Lawyers of the past fight lawyers of the future

Tech

Published: 06 Mar. 2022, 16:56

Lawyers of the past fight lawyers of the future

Legal tech start-up Law&Company's LawTalk service is advertised at subway stations. LawTalk is being challenged by multiple bar associations for violating the Attorney-at-law- Act. [LAW&COMPANY]

Legal tech is on trial.

While it is growing rapidly elsewhere, as enterprising entrepreneurs make the law more accessible and more efficient, in Korea, it is stuck as legal associations battle innovations that threaten to upend the business.

Types of services that can be provided through legal tech run the gamut, ranging from match-making individuals with attorneys to programs that help people fill out legal forms. Recent advances include systems that calculate the likely outcome of a case using databases.

The global legal tech market is forecast to grow from $17.3 billion in sales in 2019 to $25.2 billion by 2025, according to Statista. The U.S. takes up half of the global market and Europe a quarter.

In Korea, there are no estimates because the business is so insignificant. Battles with the bar are taking their toll, discouraging new entrants and compelling the few existing players to cut back on the more innovative of services.

Lawyers v. Lawyers

Law&Company, founded in 2012, is being challenged by some of the biggest legal industry groups.

While Law&Company argues that it serves to better lives by providing easy access to legal aid, its opponents claim that lawyers become subordinates to tech companies and their drive for market share.

The company has thrice been reported to the authorities, and each time the argument against them has come to nothing.

In March 2015, the Seoul Bar Association reported the company to the prosecutors, claiming that its LawTalk was operating in violation of the law by brokering business between lawyers and consumers and taking paid advertising from attorneys.

In April of that year, the prosecutors said that the case would be dropped, as Law&Company did not charge additional fees when an attorney received business as a result of LawTalk.

The lawyers pay LawTalk a lump sum for advertising and users receive a random list of lawyers. Lawyers can be included without paying, but they are placed lower on the search results.

In September 2016, the Korean Bar Association (KBA) made a similar complaint, as did the Organization of Lawyers on Occupational Protection in November 2020. These complaints also failed to make it to court.

"We have been found not guilty three times now," Law&Company vice chair Jung Jae-sung said during a press conference on Jan. 4, after the third complaint fizzled.

"Should there be any other party claiming that LawTalk is illegal, they should be prepared to face legal charges. We will take firm measures against any action meant to bring our reputation down or disrupt our rightful business."

The KBA remains determined.

"We are regretful of the decision," the KBA said in a statement on the same day. "We demand that the prosecution and the court make a legally sound decisions and reveal the truth about LawTalk."

The occupation protection organization has already appealed.

"Additional investigation must take place, as the police concluded the case upon insufficient investigation when it's clear that LawTalk is operating illegally," said organization president Kim Jung-wook, who is also the president of the Seoul Bar Association, in a press release.

Kim says that the LawTalk feature that predicts case outcome is illegal, as only lawyers can give legal advice. It is illegal for a computer to do so, he argues.

The service was released in November 2020 but ended last September. The advice was based on data on 470,000 cases and provided the average and maximum sentence given in similar cases.

"It was clearly illegal to give sloppy estimates and then introduce potential lawyers," Kim said. "It may have been shut down now, but it was crime nonetheless."

Lawyers with legislative power

According to the Attorney-at-law Act, the KBA holds the authority to determine rules for advertising.

All attorneys who wish to practice law in Korea must be registered with the KBA, and the association can penalize a lawyer for violating its rules. A lawyer can be expelled from the KBA.

In May last year, the KBA revised its rules so that no lawyer can advertise or cooperate with "any service that proposes to estimate the outcome of a case despite not being a lawyer."

Following the revision, 60 lawyers and Law&Company filed a suit with the Constitutional Court, claiming that it was unconstitutional for KBA to overly regulate its members. But to avoid further conflict, the prediction service was shut down anyway.

KBA's revision also prohibited lawyers from using the LawTalk mobile app, and it threatened punishment of those who do.

