This is easily one of my favorite matchups in all of MK2. Two complimentary playstyles do very well against each other.
Kung Lao has opportunities to do some big damage against Scorpion. Blocking a teleport can lead to a whirlwind spin combo or something simpler such as aaHP, hat toss...or a double bullet kick. Scorpion's threat of an aaRH usually goes out the door in this match because he is always afraid of getting bullet kicked. Use that to your advantage and slam a few out every now and then. Don't get predictable with it, though, or you will get speared and uppercutted. That, or Scorpion will start meeting you in the air for an air throw. Against turtlers, use a well timed teleport to get inside and start up the CQC jabbing and headbutt game. I like to use a few (kara) jabs followed by a RH or whirlwind spin when out of range. Also, if Lao manages to block a spear from close range, QUICKLY punish with a bullet kick. Lastly... if you don't feel like trying and just want the cheese it, enact the Liu Kang low toe strategy. It works the exact same way, and will piss off Scorpion players just as much.
Scorpion's use of the spear is very potent in this match. Use it to counter all failed bullet kicks and buffer it to stop teleports when possible. As discussed earlier, when Lao goes into the air, countering with aaRH isn't always feasible because of the speed of the bullet kick that may followup. Either duck down and wait for it to pass or stand-block and counter with aaHP, spear, uppercut. If Lao starts to turtle and spam hats, just telepunch.
Scorpion has the ability to take away a lot of Lao's offense with his spear. However, a turtly Lao can pose an equal problem for Scorpion. For those reasons, I feel this is a 5-5 match.