Legalon Technologies conducted approximately a year of lobbying regarding the interpretation of the law. The photo shows Mr. Kasuga, who was in charge of lobbying at the company.
Lobbying involves lobbying the government and administration to change rules.
For startups that develop their businesses beyond the framework of traditional laws and regulations, the success or failure of lobbying can have a bearing on the survival of the company.
Most recently, in July 2023, electric scooter startups began lobbying the government. Lobbying also played a role, and the Road Traffic Act was amended to allow electric scooters to be operated without a driver’s license, rapidly expanding the range of users.
LegalOn Technologies (changed company name in December 2022), which operates the contract checking service “LegalForce” that utilizes AI, has also been reporting for more than a year since June 2022 that its services violate the law. We have been lobbying on whether or not to do so.
How did the “unknown battle” by lobbying unfold? We covered Legalon Technologies and the consulting firm that supported the company’s lobbying efforts.
“Possibility of illegality” indicated by the Ministry of Justice
Various applications have been submitted to the “Gray Zone Elimination System.”
“Legal Force” was released in 2019. As of August 2023, 3,000 companies have adopted this service, which uses AI to improve work efficiency by identifying common risks hidden in contracts and supporting revisions. ing.
Although it is a venture that is a leader in legal tech, it was the Ministry of Economy, Trade and Industry’s “gray zone elimination system” that put a stop to its rapidly growing services.
This system is aimed at confirming the interpretation and applicability of current regulations and encouraging new entrants such as startups. , there was an inquiry as to whether it was in violation of Article 72 of the Lawyers Act (*Full text of the article is below).
The inquiry was about a “new business that utilizes AI to display on an app the results of examinations, such as whether the contents of a contract are favorable or unfavorable from a legal perspective,” and was about a service similar to Legal Force.
Article 72 of the Lawyers Act prohibits so-called “unrepresentative conduct” in which non-lawyers perform acts that are reserved for lawyers, but the Ministry of Justice has not responded to this inquiry.”It is believed that this service may be assessed as violating the main text of Article 72 of the Attorney Law.”replied.
Regarding this response, multiple media reported that existing legal tech services may also be illegal. The situation has developed into a series of inquiries from companies that use Legal Force and those that are new to the service, asking whether it is safe to use the service.
At the weekly regular meeting attended by all employees of Legal On Technologies, the company’s CEO Nozomi Tsunoda said,”The services we provide are designed legally, but this is a big test for the company.”He said he felt nervous as he explained this to his employees.
*Article 72 of the Lawyers Law: “A person who is not a lawyer or a law firm shall, for the purpose of obtaining compensation, file a lawsuit, non-contentious case, request for review, request for re-investigation, request for re-examination, etc. to an administrative agency, and other general laws. A person may not engage in the business of providing expert testimony, representation, arbitration, reconciliation, or other legal services in connection with a case, or providing mediation for these matters.However, unless otherwise provided for in this Act or other laws, this shall apply. It’s not” (From e-GOV law search)
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Forming an industry group and creating connections with related parties
Legal force is legal.For Legal On Technologies, demonstrating this to the world has become an important matter that will affect the survival of the company.
The first thing they set out to do was create a system that would allow the industry as a whole to raise its voice. In October 2022, the industry group “AI and Contract Review Technology Association (ACORTA)” was formed with Lycée, GVA TECH, MNTSQ, and others that develop services using AI. Legalon Technologies was asked to act as the secretariat to coordinate the discussions.
At the same time as creating horizontal connections, weBuilding connections with related parties, including Kasumigaseki and Nagatacho.It was.
The Ministry of Economy, Trade and Industry and the Ministry of Justice are involved in institutional and legal aspects, the Cabinet Office is involved in regulatory reform for startups, members of Congress with an interest in legal affairs and technology, and related industry organizations… By contacting the people involved, they looked for ways to get approval that the service was legitimate.
Makayla, a consulting firm that provides support for policy proposals, supported these lobbying efforts. Makayla was founded in 2014 and is a well-known company in the lobbying world with a track record of supporting lobbying related to electric scooters.
Makayla executive officer Jo Jo, who was in charge of lobbying for Legalon Technologies.
Yuzuru Tachi, executive officer of Makayla, who was in charge of roving at Legal On Technologies, currently works at the Ministry of Land, Infrastructure, Transport and Tourism, and has experience working at Rakuten and Mercari.
Mr. Jo is”We started by creating a stakeholder map that included the country, experts, industry groups, and politicians, and sorting out what their stance was.”I look back.
“In addition, in order to change the system, it is necessary to act according to a schedule of what to do and by when. For example, if we want to change the law, the Diet only meets once a year. What should we do at this time? We proceeded with lobbying while assembling the system.” (Mr. Shiro)
“Working in line with the administration’s line” was successful.
In lobbying, “it is also important to be able to link it to important policies of the administration.”
An opportunity arose in November 2022, five months after the Ministry of Justice’s response.
The issue of contract checking using AI was taken up by the Cabinet Office’s Regulatory Reform Promotion Council’s startup working group.
