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[Korea and the fourth industrial revolution <14-2 Legal Tech>] Local legal tech startups face strong opposition

July 24,2017
Although legal tech companies are on a rapid rise globally, domestic startups are facing unfavorable conditions here in Korea, including the very legal system that they try to innovate.

“In the United States, courts base their decision on previous verdicts and precedents,” explained Lew Young-moo, a lawyer at a local law firm Join Law. “But the Korean legal system considers legislations as the principle source of law.”

According to Lew, the legal system makes it difficult for Korean legal tech startups to flourish.

“Past cases are that much more important in the United States and they are open for the general public to view by the government,” said Lew. “But here, not only are they less important, the records of precedents are mostly undisclosed, which means startups cannot use them to provide the service of legal research.”

Legal research refers to the process of data research - including precedents, related articles etc. - a crucial element in the pre-trial process that could determine the outcome of a lawsuit. Companies in the United States such as Westlaw helps lawyers search through as much as some 40,000 different cases and legislations with just a single software, condensing the time used in the research process.

“It’s about information and data,” said Jeon Hye-young, a senior researcher at Hyundai Research Institute. “But while data on precedents are available in the United States, records on past cases in Korea only reveal simple facts. Without detailed data, it’s simply impossible to provide useful service.”

Another major hurdle for Korean legal tech startups are the strict privacy laws in Korea.

“Our country is sensitive about privacy and this is reflected into our legal system,” said Koo Tae-eon, a lawyer and vice chairman for special committee on startup and regulation innovation of Korean Bar Association. “As a result, the safety standards on personal information are set too high, making virtually all the information about a person - regardless of the difference in the gravity of importance - all secrets.”

He added, “We are not saying we should lower the standards but rather, we must differentiate the standards based on the type and sensitivity of the information.”

The Health Insurance Portability and Accountability Act of 1996 (Hipaa) from the United States precisely does that, according to Koo. Hipaa designates who and what type of information should be covered by the law, even allowing the use or disclosure of health information that has been made secret.

Local legal professionals are also unwelcoming towards the rise of the legal tech industry.

The Korean legal sector is already experiencing a tremor with the emergence of a law school system similar to America’s and the abolishment of the state-run bar exam known as “Sasi,” which is notoriously demanding. The “Sasi” system only produced a handful of legal professionals each year and, as a result, the legal circle has always been considered a collection of elites in Korea. But due to the adoption of the law school system, there are more lawyers in Korea than ever and some say this has downgraded the prestige of being in the profession. The rise of legal tech services will only further lower their prominence, some lawyers think.

“Whether computers will replace us or not is out of the question since most of us think it’s impossible,” said Mr. Park, an attorney-at-law at one of the top law firms in Korea. “However, I am skeptical about these new companies that make legal services more accessible and cheaper. It will undoubtedly undermine the prestige and social standing of legal professionals, which they have earned through years of hard work.”

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]


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