By Don Southerton, Editor KoreaLegal.org
There is only one lawyer for every 5,891 people, compared to 268 in the U.S. 394 in the U.K. and 560 in Germany.
Chosun Ilbo recently noted that the Organization for Economic Co-operation and Development in its annual Going for Growth report says Korea “implemented 558 regulatory reforms in the non-manufacturing sector during 2004-2007,” but recommends “promoting greater competition in services, especially in professional services.”
This is no surprise, one of the outcomes of the 1997 IMF Crisis was the opening of Korea to Foreign Direct Investment (FDI). International involvement in Banking, for example, is quite widespread. Not so with the legal sector. This however might change with the US Korea FTA and other pending FTAs.
Questions? Comments? Opinions? Please share.
BTW the article points out… First of all, there is a shortage of professionals such as lawyers and doctors in Korea’s service industry. There is only one lawyer for every 5,891 people, compared to 268 in the U.S. 394 in the U.K. and 560 in Germany. There is one accountant for every 3,950 people in Korea, compared to 895 in the U.S., 545 in the U.K. and 1,586 in Japan. The doctor-patient ratio is 1 to 580, the second highest among OECD member countries after Turkey.
Most fields of professional services are restricted to people with licenses, and the unlicensed are prohibited even from becoming partners who mainly provide money needed. It is also forbidden to open businesses in multiple locations, which has made it difficult for specialized service businesses to diversify and led to the emergence of many small private businesses, lowering the overall quality of services offered. Lawyers, certified public accountants and tax accountants are only allowed to hire holders of other licenses to serve as advisors, but not as partners.
In patent or tax legal cases involving several professional fields, clients must turn to big law firms providing all services or take the trouble to contact experts separately in each field. Also, patent agents are barred from handling patent-related lawsuits and tax accountants from playing proxy roles in tax disputes, requiring clients to turn to lawyers in all litigations.
The low supply and high barriers to entry have inevitably led to high fees for professional services. Eighty-five percent of small and medium-sized businesses in Korea cited high costs as the main reason why they avoided legal advisory services.
In the U.S., consumers can buy vitamins, analgesics and digestive tablets in supermarkets, but in Korea they need to go to pharmacies. This is just one illustration of the difficulties posed by the system.
It is consumers who suffer from such regulations and barriers existing due to the vested interests of those concerned and disagreements among government ministries. Once the Korea-U.S. free trade agreement is ratified, Korea will eventually have to open its service market. If the present situation continues, the country may then see the market dominated by foreign businesses.
By Don Southerton, Korea Expert Witness Editor and Chief Blogger