Aladin Loses After Refusing 'Hacking Resolution Success Fee'

Aladin, a company specializing in used books, lost in the first trial despite claiming that it could not pay fees to the law firm it appointed after being involved in a hacking incident, arguing that “the fee agreement was a so-called ‘criminal case success fee’ contract, where payment depends on the police investigation results.”

On the 17th of last month, Judge Jeong Yoon-joo of the Civil Division 73 at the Seoul Central District Court ruled in favor of the plaintiff in the fee claim lawsuit (2023가단5509762) filed by law firm A against Aladin Communication.

Yonhap News

Aladin, which operates internet services and book and publishing distribution businesses, was hacked in May last year, resulting in the leakage of about one million e-books it held. The hacker distributed some of the e-books in a Telegram public chatroom with about 3,000 members, then demanded Bitcoin from Aladin and threatened to release the rest if the demand was not met, according to investigations.

In response, Aladin signed a legal advisory contract with law firm A to resolve the incident. The contract included provisions for “handling the police investigation stage of Aladin’s e-book hacking damage case, negotiations and discussions with the accused party, and all legal and factual advice and execution necessary to resolve the case, including prevention of damages caused by the distribution of hacked e-books.” It also stipulated a payment of 100 million KRW as advisory fees, with a clause stating that “if the accused is apprehended or a settlement approved by Aladin is reached, and it is confirmed that there is no secondary damage such as further distribution of hacked e-books, the fee of 100 million KRW will be paid within one month from the conclusion date.”

Employees of law firm A moved materials from the Telegram public chatroom to a private Telegram chatroom with the hacker and induced the cessation of further distribution. They also requested disclosure of the hacking route and closure of the public chatroom as a condition for starting negotiations. Additionally, they negotiated to reduce the Bitcoin ransom demanded by the hacker; however, only a small amount was transferred and was detected as suspicious by the exchange’s monitoring system, resulting in a withdrawal ban. Subsequently, the law firm discussed with Aladin and delivered the ransom to the hacker in cash. After Aladin provided related materials to the police, accomplices and the hacker were arrested in July and September of the same year.

Judge Jeong stated, “Aladin claims that the fee agreement under the advisory contract is linked to the police investigation results and is effectively a criminal case success fee agreement, so there is no obligation to pay. However, the contract is intended for responding to the hacker and preventing damages from the distribution of hacked e-books, and does not appear to be an agreement related to criminal case investigation or trial results.”

He added, “It is difficult to see that the fee agreement links investigation and trial results to monetary compensation in a way that undermines the public nature of the lawyer’s duties or damages public trust in the judiciary. Therefore, the advisory contract’s fee agreement cannot be considered a criminal case success fee agreement that violates good morals or other social order.”

Regarding Aladin’s claim that the fee was excessively high and should be reduced, the judge noted that considering the delegation process, progress, difficulty of resolution, and the efforts made by the law firm, the fee was not excessive.

Park Su-yeon, Legal Times Reporter

※This article is based on content supplied by Law Times.

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