[Law & Story] What Is the Future of the Conflict Between Lotoc and Lawyer Associations?

At 10 a.m. on the 19th, Ki-won Kim, Legal Affairs Director of the Seoul Bar Association, and Jung-wook Kim, President of the Seoul Bar Association (from left), appeared as presenters at the press briefing on "Legal Interpretation, Legislative Direction, and Alternatives Related to Lawyer Introduction Platforms" held at the Seoul Bar Association Hall in Seocho-dong, Seoul. Photo by Seokjin Choi

In Choi Seok-jin's Legal Story, we aim to cover various issues revolving around the legal community, focusing on courts and prosecutors. We plan to write somewhat freely on topics such as the legal points or prospects of major cases, behind-the-scenes stories, and untold anecdotes without being bound by specific themes or formats. Today’s sixth story is about the conflict between the legal platform 'Lotoc' and lawyer associations.

[Asia Economy, Choi Seok-jin, Legal Affairs Reporter] As the conflict between the representative online legal platform ‘Lotoc’ and lawyer associations intensifies, the Ministry of Justice is expected to announce its official stance on the matter this week, drawing significant attention.

Lawyer associations argue that the services provided by Lotoc are not mere ‘advertisements’ but rather ‘brokerage’ or ‘introductions’ of lawyers, which violates the current Attorney-at-Law Act that prohibits receiving money or economic benefits for introducing, mediating, or soliciting lawyers. They warn that if this is left unchecked, the legal profession will become subordinated to large capital, undermining fair client acquisition order and ultimately harming the public.

On the other hand, Lotoc claims that it does not receive commissions for introducing specific lawyers but only charges a fixed advertising fee to display lawyers’ advertisements on its website or mobile application (app). Since it does not receive separate payments for consultations or case acceptance, it considers itself a simple advertising platform. Given that portal advertisements charging fees based on clicks or sales are allowed, there is no reason to ban Lotoc’s service, which charges a fixed advertising fee based on exposure periods.

While legal experts have differing opinions on the legality of Lotoc’s services, the prevailing view is that it is difficult to see them as violating the Attorney-at-Law Act.

However, considering the unique nature of legal services provided by lawyers, there are clearly concerns about allowing advertising through platforms without any regulation.

Lotoc’s Lawyer Membership Grows to 3,966 in 7 Years Since Launch... Intensified Offensive

Lotoc was first launched in February 2014.

This is not the first time its legality has been questioned.

In March 2015, the Seoul Bar Association, and in 2016, the Korean Bar Association each filed criminal complaints against Kim Bon-hwan, CEO of Law&Company, for violating the Attorney-at-Law Act. However, both cases ended with non-prosecution due to ‘insufficient evidence’ and ‘no charges,’ respectively, and the conflict did not escalate as severely as it does now.

The lawyer associations’ attacks on Lotoc intensified after Lee Jong-yeop became president of the Korean Bar Association and Kim Jung-wook became president of the Seoul Bar Association.

Before their election, both served as co-representative and executive representative, respectively, of the ‘Lawyer Profession Protection Group,’ which filed complaints against Lotoc with the Fair Trade Commission and prosecutors in November last year. They also made ‘(lawyer) profession protection’ a key campaign pledge in the early elections this year.

Above all, the reason the Korean Bar Association and Seoul Bar Association have strongly checked Lotoc is likely due to growing concerns as the number of lawyers registered with Lotoc has increased noticeably. As of March this year, Lotoc had 3,966 lawyer members. Considering that the total number of active registered lawyers is about 24,000, this is not a small number.

At a recent press briefing on ‘lawyer introduction platforms’ held by the Seoul Bar Association, a representative stated that the legal platform regulations currently being pursued by both the Korean Bar Association and Seoul Bar Association are not targeted solely at Lotoc but apply commonly to all legal platforms such as Naver Expert and Law&Good. However, they added, “Lotoc advertises the most and has the largest number of members,” and expressed concern that “if this continues, in 2 to 4 years, candidates running for the Bar Association president will pledge to ‘talk to the Lotoc CEO to lower Lotoc’s exposure and commission conditions.’”

