Case Studies
[Maeil Business Newspaper] Korea Bar Association "Need to revise laws to prevent side effects of blockchain"
[Maeil Economy Article] The press conference held at the National Assembly press conference hall on November 08, 2018 was hosted by the Korean Bar Association Blockchain TF team, and the main contents concerned urging institutionalization for the development of blockchain businesses and revising laws. Currently, overseas has begun to build blockchain-related legal systems, while our government is taking a cautious stance on building blockchain-related legal systems due to concerns about various side effects. In response, the Korean Bar Association TF team argued through the press conference that specific regulations are needed for the correct development of the industry. Thank you. Law firm Veat Dream
[Korean Bar Association Newspaper] Lawyers Step Forward to Improve Regulations in the Information and Communications Technology Field
[대한변협신문 기사 바로가기] On November 02, 2018, the Korean Bar Association and the Ministry of Science and ICT concluded a business agreement, and a legal mentor team for ICT startup companies was launched. Among the 16 startup lawyers recommended by the Korean Bar Association, Choi Seong-ho, representative lawyer of Law firm Veat, Song Do-young, partner lawyer, and An Il-woon were appointed. The startup legal mentor team is planning to conduct work, including providing general legal advice such as drafting contracts and articles of association, and discovering and improving ICT-related regulations. As many as three lawyers from Law firm Veat are included among the 16 lawyers recommended by the Korean Bar Association, we will strive to contribute to the development of the startup sector. Thank you. Law firm Veat
[Very Economy] Broadcasting and Media Review Commission Appoints Members of the 10th Defamation Dispute Mediation Committee
Broadcasting and Media Review Commission Appoints Members of the 10th Defamation Dispute Adjustment Committee The Broadcasting and Media Review Commission appointed members of the 10th Defamation Dispute Adjustment Committee on February 22. The 10th Defamation Dispute Adjustment Committee is chaired by Lee So-young, a Broadcasting and Media Review Commission member, and comprises 5 defamation and dispute adjustment experts, including Han Myung-ok (attorney at Law firm Woo Won), Kim Tae-seon (associate professor at Sogang University School of Law), Choi Seong-ho (representative attorney at Law firm Veat), and Park Dae-young (representative attorney at Park Dae-young Law Firm). The term of office is until February 21 next year. The Defamation Dispute Adjustment Committee is an organization that resolves disputes arising from information distributed through the internet and other telecommunications networks that infringe upon the rights of others, such as privacy violations or defamation. It has been installed and operated by the Broadcasting and Media Review Commission since 2007. The Defamation Dispute Adjustment Committee received and processed 76 cases of defamation dispute resolution, 395 requests for user information provision, and 929 consultations related to defamation and privacy violations last year.
[Platform] Modu Sign-Law firm Veat, ‘Startup Contract Kit’ Distribution!
[Platum article] Easy electronic contract service ‘ModuSign’ and Law firm Veat released ‘Startup Contract Kit'(a collection of essential Startup contract forms) to prevent legal disputes for startups.
[Chosun Biz] Nice Group affiliate achieves government project results by illegally utilizing 100,000 pieces of credit information.
