[Exclusive] Ministry of Justice: Legal Service Brokerage Sites Charging Membership Fees Violate Attorney Act... 2015 Interpretation

"Receiving Membership Fees Is Illegal Even If Not Charged as Case Handling Fees"
"Encouraging Violation of Lawyer's Ethical Code Even Without Collecting Membership Fees"
Response from Ministry of Justice Legal Affairs Division to Civil Petition on Kukmin Sinmungo, July 2015

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Graphic by Joo Ryong Lee

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] It was confirmed on the 4th that the Ministry of Justice, amid Minister Park Beom-gye's mediation between Lotok, a lawyer advertising service, and lawyer organizations, had previously issued an official interpretation stating that the establishment of a legal service brokerage site similar to Lotok could "potentially violate the Attorney-at-Law Act."

This interpretation is expected to spark controversy as it is completely contrary to Minister Park's recent public stance that Lotok is a "legal service."

The Legal Order Violation Supervision Center of the Korean Bar Association (KBA) recently received a report.

The informant, who is known not to be a lawyer, stated, "In 2015, the Ministry of Justice responded to the person who designed and inquired about a business model identical to Lotok, saying that it violated the law regardless of whether it was paid or free." The informant attached a photo capturing the Ministry of Justice's reply to a complaint submitted through the National Petition System at that time.

The reply was from the Legal Affairs Division of the Ministry of Justice, dated July 16, 2015, in response to an inquiry made by a complainant on July 2, 2015, through the National Petition System.

In the reply, the Ministry of Justice stated, "Your complaint is understood to concern the possibility of operation after establishing a legal service brokerage site and whether membership fees are charged or not."

Further answering the inquiry, it said, "If membership fees are charged, the judgment may vary depending on specific facts, but even if the operator of the legal service brokerage site does not receive commissions for case acceptance from lawyers or consumers, charging membership fees itself can be seen as compensation for introduction, mediation, or inducement, or as a profit through work that only lawyers can perform, thus potentially violating the Attorney-at-Law Act."

It added, "Under the Attorney-at-Law Act, no one may receive money, entertainment, or other benefits related to the introduction, mediation, or inducement of legal case acceptance, and non-lawyers may not distribute fees or other benefits through work that only lawyers can perform. Violations are subject to criminal penalties," citing Articles 109, 34(1), and 34(5) of the Attorney-at-Law Act as the legal basis.

Meanwhile, the Ministry of Justice judged that even if the legal service brokerage site does not charge membership fees, it could encourage lawyers to violate the Lawyer's Code of Ethics.

The Ministry stated in its reply, "The Lawyer's Code of Ethics stipulates that 'a lawyer shall not receive case introductions from persons engaged in the business of case mediation, use such persons, or allow such persons to use their name in any way,' and lawyers who violate this are subject to disciplinary action," citing Article 91(2) of the Attorney-at-Law Act and Article 9(1) of the Lawyer's Code of Ethics as grounds.

It continued, "Furthermore, the Supreme Court Grand Bench ruling 98Do3697 delivered on June 15, 2006, defines 'mediation' as the act of brokering or facilitating the conclusion of contracts such as delegation agreements concerning legal cases or legal affairs between the parties to a legal case and the opposing party handling legal affairs," introducing the Supreme Court Grand Bench decision.

The Ministry of Justice also stated, "Since legal service brokerage sites can be seen as established for the purpose of brokering or facilitating the conclusion of delegation contracts between clients and lawyers, lawyers using such sites correspond to using persons engaged in case mediation as a business, which may violate the Lawyer's Code of Ethics."

It added, "Therefore, operating such sites may encourage lawyers to engage in acts violating the Lawyer's Code of Ethics, requiring caution, and this applies even if the brokerage site operates free of charge."

Currently, the Seoul Bar Association has received disciplinary requests for about 500 lawyers who joined legal platforms on grounds of violating the Attorney-at-Law Act. According to Law&Company, the operator of Lotok, the number of registered lawyers once nearing 4,000 has recently decreased to the 3,000 range, but a mass disciplinary action against more than 10% of all practicing lawyers (about 24,000) cannot be ruled out.

The Seoul Bar Association plans to soon hold a preliminary investigation committee regarding whether to file disciplinary requests against affiliated lawyers who have received complaints under the revised "Regulations on Lawyer Advertising," which take effect from today.

Although Minister Park has belatedly stepped in to mediate, it is unlikely that Lotok, the KBA, or the Seoul Bar Association will accept his mediation proposal.