[Law & Story] Lotok, File a Damages Lawsuit Against the Bar Association

Ignoring Decisions by the Prosecution, Ministry of Justice, and Constitutional Court,
Now Defying the Fair Trade Commission as Well
Ministry of Justice's Disciplinary Reversal Unlikely to Have Effect
Court Ruling Needed Through Damages Claim and Injunction

Choi Seok-jin, legal affairs reporter.

The Korean Bar Association and the Seoul Bar Association have strongly opposed the Fair Trade Commission's decision regarding the legal platform Lotok and expressed their intention to appeal.

Recently, the Fair Trade Commission concluded that the Bar Association and the Seoul Bar Association's actions to prohibit their member lawyers from using Lotok and to demand withdrawal, thereby restricting advertising, violated the current Fair Trade Act and the Act on Labeling and Advertising, constituting an "illegal act." The Commission issued corrective orders to cease such actions and imposed fines totaling 2 billion KRW, 1 billion KRW each. The 1 billion KRW is the maximum fine the Commission can impose on business associations for prohibited acts.

Both organizations immediately condemned the Fair Trade Commission's decision as an "ultra vires act" and released statements denouncing it. They also announced their intention to contest the decision through administrative litigation and jurisdictional disputes.

It is not wrong for the Bar Association to follow the legal appeal procedures allowed by law. The problem lies in the Bar Association's attitude. The Fair Trade Commission judged that the actions of the two organizations excessively restricted the business activities of their member lawyers, who are constituent businesses, and limited fair and free competition among constituent businesses. However, the Bar Association claimed that the Fair Trade Commission's "ultra vires act" against the "legitimate exercise of public authority" was a justified measure and argued that the Commission had no authority to regulate them. While citing "concerns about capital dependence in the lawyer market" as the primary reason to expel Lotok, they simultaneously demand non-interference even if they violate current laws by restricting their member lawyers' advertising.

Moreover, while it cannot be denied that lawyers' work has a public interest aspect, the Bar Association is also a business association formed for the benefit of lawyers who have registered as businesses under individual or corporate names. Article 2(2) of the Fair Trade Act defines a business association as "a combination or federation of two or more businesses organized to promote their common interests, regardless of its form."" On the Fair Trade Commission's website, the Bar Association is introduced as a representative business association alongside the Federation of Korean Industries and the Korean Medical Association.

This is not the first time the Bar Association or the Seoul Bar Association has ignored decisions or judgments by state agencies regarding Lotok. Both organizations have refused to acknowledge the interpretations by the police, prosecution, and Ministry of Justice that Lotok's operation does not violate the Attorney-at-Law Act.

When criminal charges failed, the Bar Association tried to block lawyers from joining Lotok by using disciplinary measures. However, last year, the Constitutional Court ruled unconstitutional the key provisions of the advertising regulations created by the Bar Association to discipline lawyers who joined Lotok. In response, the Bar Association distorted the intent of the Constitutional Court's decision by claiming that "more provisions were upheld than struck down, so the decision is constitutional."

The advertising regulations ruled unconstitutional by the Constitutional Court for violating the principle of legal reservation and the principle of proportionality, infringing on the freedom of expression and occupational freedom of Lotok operators and member lawyers, include Article 5(2)(1) latter part, which prohibits commissioning or participating in advertisements for lawyers in exchange for advertising fees, and Articles 4(14) and 8(2)(4), which ban advertisements that contradict the Bar Association's interpretations or aim to violate them. The former targets Lotok, which advertises paid lawyers directly, while the latter is an unconstitutional provision prohibiting advertisements deemed unacceptable by the Bar Association.

Nevertheless, the Bar Association sent a correction notice excluding Article 5(2)(1) latter part from the applicable laws due to the Constitutional Court's ruling and proceeded with disciplinary actions. The Ministry of Justice is currently reviewing objections to this, but for some reason, it is delaying the process.

While the Ministry of Justice delays the cancellation decision of the disciplinary actions and the Fair Trade Commission postpones decisions twice at the Bar Association's request to submit additional opinions, Kim Young-hoon, who has advocated for the "expulsion of private platforms" succeeding former Bar Association President Lee Jong-yeop, was elected as the next president. Kim Jung-wook, who has maintained a hardline stance against Lotok while working with them in the Lawyers for Professional Defense group, succeeded in being re-elected as the Seoul Bar Association president. This situation allows the Bar Association's irrational and illegal attacks on Lotok to intensify or at least continue.