[Chosun Biz Article] Attorney Song Do-young (Law firm Veat) stated, “If the card company outsourced its operations to (Nice Data), then the card company has management and supervisory responsibility because of the card company’s operations.” He also pointed out, “However, (from the card company's perspective), there are so many outsourced companies and affiliates that proper security checks often do not occur.” ... Omitted
[Law Newspaper] Rapid case law and data searching… A blow to the law clerk industry, Law firm Veat
[Law Times] Instantaneous Search of Cases and Materials … Impact on the Legal Staff Industry Experts are racing to predict that the development of artificial intelligence will have a significant impact on the entire legal services market. While some believe that artificial intelligence may even replace the roles of judges and prosecutors, there are many who hold skeptical views. In particular, as artificial intelligence technology reaches the stage of recognizing its own existence, complex legal issues surrounding it are likely to arise. ◇Restructuring of Personnel Structure in the Legal Services Market= The development of artificial intelligence is expected to bring significant changes to lawyer’s work first. This is because artificial intelligence is expected to easily find case precedents and legal principles related to a case without much effort. As a result, legal secretaries and office managers who assist lawyers in law firms and legal offices may be impacted. There is also a high possibility that the position of lawyers will be significantly reduced if AI-integrated legal services become popular. This is because general citizens can also use this service to handle their own legal matters as well as experts. There is also an analysis that investigations involving the judiciary and prosecutors using AI systems will be divided into factual and legal judgments, requiring a completely new litigation strategy that is different from the present. In the investigation stage, artificial intelligence can collect evidence through drones and assist the prosecutor’s judgment through rational and scientific reasoning, and in the trial stage, it can also perform tasks such as determining whether the evidence for individual cases is consistent with the charges and deriving appropriate sentences. Kim Gyeong-hwan (47, 36th Judicial Training Institute) of Minhwa represents said, "Simple cases will be pre-judged by artificial intelligence, and judges will subsequently check the results, so the system may change," and "If there is an artificial intelligence that is very good at analysis, it could predict the approximate sentence and win or lose of a trial, so disputes may decrease." ◇“Will Artificial Intelligence Replace Legal Professionals?” Many Skeptical Views= There are differing opinions on whether artificial intelligence can ultimately replace judges, prosecutors, and lawyers, but there are more skeptical views. The argument is that artificial intelligence should only be used as a partial aid tool in the judicial system. Goo Tae-eun (47, 24th) of Tech & Law represents said, "Unlike the game of Go, which is played according to rules and is thoroughly about winning and losing, social justice and legal policy are areas that machines cannot replace," arguing that “Sometimes, not following the rules of law is just.” He said, “The judicial system is about implementing a socially agreed-upon justice, and the concept of justice changes and evolves over time; if machines replace humans, the answers become fixed like a vending machine.” He added, “No matter how advanced and efficient artificial intelligence is, allowing artificial intelligence to make decisions about justice would be to make humans subordinate to robots.” A presiding judge in Seoul also said, “Since people make laws and people violate laws, artificial intelligence cannot replace judges to make judgments.” A prosecutor from the National Prosecutor's Office said, “The main task of investigation is to read the movements, tone, and emotional lines of the suspect to find the truth; it is absurd to have machines investigate people, given the controversy over human rights violations caused even by lie detectors.” An Ki-soon (46, 36th Judicial Training Institute), former representative of Law & Bee, said, "There may be various analysis attempts using big data for court documents, and the results may be a new challenge for judges, but whether people can trust the judgment of machines is a matter that requires social consensus apart from technological development," and "Ultimately, we need to further contemplate on 'the human itself' that machines cannot replace, and on 'the relationship between law and humans' to approach them more realistically and humanly." ◇Artificial Intelligence That Thinks for Itself... Could Also Cause Legal Disputes= Legal disputes could also increase with artificial intelligence. Until now, legal issues surrounding artificial intelligence have been limited to liability in cases where people have suffered damage from the actions made by artificial intelligence, such as accidents caused by autonomous driving cars, making it possible to hold software developers or vehicle owners accountable. However, if the era of “strong artificial intelligence” arrives, where machines become aware of themselves as artificial intelligence and make autonomous decisions, the legal disputes are likely to become even more complicated. Representative Kim said, "AlphaGo doesn't realize that it's artificial intelligence; it’s just a program and a tool for humans, but in 30 or 10 years, the situation will become complicated when the era comes when it realizes that it is artificial intelligence," and "When machines can think like humans and even make ethical judgments, we will need to decide whether to give them personality and whether to treat them as legally the same as humans." Choi Seong-ho (36, 42nd) of Veat represents said, "Existing legal regulations are all based on the premise that people meet people, but cases may arise where artificial intelligences meet each other," and "It will be difficult to grant them the same status as humans in such cases, but it may be necessary to recognize a similar level of status in some cases." In addition, it may also be an issue whether copyright is recognized when artificial intelligence engages in creative activities such as painting or writing, and who will be the copyright holder.
[Website] Attorney Sung-ho Choi "I, who dreamed of being an entrepreneur, have become a lawyer helping entrepreneurs."