The working group included expert members including lawyers, the Director of the Judicial Legislation Department and the Counselor of the Minister’s Secretariat of the Ministry of Justice, and observers such as the Deputy Secretary-General of the Japan Federation of Bar Associations, and held interviews with the industry group ACORTA.
The attending committee members also asked the Ministry of Justice about its response to gray zone inquiries, and asked the Ministry of Justice to formulate guidelines to provide concrete examples of what kind of AI use would not violate the law. Opinions were expressed asking for.
In June 2023, six months after the working group was held, the Regulatory Reform Promotion Council’s report stated that the Ministry of Justice should formulate guidelines as a measure in the first half of 2023, making significant progress.
Mr. Jo is”When it comes to lobbying, it is important to work in line with the administration’s policy. Discussions have progressed because the Council for the Promotion of Regulatory Reform has taken this up on their agenda.”points out.
“Legal Force is a service that contributes to work style reform in legal departments of companies, which also leads to the promotion of DX.
In addition, since the government takes into consideration overseas trends, appealing to the market size of advanced legal tech countries was also effective. They were able to successfully incorporate the discussion into the story of the government’s policies.” (Mr. Jo)
“Expressions that only experts can understand” will not reach your goal.
“Since the government is issuing guidelines, I wish they would have made it clear that the service is “white.” If there was room for interpretation, it would lead to user anxiety.”
So says Mai Kasuga, head of the corporate legal group at Legalon Technologies.
Kasuga says, “If gray areas remain, service providers will become discouraged.”
Mr. Kasuga registered as a lawyer in 2010 after graduating from the University of Tokyo Law School. He worked for many years in corporate law at TMI Law Offices, one of the five major law firms, but transferred to Legal On Technologies in January 2023.
“I never expected to be in lobbying.”Mr. Kasuga was put in charge of lobbying and became ACORTA’s executive director. In addition to keeping in touch with member companies, he continued to communicate with officials from the Ministry of Justice and others.
“It was my completely new experience approaching the government, so I thought about how best to communicate with them.Although it’s a low-key approach, I regularly call the people in charge of the Ministry of Justice and the Cabinet Office, and as an industry group, I Send out information.
We have communicated our thoughts on what we think is necessary for the guidelines.” (Mr. Kasuga)
Mr. Kasuga emphasized that the guidelines”It’s no good using expressions that only experts can understand.”I’m saying that.
“Even though things are commonplace in the legal world, there are many things that people reading the law for the first time don’t know.However, the guidelines are also for the general public to read.I kept asking them to express them in an easy-to-understand manner.” (Mr. Kasuga)
Guideline: “I landed in the best possible way.”
After about a year of lobbying, the guidelines were announced in August 2023.
Finally, in August 2023, the guidelines were announced.
The 6-page guideline titled “Relationship between the provision of contract-related business support services using AI and Article 72 of the Attorney Act” published by the Judicial Legislation Department of the Minister’s Secretariat, Ministry of Justice, describes the types of services that can be provided. The relationship between the law and legal tech services was specifically shown, such as whether it would be a violation of Article 72 of the Lawyers Act, and what kind of services would not constitute a violation.
“Honestly, when I saw the guidelines, I was impressed and thought, ‘Wow, they’ve gone this far.’ It was the best way for businesses to land.”Kasuga looks back.
In response to the publication of the guidelines, Legal On Technologies immediately released LF Checker, an AI contract checking tool for small and medium-sized businesses that can be used for 9,900 yen per month (tax included). Additionally, in the United States, services that use AI in a more advanced manner are already being rolled out.
“If it is unclear how much gray area there is, service providers will be forced to become conservative and feel discouraged, thinking, “I really want to go this far, but I might be criticized.”
Providing a clear statement that it was legally correct was also valuable in terms of expanding the scope of the service.” (Mr. Kasuga)
Corruption cases too… What is lobbying in the Reiwa era?
According to Makayla, the number of lobbying requests from startups has skyrocketed.
“The number of competing companies that provide lobbying consulting services could only be counted on one hand when the company was founded in 2016, but the number has more than doubled.” (Mr. Shiro)
On the other hand, there are many cases of corruption when private companies approach the government.
In September 2023, a member of the House of Representatives, Mari Akimoto, was charged with accepting bribes from Japan Wind Power Development Co., Ltd. in return for facilitating questions in the Diet regarding the government’s offshore wind power generation project. It is also fresh in my memory that he was arrested and charged with bribery.
However, Mr. Jo”Lobbying in this day and age means making comprehensive decisions while maintaining fairness and transparency by making the issue widely known, rather than making petitions to politicians in a closed form.”and talk.
“Due to the rapid evolution of technology, there are more and more cases where politics and government cannot make decisions, and if Japan’s regulations are stronger than those overseas, this can hinder the growth of domestic startups.
Through lobbying, I would like to create an environment where Japan’s issues can be broadly discussed.” (Mr. Shiro)
Source: BusinessInsider
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