[Invest&Law] Beyond Legal Support to Regulatory Analysis... Law Firms Expanding Startup Support Scope

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The year 2024 has been a harsh one for the startup industry. The number of investments in the first half of the year plummeted by 32% compared to the previous year, and with the combination of global high interest rates and political turmoil, the bar for securing investments has risen. However, startups finding breakthroughs amid the crisis are preparing for a new leap forward through collaboration with law firms, drawing attention. As 2025 approaches, we highlight the activities of law firms leading innovation hand in hand with startups.

Startup Investment Freeze... The Role of Law Firms

Last year was marked by investors' cautious and conservative attitudes. Min In-gi, a member of the top 10 law firms and a lawyer at Bae, Kim & Lee LLC who opened the first branch office in Pangyo, said, “Last year, startups particularly struggled to secure additional investments, and investment conditions tended to become more stringent, causing many startups difficulties in fundraising.” He added, “While law firms cannot directly solve investment issues, they focus on providing legal advice to swiftly and smoothly resolve internal disputes within startups, preventing delays or halts in investment due to legal issues rather than managerial decisions.”

The investment freeze has shaken trust among co-founders and led to disputes arising from disagreements in future planning, increasing the role of law firms. Nam Hyun, a lawyer at Seum Law Firm, said, “If the initial contract structure is weak, cases occur where some founders take profits and leave,” advising, “To prevent such problems, thorough legal safeguards must be established from the early stages.”

The Track Record of Domestic Law Firms Supporting Startups

In July last year, the Ministry of SMEs and Startups (Minister Oh Young-joo) signed memorandums of understanding with major law firms such as Kim & Chang, Kwangjang, Bae, Kim & Lee, and Sejong to provide tailored legal support for startups. Subsequently, in November, law firms including Yulchon, Barun, Mission, and TMI Comprehensive Law Office joined, building overseas legal FAQs for new industry startups and holding legal and regulatory consultation sessions for overseas expansion, thereby expanding support for startups. Boutique law firms specializing in startups also played a prominent role.

DLG Law Firm (Representative Lawyer Cho Won-hee) provided legal services specialized for startups and tech ventures. They held various seminars such as “Startup Talent Compensation Plans,” “Innovative Startups Beyond Regulations,” and “2024 Next Horizon” to respond to the industry's legal needs. Additionally, to support the global expansion of domestic startups, they launched the “Global Business Support Center” in September last year, offering one-stop services for overseas expansion through local market research, partner discovery, and advice on compliance with local laws and regulations.

Seum is a startup-specialized law firm celebrating its 12th anniversary, founded by lawyers who previously worked at Sejong Law Firm and others, united to provide legal services for startups. In April last year, Seum launched “Seum Rocket,” a low-cost legal service for very early-stage startups, offering a wide range of advice from drafting investment contracts to consulting on new business regulations.

Choi & Lee Law Office (Representative Lawyer Choi Cheol-min) launched “Deunggi Man 2.0” in August last year, an integrated corporate registration management system for startups and SMEs.

Choi Cheol-min, lawyer at Choi & Lee, said, “We launched the online real estate registration service through Deunggi Man, leveraging accumulated legal knowledge, experience, development capabilities, and a nationwide network of judicial scrivener partners, and we plan to accelerate these efforts next year.”

The Growing Role of Law Firms

The legal demands of startups are becoming increasingly sophisticated beyond simple consultations. Overlooking legal issues at the early stages can escalate into major crises at the IPO (Initial Public Offering) stage.

Lee Min-hoon, a lawyer at Barun Law Firm, said, “Startups need to make various decisions during investment rounds, such as how to structure equity, how to determine the equity ratio between investors and founders, and how to set restrictions on equity transfer and sale.” He added, “Investors are often financial institutions and understand these structures, but founders often lack legal knowledge, so law firms help both investors and founders fully understand and negotiate the terms.”

Gyeong Gi-dong, a lawyer at Bae, Kim & Lee, said, “Startups can start their initial business by accepting or utilizing the current regulatory environment, but for sustainable growth, an appropriate regulatory environment must be supported.” He explained, “As society becomes more complex and regulations tighten, if startups overlook this, they may set growth limits on themselves.” He continued, “Law firms analyze regulations from legal and policy perspectives and develop improvement plans tailored to the business characteristics of startups to create a growth foundation. Therefore, the role of law firms will become more important, and collaboration with startups will expand further.”

Hyun Ahn, Legal Times Reporter

※This article is based on content supplied by Law Times.

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