Hong Kong was rocked by months of protests in the second half of 2019, sparked by the extradition bill. 47 other high-profile democratic campaigners are facing subversion charges under the national security law, and have mostly been denied bail and are being held in detention.
Alongside Mr Lai and Mr Lee, former lawmakers Margaret Ng, Cyd Ho Sau-lan, Lee Cheuk-yan, Albert Ho Chun-yan and Leung Kwok-hung, known as "Long Hair", were convicted.
The city's government separately charged some 47 prominent opposition figures with "conspiracy to commit subversion" under a national security law imposed past year that carries sentences as long as life in prison.
Martin Lee, the 82-year old veteran of Hong Kong's struggle for more political rights, is the founding chairman of the Democratic Party.
With many suggesting Hong Kong is becoming like China, 64-year-old Lee, a former legislator who has be an activist across four decades, said there is still hope.
Two others had previously pleaded guilty.
Lai, founder of Apple Daily and media group Next Digital of Hong Kong, also faces charges of fraud and colluding with foreign forces and endangering national security under the National Security Law for the HKSAR.
"So on this day, in a very hard situation in Hong Kong, political retaliation is on us", Lee Cheuk-yan, one of the defendants, said ahead of the court session.
Lee, who helped launch the city's largest opposition Democratic Party in the 1990s and is often called the former British colony's "father of democracy", was accused of taking part in an unauthorised assembly on August 18, 2019.
"I have found after trial the prosecution able to prove beyond reasonable doubt that all of the defendants together organised what amounted to an unauthorised assembly", the district court judge noted in the full written judgement.
Before the ruling, a small group of supporters displayed banners outside the West Kowloon court building, including one that read "oppose political persecution".
"We will still march on no matter what lies in the future".
Organisers claimed 1.7 million people turned out - nearly one in four Hong Kong residents - though that number was hard to independently verify.
"But once Hong Kong's human rights and rule of law are rolled back, the fatal virus of authoritarian rule will be here to stay", he said.
Media tycoon Jimmy Lai, now in custody after his arrest under Beijing's new national security law, was among those convicted.
Prosecutors accused the seven of turning an approved assembly in Victoria Park into an illegal march to Central under the pretext of crowd control.
British lawyer David Perry, hired by the Hong Kong government to be the lead prosecutor, stepped down following withering criticism from both the United Kingdom government and British legal bodies over his decision to take the job.
But the movement suffered a halt in early 2020 due to the restrictions imposed against the coronavirus pandemic, the thousands of arrests and a certain fatigue of the protesters.
"We are getting very close to the system of China but not yet", he said.
Critics counter that Beijing has shredded the liberties and autonomy it promised Hong Kong could maintain after the handover.