Friday, 23 April 2010

Don't Trust Your Boss? How's Peace of Mind for 20 a Month?

I got an e-mail from ATEK's President, Greg Dolezal. I'm a member of ATEK now, and am planning on becoming more involved. I'd rather not let that take over this blog entirely, but I would like to put some of my energy in that direction, and you'll hear about it here from time to time.

Meanwhile, there's an exciting program that I'd like to mention here: Kangnam Labor Law Firm, which has handled a large volume of labor cases by reference from ATEK, is testing a new program called "Legal Assurance" You can read about it, including the text of the ATEK member e-mail, at Chris in SK's blog, it's mentioned at Expacked, and explained further at Kangnam Labor Law Firm's own site.  After reading up, here's the breakdown, as I understand it.

Basically, it works like health insurance: instead of paying tens of thousands for a surgery when you get sick, you pay a little each month, which adds to the pool of insurance payees, and when something big comes along, they draw from that pool to help you out with your surgery.  In this case, 20 000 won a month pays into the monthly plan, which amounts to a retainer, and give you access to the law firm's services.

So why is this a good idea?  Dollars and cents, readers.

See, the standard labor lawyer's retainer fee at Kangnam Labor Law Firm -- the fee you pay them before they start looking into your case -- is 600 000 won, to recruit their services.  Then, if you win a settlement, the firm is also entitled to 30% of the entire settlement, on top of the retainer.

Doing the math on that, if your boss is trying to rip you off for 1 000 000 won, the retainer is 600 000, and then the firm gets 30% of the settlement on top of that.  This means out of your million, 600 000 goes into the retainer, and another 300 000 goes to the firm as a percentage of your settlement, leaving you with 100 000 won - not even worth the effort.  Basically, this means that for cases in which your boss is trying to stiff you for a smaller amount, it's just not worth going to a labor lawyer; your only choice is to cut your losses and look for a better job.

The next problem with doing things this way, is that lawyers don't get called into the case until the dispute has already "gone nuclear" as the law firm calls it -- not until things have gotten so bad between the teacher and the boss, that the teacher is actually willing to cough up 600 000 won - no small amount - to get it sorted.

The last problem with doing things this way is that a lot of English teachers in bad spots need a lawyer for the same reasons they can't afford a retainer: because they're not getting paid.  How is one expected to pony up 600 000 won, when the REASON one needs a lawyer is because one hasn't been paid in two months?

So how does 20 000 a month help?

First, it means that you can access a labor lawyer without dropping 600 000; this means that you can have Kangnam Labor Law Firm backing you up in issues over smaller amounts - that big retainer means  that until the amount in dispute is larger than 2 500 000 won, it's not really worth your while to call in a lawyer, but for 20 000 a month, you can have access to a law firm ready to mediate, negotiate, and support you in smaller matters as well.

Second, it means that rather than waiting until things have gotten really bad between an employer and an employee, you can bring a lawyer in sooner in the process, or get better advice sooner, and hopefully settle the matter before it has to go to court, which is better for everyone.  Mediation is way better than lawsuits, it's faster, and less antagonistic, and there's less chance of totally fire-bombing your working relationship forever (if that's important to you).  If there IS a problem that requires going to court, no further retainer is required, but the firm is there to advise you long before things get bad enough to consider going to court, and there to mediate issues rather than having to bring the hammer.

Third, it means that you can access the expert legal advice of a labor law firm whenever you need it, which could be worth a lot, not just in terms of a stronger negotiating position, but also in terms of peace of mind.

I'd say 20 000 a month is a small price for peace of mind.  So who should sign up for this?

Well, at this point, the Legal Assurance Program is a trial balloon: they're doing a small-scale release, a "soft opening" to see how it works out, and to see if the model is viable.  They might tinker with the model a bit before rolling it out on a larger scale. If it does work out well, I'd say anybody who doesn't trust their boss, anybody who's observed sketchy behavior from their employer, whose employer seems to be hiding something, who's had to fight for things they're entitled to, like health insurance, or who's been burned in the past, and doesn't want it to happen again, would be stupid not to sign up.  Like health insurance or life insurance, anybody who's not sure about the security of their position would have much less to worry about if they signed up, and 20 000 a month is nothing: that's six bowls of jajangmyeon in Seoul, or a meal and a pint at Wolfhound, or three Long Island Ice Teas.  I'm not sure exactly how limited this limited release is, or how many monthly retainers they're putting on the table at this point, but I hope they go to people that need them.

