2024.07.18. The Fair Economy — Kwon Chil-seung, a lawmaker on the National Assembly's Foreign Affairs and Unification Committee, said on the 18th that he has sponsored the bill for the Act on the Promotion of the Legal Tech Industry and the Facilitation of Its Use (the Legal Tech Promotion Act).
According to a query response from the Korean Bar Association obtained by Rep. Kwon's office, the association determined that a company that is not a law firm providing automated legal document services online using artificial intelligence (AI) could be in violation of the Attorney-at-Law Act. It also ruled that providing services for drafting and reviewing individual contracts using AI constitutes a violation of the same act.
Although the Korean Bar Association's response is not an official interpretation, it has direct effect on attorneys because the association holds disciplinary power over them. For general companies, it serves as grounds for raising criminal liability for violating the Attorney Act.
Currently, it is assessed that venture companies operate in a "gray zone" where it is unclear what regulations they will face when applying AI to the legal sector to provide legal tech services.
There is a risk that, like the "TADA" case, businesses may have their operations halted due to backlash from operators who have obtained relevant permits, or, as in the "LawTalk" case, face management difficulties due to lawsuits among stakeholders.
Rep. Kwon explained the reason for proposing the bill, saying, "If the differences of opinion between the legal profession and venture startups over innovation in AI-based legal services are not resolved, a 'second TADA' incident could occur."
The bill stipulates matters necessary for the promotion and utilization of the legal tech industry, including establishing specific qualifications for providing legal tech services using AI and other technologies, and creating a legal basis to support the legal tech industry. It aims to build an institutional framework that enables high-quality legal services based on IT, thereby contributing to the protection of citizens' fundamental rights.
According to a report by global market research firm Tracxn, as of last September, there were approximately 7,486 legal tech companies worldwide, with total investment reaching about 16 trillion won. About 30% of this investment was made within the past two years, indicating rapid growth.
Furthermore, the majority of legal tech companies are concentrated in North America, Europe, and India. Of the nine unicorn companies, six are based in the United States, and nearly half of the 15 companies that have successfully gone public (IPO) are also U.S.-based. Notably, one Japanese company is listed among the unicorns and two among the IPO companies.
Rep. Kwon Chil-seung emphasized the need to enact the Legal Tech Promotion Act, saying, "If the Korean legal tech industry does not develop, overseas large law firms equipped with AI technology could encroach on the domestic legal market at any time. If the legal tech industry and the legal profession in our country coexist through the enactment of the Legal Tech Promotion Act, it will greatly help our law firms to actively enter overseas markets."
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