Controversial acquisition creates huge demand for legal advice
By Park Jae-hyuk
Korean Air owner Hanjin Group's plan to take over Asiana Airlines with financial support from the Korea Development Bank (KDB) has created a stir nationwide since its announcement. But the move is certainly regarded as good news by one of the major beneficiaries of the proposed deal ― law firms.
In addition to getting paid by both buyer and seller for offering legal advice on the acquisition, they are expected to make huge amounts of money from follow-up litigation filed in the aftermath of the high-profile aviation deal.
The most significant could be legal action taken by the Korea Corporate Governance Improvement (KCGI) against Hanjin and the KDB. The local activist fund holding a major stake in the group's holding company, Hanjin KAL, has collaborated with two other major shareholders ― former Korean Air Vice President Cho Hyun-ah and Bando Group ― to block Hanjin Chairman Cho Won-tae from taking over control of the group. The coalition has argued the Asiana acquisition is aimed at defending the managerial rights of the chairman.
Bae, Kim & Lee (BKL), which has represented the coalition since the battle for the group's control broke out, is serving as its legal adviser again this time.
In response, the KDB claimed its planned investment in Hanjin is intended for the structural reform of the domestic aviation industry, not to protect Chairman Cho. KDB Vice President Choi Dae-hyun said in a press conference Nov. 19 that the state-run bank has reviewed legal issues with multiple law firms, implying it has also spent a large sum of money on legal advice to counteract the opponents of the acquisition.
Hanjin is also said to have hired several leading law firms, including Yoon & Yang, which helped the chairman when he was in a legal battle with his sister over managerial rights. A Yoon & Yang spokesman said his company is still offering "comprehensive" legal advice to Hanjin, although he declined to mention any details.
"Law firms that performed well in litigation are also selected as advisers on deals," an industry insider said on condition of anonymity.
Considering Lee & Ko founder Lee Tae-hee is a brother-in-law of the late Hanjin Chairman Cho Yang-ho, the law firm is also mentioned as a potential partner of the incumbent chairman. However, a Lee & Ko spokeswoman declined to confirm whether her company is still working with Hanjin.
The court ruling on the KCGI's lawsuit is expected to come no later than the end of the month.
Kumho vs. HDC
Another large-size lawsuit related to the deal is the one filed by Asiana and its owner Kumho Industrial against the HDC Hyundai Development Company-led consortium, which previously scrapped its plan to acquire the air carrier, citing its snowballing debts.
Represented by Yoon & Yang and Shin & Kim, Kumho filed the lawsuit earlier this month to request the court to confirm that it does not need to return a 251.5 billion won ($226 million) deposit to the consortium.
"We are reviewing all possible countermeasures to protect our own rights and shareholder value," HDC said in its regulatory filing.
It is yet to be ascertained whether the company hired law firms. Industry sources mention BKL and Kim & Chang as its potential legal counsels, given the two law firms offered advice to HDC when it was considering the Asiana takeover.
"Korean companies tend to look for Kim & Chang when their litigation becomes complicated," another industry insider said.
Even if Hanjin and Asiana successfully handle their litigation, law firms will continue to be in demand until the acquisition procedure is over.
They have to convince the nation's antitrust watchdog to approve of their merger. Fair Trade Commission (FTC) Chairwoman Joh Sung-wook recently said, "We will make a decision after reviewing whether or not the integration lessens the market competition and has a negative impact on consumers."
If Yoon & Yang continues to work for Hanjin, its lawyers specializing in fair trade law will play key roles. In April, the law firm hired former Supreme Court justice Lee In-bok, who once dealt with antitrust cases at the Seoul High Court. It also hired three lawyers who worked for the FTC in October.
As for the seller's side, it appears Shin & Kim will continue serving as adviser until the deal closes.