I predict that in the first group of people signing up, Kangnam Labor Law Firm will end up dealing with a lot of grievances, so that it won't pay for itself immediately; however, I think that once that initial burst settles down, it'll be well worth it for them, in revenues and in reputation among English teachers, and it'll be a huge boon for English teachers who aren't sure about the situation they're heading into.

I think it's awesome that Kangnam Labor Law Firm is trying out this system; I hope it works, and I hope we can see others like it.  For those who have been asking what ATEK's done for them, lately, I'd say this is a pretty strong indication that, while ATEK hasn't been loud (though some of its critics have), it has been getting stuff done.

Go to the website and read more about the plan, and you're also free to write them if you have a question at

(by the way: I'm not a lawyer, and I'm not qualified to give legal advice.  Don't take this as such.  Instead, contact Kangnam Labor Law Firm where they actually know what they're talking about, rather than just reading stuff and putting it into pretty words.)


kushibo said...

I think this is an excellent idea, and I think you did a good job of talking about the potential problems, all of which I think are fixable with some fine-tuning and tweaking.

The biggest problem is that by having voluntary (versus mandatory) insurance, you run the risk of something like adverse selection. Basically, those with a propensity to sue and those with a perceived greater likelihood of needing to sue will seek out this kind of insurance.

Spreading the risk to a more "normal" population is what needs to be done. I believe this could be done by ATEK upping the cost of membership by the amount of the insurance and offering it as a package (20K for the insurance and 10K (?) for the membership). Of course, this would discourage membership among some, but it might encourage membership among others. For the former, an assurance-free option could be available: 15K for membership instead of the current 10K, so that getting the two would be a bargain. In turn, the law firm should charge 25K won for the assurance alone, not 20K won.

Another problem, as you mentioned, is that there would be greater usage, perhaps more than is being covered by the assurance premiums of 20K or 25K. This would be for two reasons, the first of which would flatten itself out over time; that is, there is pent-up demand for legal services that would find release in this new system. Eventually, though, as these pent-up cases are dealt with or play out, the demand for services will flatten to a "normal" level.

The second problem, though, is one that plagues insurance plans whether they be nearly all private, like pre-Obamacare US or nearly all public: People are more likely to use something if they are separated from its true cost. Right now people who want to sue are curtailed by the high cost (600K), but if it costs nearly nothing, they are more likely to go and do it. Perhaps a gatekeeper role will have to be performed by ATEK or some objective third party, someone deciding — hopefully with some criteria — if a case has merit and a reasonable chance at success in litigation or arbitration.

Of course, that will have people whose cases are rejected screaming bloody murder and, as some disgruntled folks are wont to do, trying to take down the system through badmouthing or worse.

The problem is finding that happy medium between having legal services so cheap that people will use them even for frivolous or unlikely cases on the one hand, and having them so expensive that those with a genuine need and whose cases may effect real change are unable to get legal care.

But the latter point may actually help things along: If this assurance-providing law firm starts getting good at such services, they will actually have the effect of reducing demand for their services or their workload for each case. That is, they might end up creating a network of connections that would include, say, government officials who will go to bat for them, or developing a skill set such that a few phone calls gets cases resolved.

We shall see.

I just hope this doesn't get mucked up with overly high expectations, cheapness from people who want services they haven't been properly paying into, and bruised egos trying to ruin things for everyone else.

kushibo said...

You inspired me to take my comment and make a whole post (slightly, just slightly different from the original).

I really think this is a great idea. I wish I'd thought of it.

조안나 said...

I like the idea, but paying 240,000 a year for insurance to keep your boss from screwing you over seems a bit steep...

kushibo said...

Actually, I need to rethink those numbers (and revise my own post). I must admit I was writing my long comment while someone kept interrupting me about something, and I conflated per month with per year.

However, even 240K per year for someone going to bat for you on a variety of legal issues is not a bad deal. At the same time, I think what I mentioned — making some special deal with ATEK members for this — could serve to lower the cost to, say, 15K per month (as long as it's done on an annual contract) because tying it to ATEK membership would increase the risk pool and presumably include a lot of "low-risk" people (i.e., those who wouldn't likely need the service but want peace of mind) to off-set the "high-risk" people. That could keep the costs to the firm lower, and thus keep the "premiums" low. I think this could be offered for 150K to 200K per year.

Unknown said...

Well it would be better to do it like car insurance is done. You have a monthly fee and access to free legal advice / mediation. But actual lawsuits would require some slightly larger upfront cost (200,000 vs 600,000 or whatnot) and an amount of the won proceeds going to the company (say 10 or 15% vs 30%).

The biggest benefit isn't the actual legal suits but the advice / mediation that would happen. Having a lawyer involved early (before it becomes lawsuit worthy) will reduce the requirement for actual law suits.