Asialaw Profiles
The Guide to the legal markets of the Asia-Pacific

Kim & Chang boasts tremendous depth as the largest law firm in Korea, employing over 800 lawyers. It added one lawyer to its banking and finance practice this year, hiring counsel Jinho Joo from Shearman & Sterling.

The firm’s capability handling complicated transactions means it is involved in most landmark deals in the banking and finance area. “If there is a major issue, we go to Kim & Chang,” says a client. “There’s no other law firm in Korea on its level. We might need second opinions on vague issues, but the best answer you would expect is from Kim & Chang.”

Given its reputation, it is unsurprising that the firm makes frequent appearances in transactions of considerable size. For example, attorney Myoung Jae Chung advised Hyundai Securities and Citigroup Global Markets on a KRW83.6 billion (US$78.4 million) offering by Hyundai HCN.

In another deal highlight, lawyers Young-Kyun Cho and Kyoung Ah Grace Nam advised the Korea Development Bank on a financing package extended to Pocheon Power. The deal was worth KRW1.71 trillion (US$1.6 billion), one of the largest transactions this year.

Kim & Chang’s M&A practice is a behemoth in the Korean market. It completed several landmark deals for prestigious clients such as Posco, the Korean National Oil Corporation, Prudential Financial and Unitas Capital.

Attorneys Myoung Jae Chung and Chung Hoon Ahn advised the Korea National Oil Corporation on its hostile takeover of Dana Petroleum, formerly listed on the London Stock Exchange. The transaction was worth £1.1 billion (US$1.78 billion), and represented the first successful hostile takeover by a Korean company of a foreign company. This deal follows a trend of Korean companies acquiring energy resources abroad to decrease their reliance on foreign entities.

Attorney Kye Sung Chung is also advising Hana Financial Group in the largest proposed cash acquisition ever in Korean history. If the deal successfully bypasses the regulators, Hana Financial Group will purchase a 51.02% stake in Korea Exchange Bank worth KRW4.69 trillion. This deal will profoundly reshape the Korean mid-size banking market.

“There’s no doubt about Kim & Chang’s status in the construction and real estate areas,” says one peer. “The firm handles most, if not all, of the deals by multinational corporations.”

A highlight transaction involved partners Kwon Lee, Keun-Ah Cho, Milosz Zurkowski and Seung-Hwan Jin. They oversaw the creation of a yuhan hoesa (limited liability company), KTB First Private Real Estate Investment, for ASPF II NY GmbH. KTB First Private Real Estate Investment purchased two buildings under construction in Seoul, and chose to use the innovative yuhan hoesa real estate fund structure for the KRW284 billion purchase because of various tax requirements. This is the first time a yuhan hoesa has been used, and the deal was subject to new and untested regulations.

Attorney Kwan Sik Yu also advised Mirae Asset Maps Asia Pacific Real Estate 1 Public Investment Company and Mirae Asset Maps Frontier Real Estate Fund No. 28 in their acquisition of the Center 1 Building in Sooha-dong, Jung-gu, Seoul. The building cost KRW80 billion to KRW90 billion and involved a complex investment structure.

Kim & Chang bolstered its esteemed litigation and international arbitration practices this year. It added 12 former judges and six prosecutors to its litigation practice and three lawyers to its international arbitration area. “The firm has unmatched resources in Korea,” says one peer.

No fewer than 15 of the firm’s partners, including Chang Hoon Baek, Soo Hyung Kim and Sang Keun Kim, and 60 associates are defending 12 banks, six Korean and six foreign, in over 300 high profile cases relating to ‘Knock in-Knock out’ (Kiko) derivative contracts that companies entered into with the banks for foreign exchange hedging purposes. Altogether the 300 cases are worth KRW2 trillion (US$1.5 billion), the plaintiffs contend that these OTC derivatives were designed unfairly from a financial engineering perspective. Though some cases are still pending, the court has ruled that Kikos did not have an unfair structure and that their sale was not a fraudulent act.

In another landmark case, partners Sang Yoon Lee, Neung Kyu Lee and Woo Jin Lee, from the firm’s litigation and pharmaceutical teams, represented a Korean pharmaceutical company in a dispute regarding recognising injury from asbestos exposure, which previously had no precedent in Korea. Although the company won the first round of decisions, the plaintiffs have appealed.

