High Retainer Demands, Split Contracts... 10 Years of "Invalid Success Fees in Criminal Cases"

After the 2015 Supreme Court En Banc Ruling,
Modified Contracts Became Widespread in Practice

After the Supreme Court en banc declared all success fee agreements in criminal cases to be entirely invalid in 2015, alternative forms of contracts became widespread in the legal profession. Lawyers began to set higher retainer fees, effectively replacing success fee agreements. Contracts that divided compensation into multiple stages, allowing lawyers to receive payment several times, also became common. In some cases, it is reported that clients and lawyers would secretly specify a "success fee" in their contracts by mutual agreement.

The Law Times

Constitutional Petition Filed but Dismissed

Lawyer organizations took various actions immediately after the 2015 Supreme Court en banc ruling. The Korean Bar Association promptly filed a constitutional petition, arguing, "In Korea, where there is no law prohibiting the receipt of success fees, the Supreme Court's decision to declare all success fee agreements invalid is akin to creating a new law, thus infringing on legislative authority and violating the freedom of contract and the right to equality." However, in August 2018, the Constitutional Court dismissed the petition, stating that it was an improper claim in violation of Article 68, Paragraph 1 of the Constitutional Court Act, which prohibits appeals against judicial decisions. Subsequently, the Bar Association continued to issue related statements and collect cases of damages. It also held a seminar on the "Validation of Success Fees in Criminal Cases."

The Seoul Bar Association also held discussions on topics such as "The Need to Change the Precedent on the Invalidity of Criminal Success Fees for Lawyers." In March 2023, the Seoul Bar Association's Legislative Research Institute conducted a "Study on the Ruling Prohibiting Criminal Success Fees." In June 2025, it compiled cases related to criminal success fees and submitted an opinion to the court. To support litigation representatives, it also launched and operated the "Criminal Success Fee Litigation Support Team" (headed by lawyer Kim Giwon).

Lawsuits Filed but Lost

Several lawsuits followed. In 2018, the Seoul Central District Court ruled that even if a lawyer and client agreed to pay the fee for a criminal case in installments, dividing it into a deposit and a balance (a comprehensive retainer agreement), if the timing of the "balance" payment was set as "upon the verdict," this constituted a prohibited success fee in criminal cases and was therefore invalid (2017Gaso7400673). Even though the contract specified, "There shall be no performance (success) fee regardless of the outcome of this case," the court determined that if the nature of the balance was linked to the outcome of the investigation or criminal trial, it was considered a success fee agreement.

After the en banc decision, lawyers only won lawsuits related to success fee agreements in criminal cases when the agreement was made before July 23, 2015, the date of the Supreme Court en banc ruling. Multiple rulings (including Seoul Central District Court 2018Gadan5074347) stated that success fee agreements made before July 23, 2015, were valid, and clients were required to pay the agreed success fee to the lawyer.

"Time Charge Is Practically Difficult"

After the en banc ruling, lawyers considered new types of retainer contracts for criminal cases, such as time-based fee agreements (time charge), as alternatives, but these did not take root easily. A lawyer practicing in the legal district of Seocho-dong, Seocho-gu, Seoul, said, "Clients often ask me to take on cases by offering a low retainer and a high success fee. As a lawyer without prior judicial experience, it is practically difficult to demand a high time charge when taking on a case." A mid-level lawyer at a major law firm explained, "In the United States, success fees in criminal cases are not allowed, but lawyers work based on time charges, so the structure is different from Korea." He added, "It will take a long time to transition to a time charge system, and it is not easy to gain the understanding of clients in Korea."

Park Suyeon, The Law Times Reporter

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

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