Difficult to See as ‘Violation of Attorney-at-Law Act’... Bar Association’s Disciplinary Measures Seen as ‘Last Resort’

The Korean Bar Association’s executive body, which previously filed criminal complaints against Lotoc’s operator for violating the Attorney-at-Law Act, amended the ‘Regulations on Lawyer Advertising’ and the ‘Attorney Ethics Charter’ on May 3 to establish grounds for disciplining lawyers registered with Lotoc.

Specifically, Article 5, Paragraph 2 of the regulations prohibits (1) acts of connecting lawyers and consumers or advertising, promoting, or introducing lawyers to consumers in exchange for money or other economic benefits (such as commissions, membership fees, advertising fees, regardless of name or form) to introduce, mediate, or solicit legal consultations or cases; and (6) other advertising acts violating laws, the Attorney Ethics Charter, or association and local bar rules, as prohibited lawyer advertising methods.

Additionally, the Attorney Ethics Charter added a clause stating that lawyers shall not participate in or join as members in electronic media-based businesses such as applications that introduce lawyers or legal services.

Legal circles view these measures by the Korean Bar Association as a last resort to prevent their lawyers from joining Lotoc, given the difficulty in legally challenging Lotoc’s services under the current Attorney-at-Law Act.

A mid-career lawyer A, formerly a judicial official, said, “They filed many complaints against Lotoc, but all were dismissed. Since the law doesn’t work, they amended advertising regulations to discipline their own lawyers.”

He added, “It’s ridiculous to attack your own side. They are disciplining lawyers. Why would the government forces attack themselves? They should attack the Donghak army.”

This means that since the association president Lee and Seoul Bar Association president Kim have no legal means to suppress the Donghak army (Lotoc), they resorted to amending advertising regulations to attack the innocent government forces (lawyers affiliated with the Bar Association).

The relevant Attorney-at-Law Act provision concerning the legality of Lotoc’s services is Article 34, which prohibits partnerships between lawyers and non-lawyers.

Article 34, Paragraph 1 of the Attorney-at-Law Act states that no one shall engage in the following acts regarding the acceptance of legal cases or legal affairs: (1) receiving or promising to receive money, entertainment, or other benefits in advance to introduce, mediate, or solicit a specific lawyer or their staff to the client or related parties; (2) receiving or demanding money, entertainment, or other benefits as compensation after introducing, mediating, or soliciting a specific lawyer or their staff to the client or related parties. Paragraph 2 prohibits non-lawyers from sharing fees or other benefits through work that only lawyers can perform.

Article 109 of the same law stipulates that violating Article 34 is punishable by imprisonment of up to seven years or a fine of up to 50 million won.

Can receiving advertising fees from lawyer members and displaying advertisements on websites or apps be considered a violation of the Attorney-at-Law Act?

The key point is not whether the money received from lawyers is called an advertising fee or commission, but whether it is essentially a fee for introducing a lawyer. Also, since multiple lawyers are listed without order and consumers choose one among them, can this be regarded as introducing or mediating a specific lawyer?

Currently, Lotoc charges a fixed advertising fee based on the lawyer’s choice and displays ads categorized by specialty, but the order of lawyers displayed within each category changes every time the category is clicked.

Regarding this, lawyer A said, “Media is basically an advertising platform. Legal platforms connect information about lawyers but it is difficult to see this as mediating cases.”

He added, “Advertising is the customer’s choice. Bringing customers to choose Coca-Cola is mediation, but promoting Coca-Cola is not mediation.”

He also said, “There are keyword ads or banner ads for lawyers on Naver, and lawyers can advertise in flea markets. I don’t see the difference between advertising through Lotoc and these.”

