With an appellate court recognizing "success fees" in criminal cases last month, a Supreme Court precedent that has stood for 11 years is wavering. The ruling says an attorney may be paid if they achieve the client's desired outcome. The court also noted that the attorney market has been distorted. In an era of 40,000 attorneys, success fees in criminal cases are considered a top industry goal.
◇Supreme Court: "It is difficult for 'success' in criminal cases to depend solely on an attorney's efforts"
Attorney fees are divided into a retainer and a success fee. In the past, both criminal and civil cases allowed them, but in 2015 the Supreme Court banned success fees only in criminal cases.
At the time, the full bench (with then-presiding Justice Kwon Soon-il) viewed "success" in criminal cases as nonindictment, acquittal, or a suspended sentence, but concluded that such outcomes are not determined solely by an attorney's efforts.
Because decisions by investigative agencies and the court weigh heavily, recognizing success fees could lead to improper influence. Accordingly, it found that agreements on success fees in criminal cases are void under the Civil Act for being "contrary to good morals and other social order."
Recently, however, the appellate court reached the opposite conclusion. The civil appeals panel at the Seoul Central District Court (then presiding judges Choi Sung-su, Lim Eun-ha, and Kim Yong-du, Director General judges) ruled that because guilt or innocence can vary depending on defense arguments and evidentiary disputes, compensation based on results is a legitimate price. The ruling raises the possibility that the Supreme Court may change its precedent.
The case began when a law firm signed a contract with a client that required a payment of 30 million won if an acquittal became final. The client was finally acquitted by the Supreme Court but did not pay the success fee, leading to a lawsuit. The first trial ruled against the attorney under existing precedent, but the second trial reversed. The case is now before the Supreme Court.
◇"Higher retainers, weaker defense rights for low-income people"… Japan "allows"
The appellate panel said market distortions deepened after success fees were banned. Attorneys raised retainers in place of success fees, increasing clients' upfront burdens. Critics say low-income people, who struggle to afford high retainers, have found it harder to receive adequate legal support.
According to a survey by the Seoul Bar Association, after success fees in criminal cases were banned, when the same attorney took a criminal case, the win rate was 6.2 percentage points lower than in civil cases, and an additional 1.9 percentage points lower for low-income clients' cases. Observers also say the revolving-door problem has not been resolved. The panel said, "The structure in which large retainers concentrate on attorneys who are former high-ranking judges and prosecutors has instead become entrenched."
Overseas, systems vary by country. Citing the public nature and independence of legal work, the United States, the United Kingdom, Germany, and France ban success fees in criminal cases.
Japan, however, allows success fees in criminal cases. One Japanese law firm even posts a price list on its website: 1 million yen (about 9.42 million won) for an acquittal, 500,000 yen for nonindictment, 400,000 yen for a bail decision, and 300,000 yen for a sentence lighter than the prosecution's demand.
The United States bans agreements on success fees in criminal cases. However, some point out that in practice fees are raised and paid entirely upfront, creating a de facto success fee custom.
Attorney groups such as the Korean Bar Association say success fees in criminal cases should be restored. A Korean Bar Association official said, "We need reforms that guarantee the public's defense rights and allow reasonable evaluation of attorneys' proper performance of their duties."