An appellate court ruled that it cannot uniformly ban lawyers from receiving "success fees" when they secure an acquittal or similar outcome for a client in a criminal case. The decision conflicts with a 2015 en banc Supreme Court precedent, drawing attention to whether the precedent will be changed.
The Korean Bar Association held a forum on the 23rd on whether to recognize success fees in criminal cases. Critics noted that clients' burdens have increased since the ban on success fees, including higher retainers.
◇ In 2015, the Supreme Court en banc ruled "criminal success fees are void"
According to legal sources, on Jan. 23 the Civil Appeals Division 1-3 of the Seoul Central District Court reversed a first-instance ruling that had dismissed a claim by Law Firm A in a suit for agreed payment against B and others, and ruled partly in favor of the plaintiff.
B was indicted on charges of violating the Protection of Communications Secrets Act and defamation, and in the first trial in Nov. 2019 received a suspended prison sentence. B then signed a retainer agreement with Law Firm A to pay a success fee of 33 million won upon final acquittal. B was acquitted on appeal, and the Supreme Court finalized the ruling.
However, B did not pay the success fee, and the dispute led to litigation. B argued that "a success fee agreement in a criminal case ties the trial outcome to monetary compensation and is void as it violates good morals and social order." The Supreme Court, in a 2015 en banc decision, similarly found success fees in criminal cases to be void.
Law Firm A countered that "in cases contesting guilt or innocence, the outcome can vary depending on the defense counsel's advocacy," adding that "it constitutes legitimate compensation."
Unlike the first instance, the appellate court recognized the validity of the success fee agreement, stating, "This agreement does not violate social order such as good morals." The panel determined that "a blanket ban on success fees could weaken the incentive that encourages diligent advocacy by defense counsel." The case is now before the Supreme Court due to B's appeal.
◇ Legal community says cases have concentrated in large law firms after the success fee ban
That day, the Korean Bar Association and the Seoul Bar Association co-hosted a forum at the National Assembly Members' Office Building with People Power Party lawmakers Cho Bae-sook, Song Seok-jun, Shin Dong-wook and Kim Jae-seop on "plans to normalize criminal success fees."
Korean Bar Association President Kim Jeong-uk said, "Since the Supreme Court ruling, a significant portion of success fees has been converted into retainers."
Seoul Bar Association President Cho Sun-yeol said, "As the incentive to win has weakened, there has been a tendency for cases to flow to former high-ranking officials-turned-lawyers or large law firms," adding, "This, in effect, has acted as a factor driving up initial criminal case expense."
There were also concerns that opportunities for young lawyers to take cases have declined. Korea Association of Legal Professionals President Chae Yong-hyeon said, "For young lawyers, there are not a few cases taken on with success fees only, without retainers," adding, "If success fees are deemed entirely void, it could disadvantage new lawyers and solidify a structure favorable to former high-ranking official lawyers."