, I highly recommend the Dr. Housing Bubble blog, focusing on the sagging Southern California real estate market. The Real Homes of Genius™ feature is sobering.

April 5, 2008 | Filed Under Economic News, Real Estate | Leave a comment

Save 20% on Hyundai Genesis: Ship It Back From America

by Brendon Carr

On Wednesday I had a long-standing client and friend come into town for a meeting, and we met up at the Hyatt Hotel for sodas in the lobby before he had to shuffle off to the airport. Before meeting my friend, I noticed that Hyundai Motor was holding a US dealership conference in the bowels of the hotel.

Perhaps you’ve heard of this new Hyundai “luxury” car they’re calling Genesis—the one that’s just as smashed-up in a head-on collision as an Audi A8. I’ve had occasion to crawl around one at my local Hyundai dealership, and it seems to be a very “Korean” sedan aimed at the kind of guy who always rides in the back seat, or at least prefers to think of himself that way. And I say “he” because this car has almost zero chick appeal: Genesis is definitely a car aimed squarely at members of the Lucky Penis Club.

Personally, I think Hyundai Motor America is going to have a hard time moving the Genesis, especially while gas is five bucks a gallon because while its styling has a high ajeosshi quotient, the car is not all that fuel-efficient either.

But there’s good news: The unsold inventory of Genesis won’t pile up in America, because these cars will be reimported to Korea. It seems that the Genesis 3.8L V6 model which sells for the knock-down price of W52,800,000 here in Korea (US$54,090) will be sold for only US$32,000 (plus tax and registration) to American consumers. A parallel importer has done the math and found that even with Korea’s punitive car-import duties and engine-displacement taxes, he can roll them back onto the car-carrier and sell Genesis here for W10,000,000 less than Hyundai has set the Korean price.

Together with its Kia subsidiary, Hyundai has a 70% share of the local market and a habit of pricing its cars much higher in Korea than in the United States. But hey—look at it this way: The price difference is only in the 20% range? Things are looking up! It sure is great to be a Korean consumer.

With those kind of fat margins to extort from Hyundai, it’s no wonder the Hyundai Motor labor union desperately opposes open markets and the Korea-US Free Trade Agreement.

April 4, 2008 | Filed Under Competition and Fair Trade Law, Free Trade Agreement, Non-Tariff Trade Barriers | 2 comments