Regulation and Governance of Legal Tech in Japan

Advancement of the Rule of Law or a Creeping Introduction of Unauthorized Practice?

Abstract

As the AI-Based contract review services have become widely used by corporate legal divisions, the issue of unauthorized practice of law (UPL) under the Attorneys Act was raised. The literal reading of the relevant regulation could mean that a commercial company other than a legal professional corporation providing such legal tech services commit UPL. After debates before the Regulatory Reform Council, the Ministry of Justice issued Guidelines to interpret the UPL regulation in relation to AI-based contract review services. While the Guidelines clarified the misunderstanding that the existing contract review services are illegal UPL, the extent of permitted legal tech services has remained unclear. Against this background, a group of service providers have published self-regulatory Principles on the Legal Tech and AI. The Principles are commitment to good governance in the development phase of legal tech (“lawyer-in-the-loop”), which is in line with the facilitation of good governance over the AI in general.