Alternative Legal Fee Arrangements at Korean-based Law Firms: Limited Scope Representation Explained

Many Korean law firms have been willing to work in relationships based on a non-time charge flat fee or contingency basis for Korean clients. However, many of these law firms in Korea have been unwilling to work on alternative fee arrangements with non-Korean clients, because of, among other things, the requirement to represent the client in a far different manner than that of a Korean client and, also, reduced competition in the foreign-client market, because of the reality that only a few attorneys in Korea are capable of handling the needs of international clients in Korea. In some cases, an alternative fee arrangement is better for clients, but not in all cases.

Korean and foreign clients, often, have different expectations of the role of attorneys. A Korean client is, often, willing to be a passive participant, since the client knows the attorney is motivated, primarily, through a significant contingency fee. Contingency fees are common in Korea in all matters, including criminal and family matters (up until recent changes to law). Thus, clients often “trust” an attorney because of the knowledge that little money will be earned if the client doesn’t prevail.

However, I believe these flat-fee type arrangements, normally, lead to unsatisfied foreign clients, because of the want of these foreign clients to obtain more personal service and, also, be an active participant in the matter. Also, some lawyers are willing to take small upfront fees with little hope of obtaining the contingency portion of the fee and correspondingly these attorneys balance time with money – not a great balance for most clients.

The clients that come to us, often, had significant issues with other attorneys in Korea, because of an inability of the attorneys to adequately communicate with the client and the perception, often rightfully, that the attorneys were too passive in representing the interests of the clients. I believe the solution to this issue is not mere flat-fee billing, but a more nuanced “limited scope representation” in some situations. For most foreign clients, the best choice is to be billed based on an hourly fee.

In many cases, a corporate client has the ability and wherewithal to be an active participant. Thus, for the cash-strapped clients it is, often, advisable to negotiate with the law firm to work under a “limited scope” basis. Thus, some of the matter will be handled directly by the corporate client with, only, the guidance of the attorney and some of the matter will be accomplished by the attorney alone or in coordination with the client.

This situation often allows the foreign client to reduce its expenses.

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