While Africa’s legal tech revolution has made headlines in the past years, there is still quite a bit of scepticism when it comes to legal tech in Germany. This article provides an overview of the legal tech industry and AI with a few cues for entrepreneurs in Germany and Africa who are interested in starting up a legal tech business in Germany. A decisive advantage of legal tech is that it enables a business to offer legal services online across multiple jurisdictions. If you are a start-up with expertise in one of the domains of law and an additional interest into international relations or business, this article could inspire you to professionally grow and innovate the legal sector.
What is Legal Tech?
According to legal-tech.de, legal tech is related with the automation of particular working processes in the legal industry or an entire legal service. Combining two disciplines, hence the law and technology, it is aimed at increasing the effectiveness and quality of services while decreasing their cost and duration. Legal tech is also argued to have the benefit of being location independent. Consequently, legal service providers can work on the acquisition of clients across regional boundaries and offer their expertise where it is most needed as long as they comply with domestic laws such as the German Act on Out-of-Court Legal Services, which regulate the legal profession and legal services.
Act on Out-of-Court Legal Services
The German Act on Out-of-Court Legal Services, also commonly referred to as ‘Rechtsdienstleistungsgesetz’ (RDG), was passed in 2007 and last amended in 2017. Among others, the act specifies that: 1) legal services can be provided alongside another activity as long as the latter is ancillary (§5); 2) non-registered persons such as professional associations, interest groupings and cooperatives may provide legal services within the context of their statutory field of activity to their members or the members of associations or facilities affiliated to them (§7); 3) non-registered persons such as public and officially recognised bodies can provide particular kinds of legal services (§8) and that; 4) registered persons without legal personality may provide legal services on the basis of special expertise (§10).
The latter shows that providing legal services in Germany only is an option for specialists who are located in Africa under certain conditions and provided that they possess specific affiliations. Meanwhile, for registered persons, who are interested in starting a legal tech business in Germany, it might be interesting that the RDG could offer an entrance into the domain of politics in the widest sense. Especially, because one of the ancillary activities, which legal services can be provided with, is funding consultancy, entrepreneurs who are interested in a particular societal sector could strategically start up a business to contribute to development in this particular area.
Understanding Areas of Legal Tech
The website Legal Tech in Germany currently lists 190 companies in the legal tech industry across 12 categories: 1) legal tools, 2) lawyer indices, 3) automated legal services, 4) education & research, 5) document analysis, 6) document creation, 7) expert portals and marketplaces, 8) legal apps, 9) legal databanks, 10) legal process outsourcing, 11) news portals and, 12) job markets. While these categories entail a lot and there is an enormous amount of innovation going on in the legal industry, critics have remarked that legal tech start-ups can only be successful as long as they effectively combine the expertise of traditional law firms with expertise in programming and AI.
Whereas companies such as Zug-Erstattung.de and Flug-Verspaetet.de, who claim compensation and refunds for delayed trains and flights in the name of their clients, offer a scalable legal service, legal tech and AI can also provide solutions for less scalable domains in the legal industry such as legal research and due diligence. As Derek Chau, a partner at Acorn Pacific Ventures, has explained,
“AI tools can help ease the administrative burden of this process by streamlining the collection of background information. For instance, an AI tool might scour a database of previous cases, returning only relevant information.”(ITProPortal, 2020)
Indeed, the latter illustrates that legal technology is not just an alternative when it comes to reforming the traditional practice of law through law firms, but it is also a feasible choice when it comes to improving the efficiency of court operations. A particularly interesting read, which addresses how AI might affect the work of courts, is Richard Susskind’s book ‘Online Courts and the Future of Justice’. Among others, Susskind argues that despite certain shortcomings and risks, online courts are a particularly feasible option for lower-value civil disputes. However, the digitization of court hearings and legal processes should not be mistaken with making up for errors in human-made judgements. This is to say, technology can reinforce social inequity and exclusion as much as human judges.
Despite that social inequity and exclusion might be aspects which courts and judges have to address in relation with the particular systems in which they are operating, start-ups such as Ravel Law, which was purchased by LexisNexis in 2015, offer courts other valuable features such as analytics and data tools, which enables courts to investigate open source court documents in an attempt to predict possible outcomes of particular cases. To sum up, because there is a wide range of customers in legal tech (i.e. clients, courts, law firms), there is yet much opportunity for innovation, growth and specialization across various areas of legal tech and AI (i.e. machine learning, blockchains, data privacy etc.).
Employment Creation in Legal Tech
Given that organizations engaged in legal advisory roles such as AfriWise rely on the knowledge of both lawyers, computer programmers and IT specialists, legal technology represents a field with enormous potential for the creation of new employment possibilities. Among others, because the legal tech industry must unavoidingly address the nexus between privacy, law and technology, it needs professionals from diverse fields who can provide technical expertise and make up for the gaps in law and tech. Beyond that, there is a need for researchers who will develop more elaborate imaginations of robotics and the digitization of legal services, especially when discussions about AI still remain abstract with some of the populace associating the latter only with depictions from science fiction movies.
Isaac Asimov’s short story ‘Runaround’ is by now 79 years old, however his three laws of robotics were probably the first to address that automation will change social and societal systems demanding both control and adaptation. More recently, Nathalie Rébé published an academic article about ‘Artificial Intelligence: Robot Law, Policy and Ethics’ as part of the Nijhoff Law Specials series bridging the gap between fiction, story-telling and science. Providing answers to questions such as whether AI should be prohibited, banned or regulated, Rébé argues that, due to its physical and decision-making capacities, AI should be granted a juridical personality. Whether one may agree or disagree with her claim, it is estimated that AI will take over billions of jobs. Applying AI to any industry consequently requires some thinking about which societal processes should and can be automated, and which societal processes should not and cannot be automated.
No matter which is your vision, as long as you are passionate about legal tech and AI, our team would be happy to support you with starting up an innovative legal business in Germany! With our expertise encompassing domains such as intellectual property, data protection, startups and tech, labour and employment, tax and customs and banking and finance, we hope to provide you all the necessary support to contribute to an industry, which we can call ourselves experts in.
Contact us for an initial consultation today!