The IP group at Kim & Chang, headed by Jay (Young-June) Yang, is the firm’s largest practice area and contains more than 220 patent and trade mark attorneys and over 530 individuals who serve as supporting staff. Peers have unanimously declared the IP practice the “best in Korea”.

In a landmark decision, attorneys Sung-Nam Kim and Hoe-Kee Lee defended General Mills Marketing regarding its ‘Häagen-Dazs’ trade mark. The opposing party had filed trade marks for ‘Häagendess 1881’ and ‘Häagendess’, which are Korean translations of the original name. Although the opposing party was manufacturing clothing and bags, its use of the distinctive ‘Häagen-Dazs’ style showed that its trade marks had been registered in bad faith.

In another prominent case, attorneys Soo-Hyung Kim, Hoe-Kee Lee, Yong-Gab Kim and Sung-Hoon Lee acted for Daewoo Electronics against LG Electronics. LG Electronics had filed a patent infringement claim regarding drum washers. In defence, Daewoo Electronics filed a patent invalidation claim arguing that the patent lacked novelty. After going through the IP Tribunal and the Patent Court, which upheld the patent, the Supreme Court declared it invalid. In Korea, the Supreme Court usually agrees with the decisions of lower courts. Commentators have therefore described this as an unusual and important decision for the country.

Kim & Chang boasts an impressive IT, telecommunications and media practice that reportedly has a success rate of almost 100% on disputes.

The firm, led by partners SH Han, DS Choi, TE Koo, SB Hong and YK Hwang, represented Nevar.com operator NHN in a landmark case regarding web advertising. NHN had brought 11 separate civil and criminal charges against Neoconsoft for advertising interference. Neoconsoft forced users to install a computer programme which, upon installation, would replace all paid banner advertisements on websites like Nevar.com with its own. The software would also alter search results so that paid Neoconsoft websites would always be the first listed.

This case is one of very few instances in which the Supreme Court granted a permanent injunction against a company. Kim & Chang successfully argued that Neoconsoft’s actions could not be redressed by monetary compensation alone, and that these instances would occur more frequently among online businesses unless it was dealt with harshly and immediately.

Kim & Chang has bolstered its labour and employment practice with four new hires from Deliotte: senior adviser Won Bae Kim from the Ministry of Employment & Labour, senior consultants Byung Jeun Kim and Seong Hoon Kim, and consultant Chang Se Lim.

Peers compliment department head Paul Cho and characterise him as “very good, and very active in the labour and employment area”.

In a case worth US$10 billion in potential damages, partners WH Kim and YH Park defended GM Korea, formerly GM Daewoo Auto & Technology, in a lawsuit involving more than 1,000 employees. They alleged that the calculation of their ordinary wage was not in compliance with the law. The case was notable for intense media scrutiny and its potential impact on GM Korea’s reputation.

Co-head CW Hyun and attorneys WJ Kim and DI Seo handled a case for Hutchinson Korea Terminals against several powerful labour unions, including the Busan Port Trade Union, affiliated with the Federation of Korean Trade Unions. Hutchinson was undergoing aggressive restructuring that resulted in the company’s workforce being downsized by over 60%. The firm defended the company against wrongful termination cases that were brought by laid-off employees.

Kim & Chang has bolstered its shipping, maritime and aviation practice this year, hiring new partner Hyeon-Tae Bae and two senior associates from courts. One practitioner praised the firm’s “strong capabilities in all areas”, while another says: “The firm handles approximately 20% of the shipping, maritime and aviation work in Korea.” The firm’s strong project finance practice means that much of the work involves the financing of aircraft and vessels.

In a landmark transaction that closed in March 2011, Kim & Chang advised the offshore lenders on a ship financing deal for two vessels built for SK Shipping. The firm was able to skirt legal ramifications in relation to structuring a private equity fund that holds 95% of the ship for Panamanian borrowers and owners.

Kim & Chang’s tax practice is one of the best in Korea and is led by partner Woo Hyun Baik. Peers describe the practice as “well connected, influential and generally excellent”. The firm’s tax practitioners are generally hired from large accounting firms or related government organisations, such as the National Tax Service and the Ministry of Finance & Economy, giving the practice strong relationships with both regulators and potential counterparties.

The firm has strengthened its already-outstanding tax capabilities with its hire of partner Alex Yang from Ernst & Young. The practice therefore boasts a long list of domestic and multinational corporations that utilise its capabilities.