[Asia Economy Reporter Junhyung Lee] Korea Startup Forum expressed its welcome after the police recently determined that there was no violation of the Attorney-at-Law Act by the legal platform 'Lotoc'. Kospo is the largest startup organization in Korea with about 1,700 startups as members.
On the 4th, Kospo issued a statement saying, "We welcome the police's decision on the 28th of last month not to prosecute Ro & Company, the operator of Lotoc, on the grounds that there was no violation of the Attorney-at-Law Act," adding, "The Ministry of Justice judged Lotoc as a legal service last year, and the Fair Trade Commission also dismissed allegations of false or exaggerated advertising." It added, "The police's correct legal interpretation is a natural result," and "It is evaluated as a foundation for an institutional environment where the domestic legal tech ecosystem can grow further."
Legal tech services such as Lotoc are evaluated as having resolved the information asymmetry in the legal market. The industry explains that legal tech startups have grown by increasing the accessibility of legal services to the general public. In addition, the global legal tech market is growing at an average annual rate of 28%. In the United States, unicorns (unlisted companies valued at over 1 trillion won) such as LegalZoom and Rocket Lawyer have already emerged.
Outdoor advertisement of the legal platform 'Lotoc' installed at Seoul subway stations. [Photo by Ro&Company]
This is why Kospo expressed regret in this statement. Kospo said, "It is regrettable that Lotoc, selected as a 'pre-unicorn' by the Ministry of SMEs and Startups last year, faced an existential crisis due to repeated criminal accusations by professional groups and the government's passive attitude," adding, "The police's judgment on Lotoc is the third result following two dismissals by the prosecution in 2015 and 2017." It further stated, "It is hard to find a precedent worldwide where a single service has had to endure three investigations over a long period for the same allegations."
Kospo emphasized that there should be no 'startup harassment-style' criminal accusations. Kospo argued, "While this non-prosecution decision is welcome, it should not be repeated for domestic startups," and "Time spent resolving legal disputes with associations and groups that only represent the interests of existing businesses is time wasted that should be devoted to surviving competition with global platforms." Kospo also said, "The damage caused by conflicts that hinder innovation inevitably results in the contraction of domestic industries due to the market entry of global companies, user inconvenience, and a decline in consumer welfare," adding, "Harassment-style criminal accusations must no longer occur so that all startups, including Lotoc, can focus on providing innovative services."
The need for government roles was also mentioned. Kospo stated, "We hope the government will protect startups with a clear stance against indiscriminate accusations by some professional groups so that more startups can contribute to market growth and consumer benefits through innovation."
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