[Insight & Opinion] Revitalizing the Legal Service Platform Market

Published 17 Oct.2023 11:55(KST)

With the spread of the internet and smartphones, the platform market continues to expand into various product trading and service sectors. In economics, the benefits and side effects of platform markets are very important research subjects. Platform markets facilitate connections between service and product suppliers and consumers, making it easy for small-scale suppliers to access the market, thereby broadening its scope. Especially from the consumer's perspective, it can reduce the problem of information asymmetry regarding service quality, which often lacks prior information.

In the legal market, the lawyer introduction platform 'Lotok' service started in 2014. In response, the Korean Bar Association (KBA) from the beginning raised issues such as 'illegal client solicitation' and not only filed complaints against the company but also imposed disciplinary actions on lawyers using the platform. The number of lawyers disciplined reached as many as 123 between last year and this year alone. Regarding this, the Ministry of Justice delayed taking a clear stance but has recently, after nine years, decided to cancel the disciplinary actions imposed by the KBA on lawyers who joined 'Lotok.'

The core issue lies in the KBA's internal regulation that prohibits lawyers from cooperating when individuals or organizations, not lawyers themselves, provide services connecting and advertising lawyers to consumers under a trade name. The nominal purpose is to establish a fair order in lawyer-client engagements. The KBA went further by creating regulations last year to discipline lawyers who joined 'Lotok.' The key point in the Ministry of Justice's review of the disciplinary actions was whether each lawyer violated these advertising regulations set by the KBA.

The KBA expressed regret over the Ministry of Justice's decision, but regulations aimed at protecting the interests of specific groups are difficult to justify under social norms. The KBA's conservative stance opposes the forthcoming wave of market innovation and is hard to justify as it goes against the interests of consumers purchasing legal services. Recently, the Constitutional Court also ruled that "the Korean Bar Association's actions infringe on the individual lawyer's freedom of occupation," and the Fair Trade Commission has already imposed fines on the KBA for unfair disciplinary actions.

Looking at other service markets, the spread of the internet and the popularization of online consumer reviews have lowered communication barriers between consumers and suppliers, revitalizing the market, with trading platforms playing a significant role. In particular, through platforms, information sharing among consumers has become easier, and with the emergence of various information-sharing channels such as online consumer reviews and ratings, the market has evolved into an ecosystem where the problem of information asymmetry is gradually alleviated. Consumers can easily move to better providers, and service suppliers have incentives to develop new services or improve quality based on consumer feedback and demands, thereby improving market efficiency.

The legal service market is no exception. From the consumer's perspective, they have the right to receive appropriate, high-quality legal services they desire, and information sharing through platforms helps consumers make choices. From the standpoint of individual lawyers or law firms, positive evaluations of their services should be highlighted, and negative evaluations should lead to improvements in those services.

However, as the Ministry of Justice also pointed out, if a platform structure operates by providing convenience in connecting consumers only to lawyers or law firms that pay high advertising fees or distorts some information, it could disrupt the market and harm fairness. There is also the problem that platforms could monopolize the market and excessively charge advertising fees or usage fees. These side effects should be supplemented by consumer complaints or the Fair Trade Commission's standards for fair market operation.