Three out of four small and medium enterprises (SMEs) lack dedicated legal teams or personnel, according to a recent survey. Despite rapid changes in laws and regulations, many companies struggle to keep up and respond effectively.
On July 8, the Korea Chamber of Commerce and Industry released findings from a survey of 300 SMEs, revealing that 75.3% of respondents do not have dedicated legal departments or staff.
The most common response, at 35.3%, indicated that companies rely on external consultants as needed. Additionally, 22.7% reported that staff from other departments handle legal tasks, while 17.3% stated they have no legal response system in place. Only 14.0% of companies reported having both a dedicated legal team and personnel, while 10.7% have only dedicated staff.
There is a notable disparity based on company size. Among small enterprises, 83.5% do not have dedicated legal teams or personnel, while 59.0% of medium-sized enterprises also lack separate legal response systems. Smaller companies are thus more vulnerable to legal risks.
Companies are also slow to recognize new laws and regulations. When asked when they typically become aware of new or amended laws, 52.7% of respondents said they only learn about them after implementation. In contrast, 33.6% reported being aware during the grace period, while only 13.7% monitor changes from the legislative announcement or National Assembly review stages.
This delay in recognizing legal changes has led to actual penalties. About 17.0% of respondents reported experiencing fines or administrative sanctions for failing to comply with laws and regulations in the past three years. In contrast, 71.7% said they had not faced such issues, while 11.3% were unsure.
Responses related to a lack of legal awareness or misinterpretation accounted for 43.1%. The most common reason for penalties was that compliance was difficult due to industry practices, cited by 33.3% of respondents. Additionally, 31.3% indicated they misinterpreted the applicability or implementation methods, while 11.8% were unaware of new or amended laws.
The area where companies feel the most burden in legal compliance is labor and employment, with 63.3% citing this as a concern. Other significant areas include industrial safety at 38.3%, fair trade and subcontracting at 31.7%, and tax and taxation at 29.0%.
To enhance their legal compliance capabilities, SMEs identified the need for tailored legal guidelines as a key policy initiative. Among multiple responses, 51.0% called for the development of customized legal guidelines and implementation manuals for SMEs. Other suggestions included ensuring sufficient grace periods and strengthening advance notifications at 47.0%, expanding low-cost legal consultation and advisory services at 44.3%, increasing training and seminars on legal compliance strategies at 29.0%, and providing consulting support for establishing compliance systems at 18.0%.
The Korea Chamber of Commerce and Industry stated, "Many SMEs are either unaware of new laws and amendments or misinterpret their applicability and implementation methods. A lack of awareness of legal regulations can lead to unintended violations, highlighting the need for clear legal interpretation guidelines and increased outreach tailored to the field."
This survey was conducted via phone, email, and fax from May 21 to 29, involving 200 small enterprises and 100 medium-sized enterprises.
* This article has been translated by AI.
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