Legal publishing house may offer contract generator - no violation of legal services law

WoltersKluwer offers a so-called contract generator in Germany under the "smartlaw" brand. The Hanseatic Bar Association in Hamburg filed a lawsuit against this with reference to the Legal Services Act and won at first level. However, the German Federal Supreme Court (BGH) has now confirmed the amending judgment of the Cologne Higher Regional Court (I ZR 113/20 - Contract Document Generator).

In detail, the BGH stated that the creation of a draft contract with the help of the digital legal document generator is not an unfair act according to § 3a UWG because it does not represent an unauthorized legal service within the meaning of § 2 para. 1, § 3 of the Legal Services Act (dRDG). The defendant's activity consists of creating contractual documents on the basis of the user's specifications with the help of the software programmed and made available on the Internet. In doing so, it does not act in a specific matter of the user. It had programmed the software on the basis of thinkable typical factual constellations, for which it had developed standardized contract clauses in anticipation of the given answers. The user's individual circumstances, which go beyond the usual case, would not be taken into account in the creation of the contract document - similar to a form book. Therefore, the user does not expect a legal examination of his specific case.

The German bar association is conducting a whole series of lawsuits against providers of LegalTech applications; so far, they have mostly ended in favor of the providers. However, it should be noted in each case that the German legal situation has no direct equivalent in Austria.

Germany: BGH backs debt collection companies against the legal profession

A decision by the German Federal Court of Justice is causing considerable unease in the German legal profession. What was at issue?

A debt collection company had low-threshold claims from consumers assigned to it in order to bundle them into a class action and then bring them before the court in its own name. A professional association had filed a complaint against this, claiming that this procedure exceeded the scope of the so-called "collection privilege" of the German Legal Services Act. The Court of Appeal also agreed with this view and denied the debt collection agency the right to sue. The Federal Court of Justice, however, does not consider this view to be supportable.

As reported by lto.de, the court refers almost exclusively to the question of whether the consumers who have assigned their claims have a special interest in protection that speaks against the collection agency asserting their claims. In short: this is not the case, since the collection agency must also be represented by a lawyer in court. The BGH also considers the business model, according to which the collection agency assumes the sole litigation risk in order to retain 35% of the awarded claim amount in the event of success, to be appropriate. On the other hand, there is no question of a protective interest on the part of the legal profession, nor are they unduly disadvantaged by the fact that the lawyers themselves are barred from success fees to this extent.

German lawyers must accept, according to the article in lto.de, that they will face even more structural competition from debt collection companies.

 This case law is not directly applicable to the Austrian market, as the "debt collection privilege" of the German Legal Services Act has no direct equivalent in the Austrian legal system. 

Who is being harmed by bad campaigning?

Last week, I reported on this space about the sale of Kira to Litera and the intention to release a standalone product for corporate lawyers under the Zuva brand. The media release emphasized that Kira technology would continue to be operated and developed under the new umbrella.

Somewhat surprisingly, UK vendor Luminance responded with an aggressive campaign urging existing Kira customers in the legal sector to switch, portraying the Kira-sell in a distinctly different, negative light. One could read from the Luminance press release that it was a child disposal, the fact that the existing management would perform a strategic advisory function was left unmentioned.

Several media are now asking what drove Luminance to this activity, and who actually benefits from bad campaigning. On the one hand, this is coffee-bag reading, because without knowing the reactions of the customers, one will not come to a conclusive answer. In any case, the commenters seem to assume that Luminance itself will come out of this damaged. However, I think that the issue shows the enormous pressure that even established legaltech companies are under. Is it the concern of falling behind in development resources? Is it fear that their own customers will switch to Litera's comprehensive software solution because they appreciate the all-in-one concept? - Everything is possible

Markets on the move

As reported by alm, Legaltech group Litera is acquiring industry leader Kira, effective Sept. 1 of this year. The product and brand are to be continued, and at the same time Litera is aiming for market expansion. Why and to what extent can this also be significant for Europe?

Kira is a specialist in AI-based automated document analysis. Main use case is due diligences / data rooms in transactions. Accordingly, Kira's customers are mainly law firms, globally.

