The method of calculating the contingent fees to be included in the litigation expenses by instance where the contract is made to pay a certain percentage of the final winning amount as the contingent fees of attorney at each instance.

The attorney’s fees to be included in the litigation costs shall be calculated according to the standards of Article 3(1) [Attached Table] of the Regulations on the Calculation of Litigation Costs according to the value of the subject-matter of the lawsuit by the parties within the scope of the fees paid or to be paid by the parties under the contract for remuneration. In a case where the parties agreed to the contingent fees and agreed to pay a certain percentage of the final winning amount through all instances as the contingent fees, the contingent fees to be included in the litigation costs by each instance shall be calculated by dividing the contingent fees determined according to the result of the final lawsuit among the winning courts in proportion to the winning courts in each instance, and shall not be included in the litigation costs by the losing court.

Article 109(1) of the Civil Procedure Act, Article 3(1) of the Rules on the Inclusion of Litigation Costs in Attorney Fees

New Korea Mutual Savings Bank

United States Development Corporation

Seoul High Court Order 2011Ra1114 dated September 23, 2011

The order of the court below is reversed, and the case is remanded to Seoul High Court.

The grounds of reappeal are examined.

1. According to the reasoning of the order of the court below, when the applicant delegated a law firm (with limited liability) with the performance of litigation concerning the entire instance of the claim for the loan, which is the subject of the determination of the amount of litigation costs in this case, the court below decided that the contingent fees of the subject case shall not be determined separately at each instance, and in fact, the above law firm was appointed at all instances of the subject case as the petitioner's attorney and brought a lawsuit. In light of the above facts, it is reasonable to view the contingent fees of the court as the contingent fees of the whole instance in the case of final winning regardless of the time of payment or the success or failure at each instance. In this case, in order to determine the amount of litigation costs in this case, the court below presumed that it is reasonable to divide them into the contingent fees of the subject case into the attorney fees of the court of first instance in which the applicant lost 1/3 of the contingent fees paid to the above law firm, and included the amount of litigation costs in the first instance court's total sum of the amount paid to the petitioner's attorney fees in accordance with the rule.

2. However, the attorney’s fees to be included in the litigation costs must be calculated based on the standards of the above Rule (Attached Table) within the scope of the amount of remuneration paid or to be paid by the parties under the contract for remuneration, depending on the value of the subject matter of the lawsuit at each instance (Article 3(1)). In a case where the parties agreed to the contingent remuneration and agreed to pay a certain percentage of the final winning amount through all instances, it is reasonable to calculate the contingent fees to be included in the litigation costs at each instance in proportion to the winning amount of the final winning amount determined according to the result of the final lawsuit among the winning parties, and it cannot be included in the litigation costs at the losing instance, such as the order of the court below.

3. Ultimately, the order of the court below is erroneous in the misunderstanding of legal principles as to the inclusion of attorney fees in the litigation cost, which affected the conclusion of the judgment, and the case is reversed and remanded to the court below for a new trial and determination. It is so decided as per Disposition by

Justices Kim Nung-hwan (Presiding Justice)