If there are concerns about Lotok's adverse effects, the issue should be resolved through legal means such as promoting related law amendments or establishing measures to strengthen supervision, rather than interpreting current laws differently from the prosecution or Ministry of Justice or pushing forward in ways the Fair Trade Commission has judged illegal. It is problematic for an organization representing lawyers, legal experts, to completely ignore the judgments and decisions of various state agencies enforcing the law and persistently attack Lotok with only their own claims.

The Ministry of Justice, which has neglected this situation, also bears responsibility. Article 86(1) of the Attorney-at-Law Act states that "The Korean Bar Association shall be supervised by the Minister of Justice." The Ministry of Justice, which has merely watched the Bar Association ignore the supervisory agency's interpretations and discipline its member lawyers contrary to the Constitutional Court's ruling, is delaying the review of objections filed by unfairly disciplined lawyers under the pretext of "the seriousness of the case" and "fairness with other cases." Delayed justice is no justice at all.

The problem is that despite numerous public criticisms and sanctions from the Fair Trade Commission, the unfair attacks carried out by the Bar Association have achieved their intended effect. The number of lawyers registered with Lotok, which had grown to as many as 4,000 due to repeated complaints and disciplinary actions, has been halved, and Lotok operator Law&Company has suffered massive losses, recruiting voluntary retirees aiming to reduce staff by 50% and putting its office building up for sale.

Ironically, because it is so clear that Lotok does not violate the Attorney-at-Law Act, no indictment has been made, and thus there has been no opportunity for judicial review. Meanwhile, the Bar Association has ignored decisions by the prosecution, Ministry of Justice, and Fair Trade Commission, citing that these are not judicial rulings. The lack of court cases has provided the Bar Association with a pretext to run rampant.

Even if the Ministry of Justice cancels the Bar Association's disciplinary actions, the Bar Association will not cease its attacks on Lotok or lawyers registered with Lotok. Under the Attorney-at-Law Act, if the Ministry of Justice dismisses the objections, disciplined lawyers can file lawsuits in administrative courts. However, if the disciplinary actions are canceled, the Bar Association cannot sue the Ministry of Justice, making it unlikely that this objection case will proceed to court.

Ultimately, to obtain a judicial ruling on this matter, the Lotok operator must file a direct damages claim lawsuit against the Bar Association, the Seoul Bar Association, and their current and former executives. The legal basis could be Article 750 (Tort) of the Civil Act or Article 109 (Liability for Damages) of the Fair Trade Act, which stipulates the liability of business associations for damages caused by intentional or negligent violations of the Fair Trade Act.

Even if not from the beginning, at least after the Ministry of Justice's official stance or the Constitutional Court's ruling, the Bar Association forcibly disciplined lawyers registered with Lotok, fully aware of the illegality, and it can be argued that the possibility of damages to the Lotok operator was foreseeable. If the Bar Association continues to block its member lawyers from joining Lotok or disciplines them for joining after the Fair Trade Commission's corrective order to cease and desist, there is no need for further explanation.

For a swift resolution, it is necessary to file a "prohibition of business obstruction injunction" to ban acts interfering with Lotok's business and seek indirect enforcement measures imposing fines for each day of violation if the court's order is breached. In 2010, the Supreme Court recognized the "interest in advertising business" as a legally protected interest in an injunction case involving internet portal site advertisements, acknowledging the protected right.

Unlike wealthy or powerful individuals who can easily hire famous law firms or former high-ranking lawyers, most people are ordinary citizens who cannot even afford the hourly consultation fees charged by law firms. There is a clear demand for affordable consultations and hiring lawyers at reasonable fees. The two organizations criticize the qualifications of lawyers advertising on Lotok and the quality of legal services provided, but the possibility of hiring lawyers lacking expertise or skills in relevant fields despite paying high fees has always existed. The choice belongs to legal consumers.

Most lawyers, busy with their livelihoods, are not very interested in the Bar Association's response to Lotok. Many lawyers are dissatisfied with the Bar Association's executive body, which repeatedly suffers defeats due to excessive responses to Lotok. However, they refrain from voicing opposition out of vague fear that if Lotok grows too powerful, unfavorable situations might arise for themselves. The excessive attacks so far have been led by the executive bodies of the two organizations, who used strong measures against Lotok as campaign pledges to gain support.

Since the Seoul Bar Association first filed a complaint against Lotok in 2015, the conflict has continued for eight years. A Supreme Court ruling declaring the Bar Association and Seoul Bar Association's conduct illegal is necessary for a final resolution.

Before writing this column, I asked several legal professionals whether it is legally possible to file a lawsuit against Lotok. One lawyer hesitated briefly and then answered, "Of course it is. It's really embarrassing."

This content was produced with the assistance of AI translation services.