'Rotok Law' Effectively Abandoned... Discussion Expected to Continue in the Next National Assembly

Published 13 May.2024 14:16(KST)

Assemblywoman Lee So-young: "Will Reintroduce Immediately Upon Opening"

The so-called ‘Lotok Act’ (an amendment to the Attorney Act), which aims to ease advertising restrictions on lawyers active on legal tech company platforms, is expected to be discarded in the 21st National Assembly. However, with Lee So-young, a member of the Democratic Party of Korea, expressing her intention to reintroduce the bill immediately upon the opening of the 22nd National Assembly, there is also a possibility of the Lotok Act’s revival.

This is interpreted as an acknowledgment that the rapidly growing domestic and international legal tech market and its sales cannot be ignored. For example, the largest domestic legal tech company, Law&Company, saw its number of lawyer members grow by about 33%, from approximately 2,100 in the first quarter of last year to about 2,800 in the first quarter of this year.

[Image source=Yonhap News]

On the 7th, the National Assembly’s Legislation and Judiciary Committee excluded the Lotok Act from the agenda for the plenary session. With only three weeks left in the current National Assembly’s term, this effectively means the bill is on the path to being discarded. Bills not processed within the term are automatically discarded.

The Lotok Act was originally introduced in May last year by Lee So-young (39, Judicial Research and Training Institute class 41), a former lawyer at Kim & Chang law firm. The core of the bill is to have advertising regulations for lawyers determined by presidential decree rather than internal regulations of the Korean Bar Association. The Lotok Act is an innovative bill supported by politicians from both ruling and opposition parties who believe “there is a need to check the authority of the Bar Association.” In June last year, just before the Legislation and Judiciary Committee subcommittee meeting, Lee pointed out that “the Bar Association is including various legal tech services in the scope of regulation,” and that “it is difficult for a new legal tech industry to emerge domestically.”

However, the Lotok Act was not even discussed for 10 months after June last year. The bipartisan startup support group in the National Assembly, ‘Unicorn Farm,’ issued a statement on the 29th of last month, saying, “We are in an era where global legal tech companies are actively operating on the international stage,” and urged, “We must open the way for startups to develop global competitiveness.” They called for the Lotok Act to be passed within the 21st National Assembly’s term. However, the Legislation and Judiciary Committee ultimately did not process it.

This contrasts with other advanced countries that are easing regulations on legal tech companies. Japan’s Ministry of Justice established guidelines for AI-utilized legal services in August last year. Thanks to this, domestic legal tech companies are actively expanding into Japan.

The global legal tech market is also showing rapid growth. According to Traxcn, a startup market research firm, the global legal tech investment scale increased by 22% in one year, from $11.5 billion (approximately 15.76 trillion won) in February last year to $14.1 billion (approximately 19.324 trillion won) in February this year.

The domestic market is also steadily growing. Law&Company stated, “The average monthly number of visitors in the first quarter of this year grew by more than 30% compared to the first quarter of last year,” and “the number of lawyer members also grew by about 33% during the same period.” Sales also reached an all-time high. After the Korean Bar Association revised advertising regulations in 2021 to allow disciplining lawyers using legal service platforms and disciplined 123 lawyers, sales hit rock bottom. However, with increasing demand for legal tech and the Ministry of Justice canceling the Bar Association’s disciplinary actions last year, sales have turned upward.

Most of the Unicorn Farm lawmakers who actively urged the passage of the Lotok Act in the 21st National Assembly were re-elected to the 22nd National Assembly, which is a positive sign for the bill. In the April 22nd general election, seven of the 11 full members of Unicorn Farm, including Lee So-young, Kang Hoon-sik, Kim Han-gyu (50, class 31) from the Democratic Party, and Kim Sung-won and Jung Hee-yong from the People Power Party, were elected. Lee So-young told the Legal Times in a phone interview on the 10th, “I will reintroduce (the Lotok Act) immediately when the 22nd National Assembly opens.”