“I used to dream of being an entrepreneur, and now I’m a lawyer helping entrepreneurs.” It is said that around the year 2000, when the IT bubble was in full swing in Korea, the admission scores for medical school and computer science were similar. This means that in the early 2000s, all of society's attention was focused on IT. However, a student who entered the popular computer science department at the peak of the IT bubble decided to become a lawyer, not a developer. This is the story of Choi Seong-ho, partner lawyer at Law firm Veat. Lawyer Choi Seong-ho said, “I’m been fascinated by computers since I was young, and I won awards in various competitions, dreaming of starting a business someday. That’s why I entered Seoul National University’s computer science department, but there were naturally ‘computer geniuses’ everywhere in the computer science department I actually attended.” He added, “While changing my thinking, I explored a third field to properly understand IT, and that’s when I decided to become a lawyer specializing in IT.” Lawyer Choi currently provides legal advice to various IT companies, venture capital firms, and university technology holding companies. He specializes in startups. He participates in legal due diligence or general investment procedures when startups receive investment or venture capital firms review investments. The reason startups are at the center of Lawyer Choi’s legal advice is clear. It’s because Lawyer Choi, who once had the dream of being an entrepreneur, believes that ‘startups’ are the field where he can work and learn most enjoyably. Lawyer Choi said, “Because I majored in IT, I can easily understand even complex technical stories, and I have a network that allows me to interact casually with many people in the startup industry.” He added, “There are even places that tell me not to worry about lawyer fees until the startup receives investment, and they help me wholeheartedly.” Lawyer Choi emphasizes that IT companies inevitably encounter legal issues in the process of expanding their business. For example, legal advice is essential even in the situation where the Chinese game market is growing, leading to the production of many domestic game ‘copycats’. Lawyer Choi explained, “IT and law are intertwined in various fields, not just when a small company seeks investment, but also in patent litigation, trademark infringement, and plagiarism.” Lawyer Choi’s plan is to establish a Law firm Veat specializing in IT and startups and to be recognized as an expert in the field. Lawyer Choi said, “I still have the dream of being an entrepreneur.” He added, “However, my goal is to play a role in creating a healthy startup ecosystem in Korea through a Law firm Veat specializing in startup work, which is an extension of the work I’m currently doing.”
Developer-centric open platform group launched… “Will strengthen development capabilities”
"Developers gathering to discuss various problems and the need to strengthen development capabilities has been consistently raised. 'Open Platform Developer Community' is one of the specific efforts towards this." Domestic 'Open Platform' developers have formed an organization to improve their technical skills. The 'Open Platform Developer Community' (Open Community), recently established, aims to concentrate its efforts on developer leader education and compatibility verification work to invigorate domestic cloud technology. An open platform refers to a cloud platform based on source code disclosure. The first chairman, Han Sang-gi (photo), stated, "Strengthening the capabilities of domestic developers and global cooperation to respond to the cloud era are more urgently needed than ever," and "Through Open Community, we will build a sustainable capability model so that domestic developers can develop into global leaders." He added that "Open Community has chosen a non-profit corporation form centered on developers rather than corporations, and the board of directors has been divided by field.” The Open Community’s board of directors is divided into △developer leaders △corporate representatives △professors and related organization heads. The board members include Kim Gi-yong, BD representative, Noh Sang-beom, OKKY co-representative, Song Sang-hyo, president of the Korea Open Source Software Association, Jeon Hyung-cheol, CroCent representative, Jeong Byung-joo, Cubrid representative, Jeong Ho-yeol, Ivy Business Software director, Lee Min-seok, professor at 국민대, Yang Su-yeol, SoYou Communication director, and Heo Gwang-nam, OKKY co-representative. The legal counsel is Choi Seong-ho, a lawyer from Law firm Veat. The Open Community’s top priority goals are 'developer education' and 'compatibility verification support.' Chairman Han stated, "Initially, we will focus on strengthening the educational capabilities of developer leaders who teach developers," and "We plan to develop textbooks and launch a pilot project around the fall.” It will also receive some of the compatibility verification work for open market launch applications (apps) currently handled by the Korea Information and Communication Promotion Agency. Chairman Han said, “Senior developers will be responsible for compatibility verification.” Heo Gwang-nam, co-representative, serves as the chairman of the education committee, and Professor Lee Min-seok from 국민대 serves as the chairman of the technology (compatibility verification) committee. The long-term goal is to grow into a community with influence that can form 'code governance,' like the Mozilla and Linux Foundation, which are world-renowned open source communities. Chairman Han said, "Open Community will play a role in linking various domestic developer communities," and emphasized that "it is an organization where developers are at the center, expressing diverse voices and solving problems.” He added, "We will also explore various ways to cooperate with overseas developers.”
