Legal Tech Companies Knock on the Japanese Market

Similar Legal Systems Between Korea and Large IT-Legal Industry Scale
"Global Leadership Battle Intensifies"

Domestic legal tech companies are targeting the Japanese market. They aim to use Japan, which has a legal system similar to Korea's and a large IT and legal industry, as a testing ground to increase growth potential and market share. Some companies are also aiming for the Singapore and Middle Eastern markets, actively joining the global legal tech leadership competition.

[Image source=Ro&Company]

Law & Company (CEO Kim Bonhwan), operator of the legal platform Lotoc, attended the "Korea-Japan Startup Cooperation Forum" hosted by the Korea-Japan and Japan-Korea Future Partnership Fund on the 2nd at the Tokyo Keidanren Hall in Japan. On that day, Law & Company held a business briefing for Japanese public institutions and companies such as the Japan External Trade Organization and Itochu Corporation, and also met with representatives from major IT companies SoftBank and Rakuten Group. In February, they participated in Japan's largest digital transformation expo, the "DX Comprehensive Expo," where they discussed the current status of AI technology with local legal tech stakeholders such as Bengoshi.com and LegalOn Technology.

Some companies have established local subsidiaries. Legal AI solution company BHSN (CEO Lim Jeonggeun) established a Japanese subsidiary in September last year. CEO Lim is a "Japan expert" with experience working on assignment at a Japanese law firm in 2013. Based on the characteristics of BHSN's Legal LLM, which can process documents in Asian languages, they began planning their entry into Japan.

AI legal tech platform Intellicon (CEO Lim Youngik) completed patent registration in Japan last April for its "AI document analysis system and AI legal visualization model." This was to gain technical recognition ahead of full-scale local entry and to build barriers to prevent imitation by competitors.

Additionally, Codit (CEO Jung Jieun), which provides legal and policy information, launched a beta service in Japan last December. Precedent search service company Elbox (CEO Lee Jin) stated, "We are seriously considering entering the Japanese market and plan to start preparations from the end of the year."

Until now, the domestic legal tech market has faced limitations in growth potential because the market size is not large. Even if services are developed, the companies, law firms, and legal professionals who use them are limited.

In this situation, the nearby Japanese legal tech environment has become a stimulus. The Japanese legal tech market is growing faster than Korea's. Currently, about 60 companies, roughly twice the number in Korea, are active. Japan's largest lawyer intermediary platform, Bengoshi.com, and LegalOn Technologies, which excels in contract management, have grown into unicorn companies.

Especially since the Japanese government announced guidelines in August last year for "legal tech companies using AI technology" to operate legally, new technologies such as AI contract review cloud services have been launched one after another. The more flexible regulatory environment compared to Korea is giving momentum to the local legal tech market.

The expansion of legal tech from traditional legal professionals to general companies is also an opportunity for Korean companies. Japan is evaluated to have many opportunities for Korean IT companies to enter because most companies, including law firms, still frequently communicate via fax and digital transformation is not active. The similarity of Japan's legal system to Korea's also encourages participation.

A Law & Company official said, "There is no company in Japan that has concretely developed generative AI-based legal services yet, so we believe there are no potential competitors," and added, "We expect it to be an opportunity space for Korean legal tech companies."

Domestic legal tech companies are expanding their frontiers to Singapore, Vietnam, and the Middle Eastern markets. Intellicon held a meeting with Saudi Arabian company officials about solution adoption last December and is pushing for overseas market expansion by recently forming a business partnership with E-Formworks, which has established joint ventures in Singapore and Japan. BHSN is preparing to enter the Hong Kong, Singapore, and Vietnam markets.

Hong Sujeong, Legal Times Reporter

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