Quite modern

More and more start-ups are competing with lawyers when it comes to basic legal services. Providers such as Flightright are having great success with this. But some business models are also controversial.

1800 federal laws, hundreds of ordinances at federal and state level: Germany, that is the land of regulations. Much is still regulated by paper, technical innovations such as the digital lawyer's mailbox are similarly difficult births as the digital patient file. Accordingly, the legal industry is considered by some to be entrenched.

Both young start-ups and established players in the industry are preparing to change just that. They are entering the market for "legal technology", as IT solutions for the legal sector are called. For both lawyers themselves and consumers, this is likely to completely change the way procedures and processes are handled in the future. At least that's what investors are betting on. In 2019, legal tech startups around the world raised more than $1 billion for the first time.

How big the change will be, the specialist publisher Wolters Kluwer has found in a survey. According to the survey, three-quarters of all lawyers now have the topic on their radar. In the long run even digital court proceedings could be possible, in Denmark there is already the digital civil process. The court, lawyers and litigants communicate with each other via a specially set-up portal. They submit pleadings there, and the judgment is also uploaded, which means it is deemed to have been pronounced. Filing by mail is only possible in exceptional cases, in the case of fax even not at all, because Danish courts no longer have such equipment.

Germany, the legal tech pioneer

And Germany? In principle, legal tech has also been around here for decades. The lawyer Josef Kurth from Düren in North Rhine-Westphalia developed a law firm software called "AnNo Text" as early as 1978. With this software, lawyers can, for example, dictate digitally, and drive forward dunning proceedings and foreclosures. At the latest with the increasing success of computers, the tool spread rapidly.

In the past few years, a whole series of ambitious start-ups have joined the ranks, striving to digitalise legal transactions in Germany. Some of them are aimed directly at lawyers, such as the Berlin-based contract generator LegalOS. The three founders of the company are all not lawyers, but do not see this as a problem; they are more of an infrastructure start-up. LegalOS offers contract creation software that is supposed to make it possible for even laypeople to make a contract legally watertight. Example: If it is decreed at one point that an employee will receive severance pay, the program reminds the user at another point that they still need to specify the amount of severance pay.

In fact, many of the startups are all about simplifying classic routine tasks in particular. Platforms like Flightright or geblitzt.de, for example, allow their users to sue for damages from airlines or take action against what they believe are unlawful parking tickets.

Flightright is one of the biggest success stories of the German legal tech scene in this regard. Founded by Philipp Kadelbach and Sven Bode, the company has been part of the Medien Union media group since 2019, but Kadelbach is still chief legal officer. His company says it helps about 500,000 air travelers a year. These submit their case to Flightright, an algorithm then analyzes whether action against the flight provider would be promising. If the case is promising, Flightright has the claim signed over and if there is compensation in the end, Flightright receives a commission.

Court case about contract generator

In most cases, a simple demand for payment is enough, but in case of doubt, the company also resorts to more radical measures. In 2017, for example, a lawyer from the company turned up at Vienna airport with a bailiff to seize a Bulgaria Air plane. It was only because the airline then paid at the last minute that the plane was able to take off in the end.

Geblitzt.de proceeds similarly, however here partner Kanzleien of the portal examine the requirements of possible mandators and take over completely regularly the agency of their interests. The examination is thereby free, only if the procedure is advanced, the customer must pay. Geblitzt.de gets money from the partner law firms, which can use the software of the start-up to get new clients.

However, the advance of new players into the market is not without friction. For example, the specialist publisher Wolters Kluwer and the Hamburg Bar Association have been arguing in court for years. The trigger is Smartlaw, a contract generator offered by Wolters Kluwer. There, consumers can create contracts themselves. The bar association was of the opinion that this violated the Legal Services Act. There, it is regulated which services may only be offered by qualified personnel, such as lawyers. In the first instance at the Regional Court of Cologne, the lawyers were proved right, but the Higher Regional Court of Cologne decided otherwise. An appeal by the bar association is pending, so it will probably take some time before legal tech providers know exactly how far they can go and which offers remain reserved for "real" lawyers.