LawTalk peaked with 3,966 registered lawyers last March, but over 1,000 lawyers backed out from the service when the KBA threatened last August to take measures against members who continue to use legal tech services. In September, the number dropped to 1,901.

Although the Constitutional Court has yet to rule, Law&Company has two powerful supporters: the Ministry of Justice and the Fair Trade Commission (FTC).

Both government bodies stated that Law&Company is not operating an illegal service and that it is unfair for KBA to prohibit its member attorneys from using legal tech services. However, because KBA has not actually punished anyone, the government cannot interfere.

Park Beom-kye, Minister of Justice, gives a welcoming remark on Sept. 29 at the Gwacheon Government Complex in Gyeonggi, ahead of the first meeting of the legal tech task force. The Justice Ministry has been running the team to tackle various issues surrounding the legal tech industry. [YONHAP]

Justice Minister Park Beom-kye sided with the legal tech industry last year. He made another comment earlier this year.

"There are serious conflicts surrounding the legal tech market in Korea, but I side with the development of the legal tech industry," Park said at a roundtable held by the German-Korean Law Association on Jan. 11.

"The legal tech industry is a new business that can provide better legal service to the people and help ensure their rights to the fullest."

The Justice Ministry formed a task force to tackle various issues surrounding the legal tech industry in September last year. The members have been meeting once a month, and the results of the discussions are likely to come in the second half of the year, according to a ministry official.

The task force is not getting involved in the LawTalk-KBA feud, but addressing the overall growth of legal tech which is struggling in general, according to the ministry.

The ongoing conflict puts lawyers on the defensive when it comes to trying out new services, in fear that they too could become involved in a brawl, according to Jung Min-chul, CEO of Byuckchon, who adds that this sentiment directly hits start-ups and hinders growth.

"We try to explain that our service is perfectly legal and persuade lawyers to use it," Jung said.

Byuckchon runs an app called Lawyland, where lawyers can come in contact with each other to cooperate on cases. Cooperation between lawyers is permitted under the law.

"But still, people seem reluctant to use it because they feel that using an online app may be dangerous as a whole. It's a shame that such a bias has been set in place."

Legal tech start-up Law&Company's LawTalk service is advertised at subway stations. LawTalk is being challenged by multiple bar associations for violating the Attorney-at-law- Act. [LAW&COMPANY]

Against headwinds

Law&Company is not alone in its battle against more traditional businesses, as it has become increasingly common in Korea for start-ups to face hostility from the established order.

Tada, a taxi-hailing service established by VCNC in 2018, is one example.

Taxi driver associations claimed that Tada was operating illegally without properly registering its vehicles as taxis and reported the service to the prosecutors in February 2019. Prosecutors felt the service was legal, but Tada lost anyway after a year-long battle when a law was passed making the service illegal.

Telemedicine — which allows patients to be digitally diagnosed by doctors — and proptech — where people can get information on real estate online — are other examples.

"The Korean law tends to be very slow and rigid," said Jung Hyung-keun, a professor at the Kyung Hee University Law School. "The situation is worsened by the exclusionary attitude from powerful organizations like KBA. It's leading to an ironic situation where Korean start-ups are all fully armed with technology but they cannot operate their businesses because of outside factors."

According to Jung, legal tech is being embraced by lawyers in major developed countries, even inside the courtroom.

On Avvo, the largest online legal marketplace in the United States, 97 percent of U.S. lawyers are registered on the directory service — a stark contrast to Korea, where fewer than 10 percent are registered on referral services.

In the United States, it's fully legal for lawyers to pay for advertisement on online services as long as it's not one-on-one brokerage that they pay for per case and the recommendation algorithm is fair. The rules are similar in Britain, Germany and Japan.

Computer assistants are being increasingly recognized. The Wisconsin Supreme Court ruled in 2017 that the COMPASS system, which provides an algorithmic assessment of the risk of recidivism, can be used.

"It may take time, but there needs to be a solution that can balance between the liberty of lawyers and access to legal services," said Kim Kwang-hyun, a researcher at the National Assembly Research Service. "Simply prohibiting the service entirely may be easy, but it's not the way to go."

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]