Lawyer Who Demanded 3.4 Billion KRW as Inheritance Property Division Advisory Fee Loses Final Supreme Court Ruling
Courts: "Limiting Fee to 20% of Actual Benefit is Reasonable"
A lawyer who demanded a fee of 10% of the inherited property while handling an inheritance property division trial worth 150 billion KRW ended up losing the final case at the Supreme Court after a legal dispute with the client. The lower courts ruled that it was reasonable to limit the fee to 20% of the benefit obtained through the inheritance property division trial, and the Supreme Court also found no problem with this ruling.
The Supreme Court Civil Division 3 (Presiding Justice Oh Seok-jun) confirmed the lower court's partial ruling in favor of the plaintiff in the debt non-existence confirmation lawsuit (2024Da254356) filed by Mr. A against law firm B on the 12th of last month.
[Facts]
Mr. A, who inherited assets worth approximately 150 billion KRW from his deceased father, became involved in an inheritance dispute with his siblings and other co-heirs. In April 2013, Mr. A signed a legal advisory contract with Mr. C, the representative lawyer of law firm B, entrusting him with matters related to the inheritance dispute. The advisory service contract included a clause stating that "A shall pay 10% of the value of the property he receives as inheritance as advisory fees based on C's advice."
As a result of the inheritance property division trial, in February 2019, Mr. A inherited about 34 billion KRW and paid approximately 3.4 billion KRW in legal advisory fees to lawyer C.
While the appeal trial was ongoing in March 2018, Mr. A's mother filed a guardianship commencement petition for Mr. A, who was suffering from a mental illness. Mr. A's guardian filed this lawsuit, claiming that the legal advisory contract with lawyer C was "unfairly stipulated with an excessively large amount."
In court, Mr. A's guardian argued, "At the time Mr. A signed the legal advisory contract with lawyer C, he was in a state of mental incapacity due to severe mental illness, so the contract is invalid," and "Considering the process, difficulty, and outcome of the inheritance property division work performed by lawyer C, the fee should be significantly reduced."
In a counterclaim, lawyer C argued, "The legal advisory contract was validly concluded between Mr. A and the firm, and according to the contract, Mr. A is obligated to pay 10% of the total value of all inherited financial assets, real estate, and other properties as fees based on the advice," and "Since the inheritance property-related tasks entrusted by Mr. A were faithfully performed and the inherited property was confirmed, there is an obligation to pay the fee."
[First and Appellate Court Judgments]
The first trial accepted Mr. A's claim that the fee was excessive. The court stated, "Considering the trial results and the benefits Mr. A obtained, it is unfair and contrary to the principles of good faith and equity to require payment of the entire 3.4 billion KRW fee to lawyer C," and "It is reasonable to limit the fee to 20% of the benefit Mr. A obtained through the inheritance property division trial, which amounts to 519 million KRW."
However, the court did not accept Mr. A's representative's claim that "Mr. A was in a state of mental incapacity due to schizophrenia at the time of contract signing and that lawyer C exploited this to conclude the contract."
The appellate court also accepted Mr. A's claim that the fee was excessive. However, it recognized lawyer C's argument that "10% value-added tax should be added to the fee recognized by the first trial," and ruled that 571 million KRW including tax was an appropriate advisory fee.
[Supreme Court Judgment]
The Supreme Court also found no problem with the lower courts' judgments and dismissed the appeal filed by law firm B.
The bench stated, "The lower courts judged that requiring payment of the entire fee according to the contract to lawyer C was unfair and contrary to the principles of good faith and equity, and that limiting the fee to 20% of the benefit Mr. A obtained through the inheritance property division trial was reasonable," and "There is no legal error in the lower courts' judgment."
Meanwhile, in the appellate and Supreme Court trials of this case, lawyers who were former senior judicial researchers at the Supreme Court represented defendant law firm B and lawyer C.
Reporter Hong Yoon-ji, Legal Times
※This article is based on content supplied by Law Times.
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