Since Lotoc charges advertising fees and posts ads for multiple lawyers on the platform, and consumers choose a specific lawyer for consultation or case acceptance, the service itself is difficult to see as lawyer mediation.

Lawyer Associations’ Excessive Legal Interpretation... Different from Medical Law Violation Case Cited

At last week’s press briefing, the Seoul Bar Association argued that the wording ‘specific’ in the Attorney-at-Law Act should not be strictly interpreted.

They stated that whether introducing one lawyer or five lawyers and letting the client choose, it can be regarded as introducing a specific lawyer in substance.

They cited the 2018 Supreme Court ruling 2018Do20928 on a medical law violation case. In that case, B and others operated an online plastic surgery shopping mall-type telemarketing site, posting banner ads selling hospital procedure products, introducing, soliciting, and mediating about 50,000 patients to 43 hospitals, and receiving 15-20% of the medical fees paid by patients as commissions from doctors, prosecuted for violating Article 27, Paragraph 3 of the Medical Service Act.

Article 27, Paragraph 3 of the Medical Service Act prohibits anyone from introducing, mediating, or soliciting patients to medical institutions or personnel for profit, including exempting or discounting co-payments under the National Health Insurance Act or Medical Care Assistance Act, providing money or transportation convenience to unspecified many, or inducing such acts.

The court cited previous Supreme Court precedents stating that ‘introduction and mediation’ mean acts of brokering or facilitating the conclusion of treatment contracts between patients and specific medical institutions or personnel, and ‘solicitation’ means acts of inducing patients to enter into treatment contracts with specific medical institutions or personnel by deception or temptation.

The Seoul Bar Association argued that although Article 27, Paragraph 3 does not use the word ‘specific,’ the court recognized the meaning of ‘specific’ in the nature of introduction and mediation, and even though the company received commissions from multiple medical institutions, it was found guilty due to specificity. Therefore, lawyer introduction platforms should be seen as having specificity even if they let clients choose among multiple lawyers and receive commissions from multiple lawyers.

However, it is difficult to accept the Seoul Bar Association’s interpretation of the Attorney-at-Law Act or the direct application of the Supreme Court precedent as is.

Under the principle of legality and especially the principle of clarity, penal provisions must be interpreted strictly. Treating Article 34, Paragraph 1 of the Attorney-at-Law Act, which punishes ‘introducing a specific lawyer and receiving money as compensation,’ as equivalent to receiving advertising fees from multiple lawyers and displaying ads is unreasonable.

Also, Lotoc does not receive additional commissions from lawyers when cases are accepted, so it is difficult to see the advertising fees initially received as compensation for connecting a specific lawyer.

In contrast, the medical law violation case cited by the Seoul Bar Association involved multiple hospitals, but the site operator sold procedure coupons for each hospital, and when patients used those coupons for treatment, the operator received a percentage of the medical fees paid to the hospital as commission.

In other words, although banner ads for procedure coupons from 43 hospitals (C, D, E, F, etc.) were posted, when a patient received treatment at hospital C after seeing the ad, the operator took a portion of the revenue from that hospital. This differs from Lotoc’s case.

Simply put, if Lotoc receives fixed advertising fees from three lawyers G, H, and I and displays their ads, and a client chooses one through search and connects to a case, Lotoc has no further involvement or additional commission. In the cited case, the operator received 2 million won out of a 10 million won surgery fee paid to hospital C after the patient used the coupon from hospital C’s ad. The latter clearly involves compensation for introducing a specific medical institution, but the former is ambiguous regarding whether it constitutes introducing a specific lawyer or receiving compensation.

Ministry of Justice’s Position: ‘Lotoc is Legal’... Disciplinary Actions and Legal Amendments Unlikely

The Korean Bar Association and Seoul Bar Association are pushing disciplinary actions against their members registered with Lotoc based on the amended advertising regulations.

