A court has ruled that lawyers must be paid a success fee if they secure a not-guilty verdict in a criminal case.
The decision represents the first significant shift in the Supreme Court’s stance on lawyer success fees in 11 years, since the 2015 plenary ruling that invalidated such agreements, and has raised attention about whether the Supreme Court will alter its prior precedent.
On Jan. 23, Seoul Central District Court’s Civil Appeals Division 1-3 (then-presiding judges Choi Seong-su, Im Eun-ha and Kim Yong-du) reversed a lower court’s ruling and partially ruled in favor of law firm A in a contract payment suit it filed against Mr. B.
The court ordered Mr. B to pay law firm A 33,000,000 KRW (approximately $24,750) plus interest for late payment.
Mr. B was prosecuted for violating the Communications Secrets Protection Act and for defamation. After the district court handed him a suspended prison sentence on Nov. 1, 2019, he retained law firm A during the appeal. The retainer agreement provided for an additional success fee of 33,000,000 KRW (approximately $24,750) if the firm secured an acquittal.
Mr. B was acquitted on appeal and that acquittal was later affirmed by the Supreme Court, but he refused to pay the success fee. Law firm A then brought a suit to recover the agreed payment.
In court, Mr. B argued that a success-fee agreement in a criminal case is void because it ties the outcome of an investigation and trial to monetary gain and thus violates public order and morals.
That argument follows the rationale of the 2015 Supreme Court plenary decision, which found success-fee agreements in criminal cases invalid.
In 2015 the plenary bench held that such agreements undermine the public character of lawyers’ duties to protect fundamental rights and pursue social justice, and pose a serious risk of eroding public trust in the judicial system. It ruled those agreements should be invalidated under Civil Code Article 103, which voids legal acts that violate public order and good morals. The opinion was led by then-Justice Kwon Soon-il.
The trial court applied that precedent and ruled in favor of Mr. B.
The appeals court, however, overturned the decision, finding that the specific agreement in this case did not violate public order and morals.
The appeals panel said it could not categorically conclude that success-fee agreements in all criminal cases automatically contradict the public character or ethical obligations of lawyers or damage judicial fairness. Instead, it held courts should assess whether a given agreement would induce a lawyer to use unlawful or improper means, or pose a real risk to the fairness and integrity of the criminal justice process.
The panel added that criminal trial outcomes are not determined solely by the discretion of investigators or judges; they are often substantially shaped by lawyers’ professional and diligent advocacy. It warned that a blanket ban on success-fee agreements could weaken lawyers’ incentives to provide vigorous defenses and shift the associated burdens and risks entirely onto clients.
The court also found that Mr. B’s acquittal at the appellate level was largely the result of law firm A’s thorough and dedicated advocacy, and it concluded that Mr. B had abused prior precedent to evade his contractual obligations rather than legitimately exercise his rights.
Mr. B has appealed to the Supreme Court, which must now decide whether to uphold the appeals court ruling. If the Supreme Court affirms that decision, precedent on success fees in criminal cases would change for the first time in about a decade.
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Reporter Lim Gwang-bin (june80@yna.co.kr)
