[Invest&Law] Legal Services Deficit Hits All-Time High

Legal Risks Surge for Global Companies
Explosive Growth in Demand for Local Law Firm Consultations
Lack of Internationalization in Legal Services Industry
Rising Legal Expenses Flowing Overseas

In the first quarter of 2025, the trade deficit in legal services reached $361.3 million, marking the largest deficit since related statistics began in 2006. The legal services trade balance has recorded a deficit of over $300 million for three consecutive quarters. If this trend continues, the annual deficit for 2025 is also expected to reach an all-time high.

The expansion of the legal services trade deficit is mainly attributed to two factors: the increased overseas expansion of Korean companies, and the rise in trade risks following the launch of the second Trump administration in the United States. The rapid increase in legal expenses flowing overseas is further exacerbating the trade balance.

According to the Bank of Korea’s Economic Statistics System (ECOS) on May 21, 2025, imports of legal services in the first quarter amounted to $214.4 million, while expenditures reached $575.7 million. Compared to the same period the previous year ($220.6 million), the deficit increased by 63.8% ($140.7 million). The legal services trade deficit has been on the rise since the first quarter of 2024, recording $220.6 million in Q1, $285.9 million in Q2, $326.8 million in Q3, and $318.9 million in Q4.

The annual deficit in 2024 reached a record high of $1.1522 billion, and with the deficit surpassing $300 million for three consecutive quarters, a new record is expected in 2025 as well. The Bank of Korea views this expansion of the deficit not as a temporary phenomenon, but as a structural trend.

Experts point to the inauguration of the Trump administration in 2017 as the starting point for the widening legal services deficit. Choi Byungil, advisor at Bae, Kim & Lee LLC and an international trade expert, stated, "During Trump’s first term, high tariff policies and retaliatory trade measures led to a surge in legal risks for global companies, which in turn caused an explosive increase in demand for local law firm consultations. Even under the Biden administration, the demand for local law firm advice continued to grow due to subsidy policies." An American attorney licensed in New York and currently practicing in Korea also noted, "Since the launch of the Trump administration, the growing uncertainty in international affairs has inevitably increased reliance on foreign law firms."

The lack of internationalization in Korea’s legal services industry is also seen as a structural reason for the expanding deficit. Choi Wonmok, professor at Ewha Womans University Law School, said, "Professional services such as law, education, and medicine have been slow to open up to the outside world and face strong political opposition, resulting in a lack of internationalization. In this environment, resolving legal issues that arise overseas inevitably leads to high expenditures." Professor Choi added, "Since service industries are consumed locally, a lack of openness leads to lower competitiveness, which in turn worsens the trade balance."

The limited local networks and influence of Korean law firms are also cited as problems. In high value-added legal service areas such as international arbitration, project financing, cross-border M&A, intellectual property (IP) disputes, and overseas listings, Korean law firms continue to play only a minor role.

A law school professor in Seoul commented, "Korean companies repeatedly choose foreign law firms first in these high value-added fields. Ultimately, the only solution is for Korean law firms to develop internationally competitive capabilities in these areas."

Lee Jinyoung, Lim Hyunkyung, Legal Times reporters

※This article is based on content supplied by Law Times.