About 1,400 complaints have been filed with the Korean Bar Association’s Legal Order Violation Prevention Center citing membership in legal platforms.

However, actual disciplinary action will take considerable time, as it requires preliminary investigations at local bar associations, investigation committees, standing committees, and finally a disciplinary committee at the Bar Association.

Nonetheless, the announcement of disciplinary intentions by the Korean Bar Association and Seoul Bar Association has already caused a significant number of Lotoc member lawyers to withdraw.

According to Law&Company, the number of member lawyers decreased from 3,966 in March this year to 2,855 as of the 3rd of this month, a drop of about 28%.

For the disciplinary actions to be effective, the Ministry of Justice must share the Bar Association’s stance. The Ministry’s Disciplinary Committee, chaired by the Minister of Justice, has the final say on appeals against the Bar Association’s disciplinary decisions.

Article 86, Paragraph 1 of the Attorney-at-Law Act states that ‘The Korean Bar Association is supervised by the Minister of Justice.’ Paragraph 2 requires the Bar Association to report resolutions of the general meeting to the Minister without delay, and Paragraph 3 allows the Minister to cancel resolutions deemed illegal or against association rules.

Article 99 requires the head of the Korean Bar Association to report disciplinary decisions to the Minister of Justice without delay.

Disciplinary suspects may appeal to the Ministry’s Disciplinary Committee within 30 days of notification, and the committee may cancel the Bar Association’s disciplinary decision if the appeal is deemed valid (Article 100).

Minister of Justice Park Beom-gye has repeatedly stated that “Lotoc’s service is legal.”

If the Ministry of Justice maintains this position, even if the Bar Association decides to discipline Lotoc member lawyers, the disciplinary decisions are likely to be overturned upon appeal to the Ministry’s Disciplinary Committee.

Meanwhile, a partial amendment bill to the Attorney-at-Law Act has been proposed in the National Assembly by Kim Hyung-dong of the People Power Party.

The bill adds a provision to Article 23 regulating lawyer advertising, prohibiting anyone other than lawyers or law firms from advertising lawyers.

This would effectively block lawyer advertisements on platforms like Lotoc.

Currently, Article 23 (Advertising) of the Attorney-at-Law Act allows lawyers, law firms, and legal cooperatives (collectively “lawyers, etc.”) to advertise their education, career, main practice areas, achievements, and other necessary promotional information through newspapers, magazines, broadcasts, computer communications, and other media.

Paragraph 2 lists prohibited types of advertisements such as false or defamatory ads.

The amendment adds Paragraph 3 stating that non-lawyers may not advertise under Paragraph 1, and adds a penalty clause to Article 113, Paragraph 3 for violations. If passed, advertisements by Law&Company, which is not a lawyer or law firm, would become illegal and punishable after enforcement.

However, it is widely expected that the amendment will have difficulty passing, as the Ministry of Justice’s position is generally considered the government and ruling party’s stance.

A lawyer familiar with the Bar Association’s internal affairs said, “Even though there are many lawyer lawmakers in the Legislation and Judiciary Committee, it will be difficult for a bill opposing the government and ruling party’s position, especially when the Minister of Justice says it is legal, to pass.”

He added, “It is doubtful whether the Bar Association can overcome this issue by confronting the Ministry, government, and ruling party. The Bar Association can trip someone up but cannot win a full-scale war against them.”

Focus on Investigative Agencies and Constitutional Court’s Judgment... Will the Ministry of Justice Resolve the Crisis?

The police are currently investigating the criminal complaint alleging Lotoc’s violation of the Attorney-at-Law Act.

However, since the complaint is very similar to the one filed in 2016, the outcome is unlikely to differ. It is also difficult for the prosecution, which will make the final decision, to reach a conclusion opposite to the Ministry of Justice’s position that Lotoc’s service is legal.

In the previous complaint, the Seoul Central District Prosecutors’ Office dismissed the case citing that the complainant’s claims were mere speculation and there was insufficient evidence to recognize the facts.

