7/31/2015

Korean Supreme Court Rules Contingency Fees for Criminal Cases Illegal

The Korean Supreme Court has, recently, ruled that an attorney's contingency fees in criminal cases are against public policy, and are, therefore, illegal in Korea.

The Supreme Court of Korea cited two bodies of law to arrive at its decision: Korea's Civil Act and the Korean Attorney-at-Law Act.

Article 103 of Korea's Civil Act (Juristic Acts Contrary to Social Order) states that a "juristic act that is contrary to good morals and social order shall be null and void."

Article 1 of the Attorney-at-Law Act states that the "mission of any attorney-at-law shall be to defend fundamental human rights and realize social justice." Article 2 of the Attorney-at-Law Act states that "each attorney-at-law shall perform his/her duties independently and freely as a legal professional."

The Supreme Court, then, ruled that contingency fees in criminal cases:
  • Harm the public's perception of lawyers - someone whose mission it is to defend fundamental human rights and help realize social justice; 
  • Hamper the mission of an attorney-at-law who shall operate independently as a legal professional;
  • Reduce the trust of ordinary people in Korea's criminal justice system; and,
  • Are against public policy and social order, and are therefore, illegal.
The American Bar Association Model Rules of Professional Conduct Rule 1.5 prohibits contingency fees in criminal cases and some family law cases.  New York County Lawyers' Association Opinion 714 has noted that the rationale behind the blanket prohibition of contingency fees in criminal cases are three fold:
  1. Arrangements based on acquittal create a conflict of interest and may lead to the potential for compromised representation. Defense attorneys, for example, may be tempted not to plea bargain in order to go to trial and obtain the contingent fee.
  2. The prohibition prevents defense attorneys from taking advantage of criminal defendants who may be willing to pay exorbitant and excessive fees.
  3. There is a general ethical proscription against lawyers acquiring a financial interest in the client's cause and against becoming a joint venturer with the client in the case. The professional judgment of a lawyer should be exercised "free from compromising interests and loyalties." 
In Korea, family law and all other types of matters are still able to be handled via contingency fee.

This holding is being criticized by many attorneys in Korea, since the system is prevalent and a adequate replacement may not be readily available to many attorneys.  The Korean Bar Association is taking the case to the Constitutional Court of Korea.

Many, additionally, contend that the lack of a contingency fee may lead to less aggressive representation by attorneys and a need to move to hourly billing.  Few Korean attorneys bill by the hour and, thus, do not have experience or adequate internal systems to, quickly, move to an hourly billing arrangement.

Often, judges in Korea are criticized for not knowing realities within the legal profession, since most judges in Korea have never engaged in the practice of law outside of their duties as a judge.  The present holding is, possibly, a reaction to an "unreasonable" fee in the particular case, but many question whether the solution of a blanket prohibition is the appropriate remedy for a seemingly isolated situation.

You can read Opinion 714 of the New York County Lawyers' Association here:
New York County Lawyers' Association Committee on Professional Ethics Opinion 714
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