[News Inside Business] Legal Tech 'Lotok' Fighting with the Bar Association for 6 Years

Rotok advertisement installed in Seocho-gu, Seoul / Photo by Yonhap News

Lawtalk, an online service provider that has been in conflict with the Korean Bar Association (KBA) since its inception, is a platform that connects lawyers and consumers. It is also the pioneer that sprouted the domestic legaltech (Legaltech ? legal technology industry) market.

Lowering Legal Market Accessibility to Drive Popularity

The Lawtalk service was launched in 2014 by 'Law&Company,' established in 2012. It provides information on registered lawyers’ career histories, specialties, and achievements on the platform, allowing consumers to select lawyers directly and receive consultation services. The options are segmented into phone consultations, short video consultations via the platform, or in-person office visits.

Lawtalk rapidly grew in popularity after its launch. It secured Series B and C investments worth 14 billion KRW in 2019 and 23 billion KRW in 2021, respectively, and was recognized with a corporate valuation of approximately 100 billion KRW the same year, being selected by the Ministry of SMEs and Startups as a 'pre-unicorn' (a startup valued at over 1 trillion KRW). According to Law&Company, Lawtalk’s cumulative visitors have reached 30.7 million, with about 740,000 cumulative legal consultations recorded. As of last year, the estimated annual transaction amount for retained cases approaches 470 billion KRW.

The key to Lawtalk’s success lies in increasing consumers’ accessibility to the legal market. Consumers find it difficult to directly search for and understand court rulings, and it is also challenging to determine which legal expert is suitable for their case. This means there is a significant 'information asymmetry' between demand and supply. Consequently, legal consumers are vulnerable to illegal brokers or false and exaggerated advertisements. In contrast, Lawtalk addresses this issue by transparently disclosing member lawyer information and providing various precedents and resolved case examples.

Inevitable Clashes with Market Incumbents

However, Lawtalk has not been welcomed by everyone. Conflicts surrounding Lawtalk’s business model are still ongoing. Lawyer organizations have clashed with Lawtalk since its early days. In 2015, the Seoul Bar Association reported Lawtalk to the police for violating the Attorney-at-Law Act, but the case was dismissed as no charges were filed after about a month. The KBA also filed a complaint against Lawtalk in September 2016 on the same grounds, but the police again concluded with no charges. The KBA subsequently attempted to pressure Lawtalk through the prosecution and the Fair Trade Commission on allegations of illegal brokerage and exaggerated advertising, but all resulted in non-prosecution.

Under the current Attorney-at-Law Act, it is illegal for non-lawyers to mediate lawyers. The KBA and others claim that Lawtalk violated this law in part. On the other hand, Lawtalk argues that since it only charges pure 'advertising fees' rather than brokerage or referral 'commissions,' it cannot be considered a legal broker.

Rotok states that its platform operates solely on advertising fees rather than receiving commissions for brokerage or mediation, and therefore cannot be considered a brokerage application (app). / Photo by Rotok official website capture

Meanwhile, in May last year, the KBA amended its association bylaws regarding lawyer advertising regulations to 'regulate mediation and participation in advertising and promotion by non-lawyers.' This established a regulatory basis to prevent lawyers from using Lawtalk. The number of lawyers registered with Lawtalk reportedly dropped from the previous 4,000 to as low as 1,700 at one point.

In response, 60 lawyers using Lawtalk filed a constitutional complaint, arguing that the KBA’s new advertising regulations violate the constitution. Subsequently, in May this year, the Constitutional Court ruled some parts of the KBA’s regulations unconstitutional. However, the KBA has initiated disciplinary procedures against lawyers affiliated with the association who used Lawtalk based on parts of the regulations the court upheld as constitutional, which is expected to further deepen the conflict between the KBA and Lawtalk.

Lawtalk plans to support KBA-affiliated lawyers who have been disciplined for using its platform. In a statement released on the 18th of last month, Law&Company said, "We strongly condemn the KBA’s disciplinary actions against lawyers solely for using Lawtalk," and added, "We will respond to the end by all possible means to protect our member lawyers."

Correction Notice

Our publication previously reported in the article titled <[Companies in the News] Legaltech 'Lawtalk' Fighting the KBA for Six Years> dated November 3, 2022, that "Since 2016, the KBA has reported Lawtalk to the prosecution and the Fair Trade Commission for violating the Attorney-at-Law Act, but all cases were dismissed without prosecution."

However, the Korean Bar Association has not reported Law&Company to the prosecution since 2017, and we hereby correct this.

The above report was based on court rulings.