Meanwhile, the Constitutional Court is reviewing a constitutional complaint filed by Law&Company.

At the end of May, Law&Company, along with 60 lawyers, filed a constitutional complaint arguing that the Bar Association’s amended advertising regulations violate the principle of proportionality by restricting Law&Company’s freedom of occupation and expression and discriminating against platforms like Naver.

Constitutional complaints are procedures to remedy violations of fundamental rights by public authority. Previously, the Constitutional Court recognized the Bar Association as a public corporation exercising public authority in lawyer registration and ruled that binding regulations on lawyer registration are acts of public authority subject to constitutional complaints.

Therefore, whether the Court views the advertising regulations as internal standards applicable only to members or as binding external regulations will affect the substantive judgment.

The Supreme Court has the final authority to decide whether Lotoc’s service violates the Attorney-at-Law Act.

However, judicial review requires prosecution first, and given the current atmosphere, prosecution seems unlikely.

Therefore, the conflict between Lotoc and lawyer associations is expected to worsen. Aware of this, the Ministry of Justice plans to finalize and announce its position on online legal platforms this week.

However, even if the Ministry reaffirms that Lotoc’s service is legal, it is unlikely that lawyer associations will accept this.

At a previous press briefing, when asked if there was any room to accept the Ministry’s mediation, the Seoul Bar Association clearly stated, “Private lawyer introduction platforms must be completely banned; no compromise is possible.”

Most Lawyers Are Wary of Lotoc, but Ministry of Justice and Public Opinion Favor Lotoc... “Bar Association Likely to Lose Moral Ground”

Public opinion in this conflict seems to largely view the Korean Bar Association’s response as excessive.

Of course, concerns raised by lawyer associations about ‘capital subordination of the legal market’ and ‘infringement on lawyers’ public nature and independence’ are not entirely baseless.

If Lotoc is fully recognized as a legal service and its lawyer membership surges, it may seek to maximize profits by charging much higher advertising fees or giving more prominent or frequent exposure to lawyers who pay more. In that case, lawyers who do not advertise on Lotoc or who cannot afford the fees may be disadvantaged in acquiring cases.

It is also concerning that Lotoc finds it difficult to substantively verify the expertise or career of individual lawyers advertising on its platform.

Lawyers’ attitudes toward Lotoc vary depending on their circumstances, but numerically, more lawyers oppose Lotoc’s service.

Those directly involved are lawyers currently advertising on Lotoc or planning to do so. Among them are former prosecutors and experienced lawyers, but most are young lawyers not affiliated with large law firms.

Conversely, lawyers who do not use Lotoc and have no plans to do so tend to support regulation out of vague fears of losing cases to those advertising on Lotoc and concerns about the future. Well-established lawyers, including former judicial officials and those in large law firms, do not see Lotoc as a major threat now but consider it a potential competitor if it grows.

In this context, it is understandable that lawyer associations, which should protect their members’ interests, try to regulate legal platforms.

Nevertheless, lowering the legal market’s entry barriers for economically disadvantaged citizens and increasing access to lawyers, and the fact that many lawyers in a market marked by ‘the rich get richer, the poor get poorer’ want to advertise affordably through legal platforms, suggest that outright banning services like Lotoc is not the best solution.

Especially since the Korean Bar Association and Seoul Bar Association, representing legal professionals, have failed to present convincing grounds while insisting that Lotoc violates the Attorney-at-Law Act despite the prosecution’s dismissal of charges and the Ministry of Justice’s position that Lotoc is legal, their indirect approach of amending advertising regulations to discipline their members or pushing for legal amendments banning legal platform advertising may give the public the impression of ‘protecting their own interests.’

Another mid-career lawyer J said, “There was also controversy over the Tada service, but I think legal tech is the trend of the times,” and predicted, “I wonder if the Bar Association can win the moral battle.”