Litera, which has grown enormously through numerous acquisitions, describes itself as a leading provider of legal workflow and workspace software. The focus is clearly on speed and effectiveness of legal work towards client service and retention. Litera sees itself as one-stop-shop for any type of legal work. That's why Litera aims to leverage Kira's core expertise in its own software suite. 

The big difference, however, is that Litera also operates in the corporate law market, and by spinning off its own new startup Zuva, Kira is also expected to follow this path in the future.

Consultants on both sides of the Atlantic won't be too happy to hear that.

Chutzpah

Legaltech News publisher Zach Warren uses this Yiddish word to describe one of the qualities needed to launch a legaltech Startup. In addition, he says, it takes vision and the ability to think oneself into the situation of the desired user as precisely as possible. There's a lot of truth to that.

Many founders fail at even describing their customers. You often hear "all lawyers" or "all attorneys". Maybe one should also generally move away from this customer group-based mindset and instead ask the question, "what pain are you trying to solve with your new product?" Then it's time to show your colors.

One example: from the current study by Wolters Kluwer, one can read that the standardization of contracting is a very important topic for law firms and for corporate legal. But why is that? Is it about the speed at which new contracts can be created, or is it about ensuring quality? In the former case, systems like Bryter or top.legal can actually help by analyzing the most important contracts and putting them into a question-answer grid with all the options provided. In the second case, it is more about the internal workflow and ensuring that all valid templates and text modules are actually stored and, above all, maintained in a defined location and that all employees are obliged to access only these quality-checked modules.

Certainly, the answers will mostly be ambiguous. But the message is: you have to understand your customer very well and know his pains as good as possible before you start developing a new software product. And exactly the same applies to customers facing the introduction of new tools. First define the pain and then deal with possible solutions!

With these meaningful words, Leginnside says goodbye to summer vacation. We will be back in mid-August. Stay healthy!

Show factor

In his column "Lost in innovation," the highly respected Markus Hartung expresses doubts about the innovative power of both law firms and their clients, the legal departments. There is no other way to explain the fact that both staff numbers and per capita turnover at law firms continue to rise, but so does the number of employees in legal departments, Hartung says. Innovation would require a permanent, joint process analysis between law firms and their clients, and there is no sign of this.

So far, so undisputed. But is this relationship really only a professional one? I claim, no. The value of consulting services (both of lawyers and of tax and business consultants) is, after all, also determined to a considerable extent on an emotional level. The particularly aggressive lawyer's letter to the opposing party, theatrical meetings, and even heavy documents - they all serve to convince clients of the extraordinary qualifications of "their" lawyer and of his overwhelming commitment to the cause.

The question remains why clients play along here. The answer is probably differentiated: some because they want to - the behavior described above gives them self-justification that they have made the right choice. And the others? - they are probably to be found in the rapidly growing group of clients willing to change, as described in the current Future Ready study by WoltersKluwer. 

Everything will stay the same until it will change.

Chutzpah

 

Never in my life would I have thought that the word "chutzpah" existed in English. The editor of Legaltech News, Zach Warren, uses it to describe one of the character traits it takes to launch a legaltech startup. In addition, he says, it takes vision and the ability to think as precisely as possible into the situation of the desired user. There's a lot of truth to that.

Many founders fail at even describing their customers. You often hear "all lawyers" or "all attorneys". Maybe you should also generally move away from this customer group-based mindset and instead ask the question, "what pain are you trying to solve with your new product?" Then it's time to show your colors.

One example: from the current study by Wolters Kluwer - I already mentioned it last week - you can read that standardization of contracting is a very important topic for law firms and for corporate legal. But why is that, really? Is it about the speed at which new contracts can be created, or is it about ensuring quality? In the former case, systems like Bryter or top.legal can actually help by analyzing the most important contracts and putting them into a question-answer grid with all the options provided. In the second case, it is more about the internal workflow and ensuring that all valid templates and text modules are actually stored in a defined location and that all employees are obliged to access only these quality-checked modules.

Certainly, the answers will be mostly ambiguous. But the message is: you have to understand your customer very well and know his pains as well as possible before you start developing a new software product. And exactly the same applies to customers facing the introduction of new tools. First define your pains and then deal with possible solutions!

PS: Even if founders have defined the parins and found a solution, it will still be a very long journey that requires a lot of chutzpah.