Fair Trade Commission Notifies Bar Associations of Review on Prohibited Business Group Activities
Korean Bar Association and Seoul Bar Association Asked to Submit Explanatory Materials
Seoul Bar Association: "Unjustified Interference Beyond Mand
The Seoul Regional Bar Association (President Jo Sunyeol) has issued a statement condemning the Korea Fair Trade Commission, which has begun a review into the association on suspicion of violating the prohibition of business group activities under the Fair Trade Act, following its move to regulate so-called "network and advertiser-driven law firms."
On the 21st, the Seoul Bar Association released a statement titled "The Fair Trade Commission Must Cease Interfering in the Affairs of Lawyer Associations," stating, "The Fair Trade Commission has notified the Korean Bar Association and the Seoul Bar Association that it has begun a review into whether there has been a violation of the prohibition on business group activities under the Fair Trade Act, and has requested the submission of explanatory materials." The association added, "This suggests that the disciplinary actions taken by lawyer associations against certain law firms' inappropriate conduct, and their efforts to inform consumers of these issues in accordance with Article 76 of the Attorney-at-Law Act, are now being considered subject to the Fair Trade Act."
The Seoul Bar Association further stated, "We strongly condemn the Fair Trade Commission for abandoning its primary duties, shielding certain law firms whose inappropriate business practices have caused social controversy, and ignoring consumer harm by launching this review. We urge the Fair Trade Commission to immediately cease its intervention in the affairs of the Korean Bar Association and local bar associations, and to stop protecting unscrupulous law firms, as this exceeds its jurisdiction."
The statement continued, "We also call on the National Assembly, the Ministry of Justice, and other relevant authorities to promptly consult with lawyer associations to devise fundamental solutions to these issues."
The Seoul Bar Association argues that existing disciplinary regulations for lawyers are insufficient to regulate the improper handling of cases by certain network and advertiser-driven law firms. The association is therefore pursuing: ▲ the introduction of a business suspension system for law firms, ▲ the implementation of a "designation system for law firms to be cautious of when seeking legal representation" (commonly referred to as the 'bad law firm designation system'), and ▲ a significant increase in the upper limit for disciplinary fines for lawyers. In August, the association submitted an opinion paper to the Ministry of Justice regarding amendments to the Attorney-at-Law Act and related system improvements.
The association cites Article 76, Paragraph 1 of the Attorney-at-Law Act (the obligation to provide information about members), which stipulates that "local bar associations must provide clients with information necessary for case retention, such as members’ educational background, career, main areas of practice, and work performance, to facilitate clients’ selection of lawyers and ensure transparency in legal cases and legal work." This means local bar associations are obligated to provide clients with information about members’ work performance and other details relevant to case retention.
The association also emphasizes that an overwhelming majority of its members agree on the need to regulate network and advertiser-driven law firms and to provide clients with information about these firms.
In a related survey conducted by the Seoul Bar Association among its members from July 24 to August 14, 1,737 out of 2,869 respondents (60.5%) answered "strongly agree" and 844 (29.4%) answered "agree" to the question, "Do you feel that inappropriate work practices by network and advertiser-driven law firms are undermining trust in the legal profession?" Regarding the operation of the bad law firm designation system, 53.5% of respondents (1,536 members) said, "The designated law firms should be made public through the media and clients should be informed in advance of any complaints or disciplinary actions," while 25.7% (736 members) said, "They should not be made public through the media, but clients should be informed in advance." In total, 79.2% supported providing information to clients.
However, there are also considerable concerns within the legal community about the Seoul Bar Association's move to impose such sanctions.
Some point out that certain law firms, which have achieved significant sales growth and entered the top ten law firms by using the main office-branch office structure permitted under the Attorney-at-Law Act, have caused difficulties for local lawyers. As a result, lawyer associations are accused of using complaints from dissatisfied clients as a pretext to push for excessive regulation of these firms.
There are also fundamental questions about whether local bar associations have the authority to implement such measures, given that the concept of a "law firm to be cautious of" is itself ambiguous, and that, while it is termed "caution," it effectively brands the targeted firms as bad law firms, causing obvious reputational and economic harm.
This situation is reminiscent of the so-called "LawTalk incident," which has been a source of controversy for several years, as it also involves lawyer associations, the Ministry of Justice, and the Fair Trade Commission.
For now, attention is focused on the Ministry of Justice’s stance and the Fair Trade Commission’s review regarding the "bad law firm designation system" being pursued by the Seoul Bar Association. However, if the association proceeds with the actual implementation of the system through internal regulations, it could lead to affected law firms filing constitutional complaints.
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