An appellate court has ruled that a law firm dismissed by its client just before the verdict can still receive a success fee of 460 million won under the original agreement, provided that the firm substantially contributed to the victory, conducted the litigation, and was not at fault. On April 17, the Gwangju High Court Civil Division 1 (Presiding Judge Lee Euilyoung) dismissed the appeal filed by B and 127 other current and former Korea Expressway Corporation dispatch workers in the contractual payment lawsuit (2024Na22107) against Law Firm A, upholding the lower court's partial ruling in favor of the plaintiff.
[Facts]
In November 2016, Law Firm A was retained to provide legal representation in civil lawsuits, including confirmation of employee status, for current and former dispatch workers at Korea Expressway Corporation. The agreement specified a retainer fee of 200,000 won per person and a success fee equal to 10% of the awarded amount.
In June 2020, B and others notified Law Firm A of their intent to terminate the contract, citing several reasons: (1) the law firm unilaterally withdrew some union members' lawsuits without prior consultation; (2) insufficient explanation regarding litigation expenses being deposited into a staff member's personal account instead of the firm's account; and (3) lack of adequate clarification regarding the excessive labor costs claimed during the litigation process.
After a new law firm was appointed, the verdict was delivered in August 2020 following only one hearing in which Law Firm A participated, resulting in a partial victory for B and the other workers.
[Court's Ruling]
In April 2024, the first-instance court ruled partially in favor of the plaintiff. The court stated, "Since the victory was achieved solely due to the contribution of Law Firm A, the defendants must pay both the retainer and the success fee." The court ordered each of the 128 defendants, including B, to pay between 86,000 and 8,543,000 won, equivalent to 10% of the amount awarded per person in the civil lawsuit. The total amount payable to Law Firm A was 461.38 million won.
The court found that (1) the attorney from Law Firm A submitted numerous briefs and evidence until the termination of the contract, and attended hearings; (2) the first-instance verdict was based on the arguments and evidence submitted by the attorney; (3) the verdict was delivered immediately after the contract was terminated, and the newly appointed law firm did not submit any briefs or documents that contributed to the outcome; and (4) considering the complexity of the case and the agreed-upon fees, the defendants were required to pay the retainer of 200,000 won per person and 10% of the economic benefit gained by B and others as stipulated in the contract.
The appellate court reached the same conclusion as the lower court. The appellate panel found that (1) there was no evidence that Law Firm A neglected its duties as legal representative, as it submitted numerous documents; (2) there was no indication of misappropriation of litigation expenses or wrongful withdrawal of lawsuits as suspected by B and others; (3) the lengthy litigation period was due to the complexity of organizing the claims of the 147 plaintiffs, rather than any fault of Law Firm A; and (4) the success fee was not unreasonably excessive. On these grounds, the court ruled that Law Firm A was entitled to the agreed-upon success fee.
Hong Yoonji, Legal Times Reporter
※This article is based on content supplied by Law Times.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
