The Fair Trade Commission recently ordered the Korean Bar Association and the Seoul Bar Association to lift a ban on their member lawyers’ use of LawTalk, a legal counseling platform, and fined each association 1 billion won ($760,000). It is the largest possible fine imposed by the commission on a business association.
The commission judged that the prohibition of lawyers’ advertisements on the platform restricts free competition among lawyers and consumer choice of lawyers. It also regarded the associations’ disciplinary actions against lawyers who advertised on the platform as an abuse of their authority.
The Korean Bar Association said it would take the case to an administrative court, but a court ruling in favor of the association is unlikely.
The platform, launched in February 2014, is an innovative online business that matches lawyers who pay advertising fees directly with consumers who want legal counseling.
It offers a new market for lawyers and has an effect of lowering the barrier to legal services. However, the associations view it as a challenge to their members' vested rights. The Korean Bar Association revised its bylaw in May 2021 to ban its member lawyers from advertising on online platforms and began to discipline those who broke the rule.
On complaints from the associations, the prosecution investigated whether LawTalk violated the Lawyers Act, but found nothing illegal. The Constitutional Court ruled in June last year that the revised bylaw of the Korean Bar Association violated the constitution.
Nevertheless, the associations disciplined dozens of lawyers for using the platform. They ignored decisions not only by the prosecution, but also by the Constitutional Court. The associations represent lawyers, so they should be more respectful of judiciary decisions than any other association.
The Justice Ministry’s attitude to this issue is also hard to understand. The lawyers disciplined by the associations appealed to the ministry. If the ministry, which supervises the associations, holds a disciplinary committee and the committee accepts the appeals, the association’ disciplinary actions become invalid.
However, the ministry has yet to call a meeting of its disciplinary committee for three months without any explanation. It causes one to question whether the ministry is actually on the same side with the associations that are trying to protect lawyers’ vested rights from new competition. Generally, prosecutors open a private practice as lawyers affiliated with the associations after resigning or retiring.
The commission’s judgement is obviously reasonable, but came too late. It took a year and eight months to make the decision. In the meantime, many lawyers opted out of the platform in question, apparently affected by the associations’ disciplinary actions to keep such platform out of the market. As a result, the platform operator is said to be now on the brink of closing down. Collective selfishness of an interest group is nipping the bud of an innovative industry.
Korea is becoming a country where innovative venture businesses crumble due to a strong backlash from vested interests. In 2019, the National Assembly passed a law banning the operation of Tada, a homegrown ride-hailing service, as taxi drivers strongly opposed it. Other startup platforms such as online real estate brokerage sites encounter tough resistance from existing business associations.
Information technology platforms are expected to reinvigorate Korea’s economy by fostering competition, especially in the professional service industry. The emerging artificial intelligence revolution will give us a wide array of new business opportunities as the internet and smartphones have done. The professional service sector must be open-minded toward new technologies and seek ways to coexist with them.
The government vowed to fight selfish vested interests in large labor unions, banks and telecommunications companies and stimulate industrial innovation. Then true to its word, it must mediate more actively in conflicts between emerging platforms and existing business associations to increase consumer choices and induce fair competition. In that context, the ministry must call a meeting of its disciplinary committee as soon as possible and get the legal service platform back on the right track.
