Korea has formally codified attorney–client privilege (“ACP”) through a newly enacted provision of the Attorney-at-Law Act. This represents a significant development for companies operating in Korea, particularly multinational companies involved in tax audits, transfer pricing disputes, regulatory investigations, and other enforcement proceedings.
This client alert summarizes the key features of the new ACP framework and outlines practical considerations for corporate tax, finance, and legal functions.
[Executive Summary]
Korea has formally introduced attorney–client privilege through amendments to the Attorney-at-Law Act. The new framework will take effect on February 20, 2027, and will apply retroactively to communications and documents created prior to the effective date. This reform significantly strengthens the protection of confidential legal communications in Korea and may have important implications for tax audits, regulatory investigations, and corporate legal risk management.
Under the amended law, clients will have an explicit legal right to refuse disclosure of confidential communications with attorneys made for the purpose of obtaining or providing legal advice. The privilege will generally extend to legal opinions, memoranda, and related communications prepared in connection with legal services.
However, several issues remain unresolved. In particular, questions remain regarding how the new privilege will interact with the investigative powers of Korean tax authorities, including on-site inspections conducted with taxpayer consent. Practical procedures for resolving privilege disputes in search-and-seizure situations are also still developing.
Companies operating in Korea should begin preparing for the new regime by implementing internal privilege management protocols, including document labeling practices, segregation of privileged legal materials, and procedures for asserting privilege during tax audits or investigations.
I. LEGISLATIVE BACKGROUND
Prior to the recent amendment, the Korean Attorney-at-Law Act imposed a duty of confidentiality on attorneys but did not explicitly grant clients a right to refuse disclosure of privileged communications.
The newly enacted Article 26-2 addresses this gap by formally recognizing attorney–client privilege as a legal right belonging to the client.
The amendment will take effect on February 20, 2027. Importantly, the transitional provisions confirm that the privilege will apply retroactively to communications and documents created prior to the effective date. This retroactive application may be particularly significant for companies currently involved in tax audits or regulatory investigations.
With this legislative development, Korea joins a growing number of jurisdictions, including the United States, Germany, the United Kingdom, and Japan, that recognize legally enforceable attorney–client privilege.
II. SCOPE OF PROTECTION AND EXCEPTIONS
Protected Communications and Materials
Article 26-2 protects confidential communications between an attorney and a client, or a prospective client, when such communications are made for the purpose of obtaining or providing legal advice.
The protection also extends to documents and materials, including electronic records, prepared by the attorney or the client in connection with litigation, investigations, or inquiries relating to matters for which the attorney has been retained.
Exceptions to Privilege
The law provides several limited exceptions under which privileged materials may be disclosed. These include situations where the client consents to disclosure, where disclosure is required due to involvement in criminal or unlawful conduct similar to the crime–fraud exception recognized in U.S. law, where disclosure is necessary for an attorney to assert or defend legal rights in a dispute with the client, or where separate statutory provisions expressly authorize disclosure.
III. IMPLICATIONS FOR CORPORATE TAX AND FINANCIAL MATTERS
Application to Tax Advice
Legal advice obtained from outside counsel in connection with corporate tax matters, including tax opinions, legal memoranda, and related correspondence, should generally qualify for ACP protection under Article 26-2.
However, privilege does not extend to communications relating to general business or consulting advice, even if such services are performed by an attorney.
To preserve privilege protection, companies should consider implementing several practical measures. Communications containing legal advice should be clearly labeled with a privilege designation such as “Attorney–Client Privileged Communication”. Companies should maintain separate files for privileged legal materials and ordinary business documents. Sensitive communications should also be routed through legal counsel rather than embedded within general internal communications that combine legal and business discussions.
These practices are widely used in jurisdictions with established privilege regimes and will likely become increasingly important as Korea begins implementing the new framework.
ACP in Tax Audit Contexts
The introduction of attorney–client privilege raises several unresolved issues in Korean tax audit practice.
Historically, Korean tax authorities have conducted on-site document inspections with the taxpayer’s consent without obtaining a separate search-and-seizure warrant. In addition, the National Tax Service Act and related tax statutes grant tax officials broad investigative authority.
Two key questions remain. First, it is unclear whether a taxpayer’s general consent to an on-site inspection could be interpreted as a waiver of attorney–client privilege. Second, it remains uncertain whether the investigative powers granted under tax statutes could be interpreted as separate statutory provisions that override privilege protections.
These issues will likely be clarified through administrative practice and future court decisions. Until greater clarity emerges, companies should consider establishing internal privilege management procedures and consulting with tax counsel when responding to tax audits.
IV. ATTORNEY–CLIENT PRIVILEGE IN SEARCH-AND-SEIZURE PROCEEDINGS
The amended law allows taxpayers to assert attorney–client privilege during search-and-seizure proceedings.
If investigators seek to inspect or seize documents prepared by outside counsel, the taxpayer may assert that such materials are privileged and request that they be excluded from the scope of seizure.
Taxpayers may also challenge the seizure of privileged materials by filing a quasi-appeal under Article 417 of the Criminal Procedure Act. The Korean Supreme Court confirmed the availability of this procedure in Decision 2024Mo730.
Nevertheless, several practical constraints should be noted. A search-and-seizure warrant issued by a court will generally continue to be executed even if privilege is asserted on-site. In the absence of a formal pre-seizure privilege review mechanism, disputes may often be resolved only after seizure through judicial review.
In addition, investigations conducted under the Act on the Punishment of Tax Evaders involve investigative authority separate from general criminal procedure, which may require distinct procedures for resolving privilege disputes.
Companies should also ensure that any consent to inspections or searches is expressly limited and clearly states that such consent does not constitute a waiver of attorney–client privilege.
V. RECOMMENDED ACTIONS
In light of the new ACP framework, companies operating in Korea should consider taking several preparatory steps. Companies should review existing tax and legal files to identify documents that may qualify for privilege protection. They should implement document management protocols distinguishing privileged legal communications from ordinary business records. Internal procedures for asserting privilege during tax audits or investigations should also be established. Finally, companies may wish to consider formalizing sensitive legal advice through external counsel where appropriate.
VI. TREATMENT OF IN-HOUSE COUNSEL COMMUNICATIONS
The extent to which attorney–client privilege will apply to communications with in-house counsel remains uncertain under Korean law.
U.S. courts recognize privilege for in-house counsel communications under certain conditions, as established in Upjohn Co. v. United States (1981). By contrast, the Court of Justice of the European Union has declined to extend privilege to in-house counsel due to concerns regarding independence, as reflected in Akzo Nobel Chemicals Ltd. v. European Commission.
Given this uncertainty, companies may wish to consider obtaining formal written legal opinions from external counsel, particularly in sensitive tax or regulatory matters, in order to maximize privilege protection.
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This newsletter is intended for general informational purposes only and does not constitute legal advice or the official position of Bae, Kim & Lee LLC with respect to any specific matter. For further information, please contact the members of our Tax Practice Group.
[Korean version]