"Startups, be sure to write a shareholder agreement!"
On the 13th, a seminar titled “Startup, How to do it with unfamiliar investment contracts?” was held at the Startup Alliance in Seolleung Station, hosted by Platum, with Yang Kyung-jun, CEO of ‘K Partners & Global,’ and Choi Sung-ho, a lawyer from law firm ‘Zen,’ as keynote speakers. Choi Sung-ho, the second speaker of the day, is a lawyer who serves as counsel for Partygames, Programms, Hyper Connect, and Dunamu, and is an attorney who is evaluated as conducting business from the perspective of a startup. Here's a summary of Choi Sung-ho’s lecture that day. Business entities have higher external creditworthiness compared to individual businesses, making it easier to raise funds. There are many possibilities, such as receiving investment or having funds coming in through the infrastructure of shareholders. In terms of taxes, individual businesses are subject to a 6%-38% 5-step progressive tax rate, while corporations are subject to a 10%-22% 3-step progressive tax rate. This means that individuals must pay up to 38% of taxes on their taxable income (net profit), while corporations pay up to 22%. That is, corporations pay less tax. Also, all issues arising in management, debt, and loss must be borne entirely by the individual business owner, while corporations have shareholders, so there is an effect of dispersing responsibility. However, establishing a corporation is more complicated than running an individual business, and even if profits are generated, they cannot be used arbitrarily. Profits must be taken out only as shareholder dividends or salaries. Moreover, there are many things to worry about. Choi Sung-ho talked about what to look for when establishing a corporation and the need for a shareholder agreement. “First of all, when establishing a corporation, the most important thing is how much capital to have and what the par value will be. In particular, excessive par value should be avoided. I usually recommend between 100 and 500 won. This often makes things more convenient. For example, one of my clients had a par value of 10,000 won. The company has developed to the point where the share value is currently 3-4 million won per share. Therefore, it is difficult to give 10 or more shares when issuing stock options. That is, it does not help with stock distribution. Secondly, there is a time when shareholders need to negotiate after the corporation is established. “With extreme examples, let’s say there are shareholders A, B, and C. If A and B fight, and B leaves but wants to keep their shares without disposing of them, there is no shareholder agreement, so B can have a share of the company's equity without doing anything. This is a cause of a sharp drop in the value of the company when a third party, including investors, looks at the equity structure of the company. Many investors are important about what roles the major shareholders are playing. This is why a shareholder agreement is needed to prevent such situations beforehand.” The shareholder agreement that Choi attorney mentioned is a document that specifies the contents of the agreement between shareholders who have shareholder rights. Attorneys recommend it to companies and startups with multiple founders, but it is not generally followed. There are many cases where this is due to a desire to avoid emotionally charged events from the beginning. The problem arises when the company is about to reach a turning point, such as investment. Investors and external evaluators look closely at what roles the company’s major executives and shareholders are playing and whether their equity is divided according to their responsibilities. As Choi attorney said, if one of the major shareholders is doing nothing and just holding equity, it will be difficult for the company to receive a good rating. Therefore, the shareholder agreement should contain information about equity distribution based on responsibilities and information about responsibility. Choi attorney emphasized several points regarding shareholder agreements. “Shareholder agreements are about shareholders fighting with certain rules when disputes arise between shareholders. If there is no such agreement, there is a high risk of a ‘free-for-all.’ First of all, a ‘period of obligatory service’ of 3 or 5 years should be stipulated in shareholder agreements. If this provision is missing, it can lead to a situation where rights are claimed without obligations. Secondly, a penalty should be specified for failing to complete the period of obligatory service. For example, it could contain language such as ‘all shares held must be returned if the period specified in the contract is not met’ or ‘share ownership is recognized only for the period worked.’ Such rules are very difficult to adjust after the company has grown. It's best to create them at the start of the company. I’m aware of several companies that have struggled due to the lack of this language. Also, it would be good to include confidentiality clauses for shareholders and clauses specifying a court jurisdiction for disputes that arise. Shareholder agreements have many standardized parts. But there are also unique cases. Investors pay attention to the shareholders’ equity when investing. In particular, how much the CEO holds is a major issue. If the CEO holds a small amount of equity, the rating may be lower. However, it’s not easy for companies with multiple co-founders. Therefore, a unique shareholder agreement has recently appeared. In short, it appears externally that the CEO holds a large amount of equity, but in reality, it is divided equally. This content has the potential for problems. When investing, VCs have a clause called 'truth and guarantee.' This requires a full disclosure of the company's equity structure and a guarantee that it is factual. If there is a difference between the externally expressed and actual equity, the VC may address it later. It may seem reasonable to divide shares equally, but investors’ thinking may be different. Finally, Choi attorney concluded his lecture with advice on investment contracts. “Startup CEOs are embarrassed when they receive investment contracts. They don’t fully understand the content, and many of the provisions seem unfair. However, investment contracts are not really that difficult. Contracts define rights and obligations. That is, investment contracts formalize the rights and obligations of startups and investors. Approaching it from that perspective will make it a bit easier to understand. Startup CEOs are worried about being too interfered with. For example, rights of consent and rights of consultation should be clearly defined to prevent excessive interference. The right of consent is usually necessary for matters such as amendment of the articles of incorporation and issuance of new shares, which allows the company to be rationally changed based on it. However, if a VC holding less than 10% of the equity has the right to nominate board members and the right to consent to board members, problems may arise. The right of consent is, again, akin to a right of veto. This means that if a new person is recruited, the investor may veto it, making it impossible to work together. Also, if internal board or shareholder meetings require consent, it may be inconvenient. Those clauses related to the right of consent should be deleted as much as possible and the contract should be stamped. When the relationship between investors and the company is good, there is no need to look at the contract. But when the relationship sours or the company has problems, the contract becomes a backlash. If something isn't done properly when the contract is concluded, it can cause problems down the road. Law firm ‘Zen’ and Yang Kyung-jun, CEO of ‘K Partners & Global,’ were unable to be reached for comment.
'Mike Impact Studio' X 'Law firm Veat', hold a free lecture event on startup investment and contracts
On March 26th, at ‘Mic Impact Studio’ (located in Yeoksam Maru180, Seoul), we will host ‘Shake the talent’ together with ‘Ro&Company’ to help startup employees with legal issues related to investment and contracts. This event is for the members of Studio Well, who are mostly founders, and startup employees who want help with legal issues. Startups often neglect problems that could be prevented or resolved with advice from legal professionals, as they are often in a legal service blind spot. Legal issues that can arise when starting a startup include service governance structure, legal validity of services, contracts, intellectual property rights, trade secrets, personal information, and civil lawsuits. In particular, nowadays, when CTOs start a business, they often lose their companies due to unfavorable contract terms when receiving investment. To help with these problems, we will conduct a free legal lecture together with ‘Mic Impact Studio’ and ‘Ro&Company’. This lecture will be given by lawyer ‘Choi Seong-ho’, who was an engineering student dreaming of starting a business in IT because he loves games. He is invited as a speaker and is expected to discuss legal issues that could arise from the perspective of startup employees. Also, lawyer ‘Choi Seong-ho’ is a lawyer with extensive experience observing the process from the early stages to growth of startups, and the lecture is expected to be practical for startup employees who are risking danger in the growth of their companies. The lecture time will be from 19:30 to 22:00 on Thursday, March 26th, and will consist of a lecture of about 1 hour and 30 minutes and Q&A sessions for attendees.