What exactly is LegalTech and are they even allowed to do it? These are the two questions we lawyers are probably all asking ourselves at the moment when we come into contact with the digitization of our profession. While the first question is very easy to answer based on the many useful and well thought-out applications that are just getting the LegalTech market going, the second question will probably be the all-important one in the future.
In the first part of the series "Regulation of the LegalTech Market", we looked at the hopefully groundbreaking Lexfox ruling of the BGH. In this second part, we look at the legal requirements for document automation by LegalTech platforms under German law.
Document automation and contract generators
Documents such as contracts, pleas and expert opinions are currently mostly created and edited step by step by several people but in individual work. In this process, trainees as well as associates and partners of a law firm use existing contract forms in word documents. This represents the best case scenario for the digitization of legal work. Even in this case, however, it is extremely tedious to individualize such a pamphlet of contract clauses to the specific case. Last but not least, the first draft must also be given the desired form. Here, only a few lawyers use suitable format templates.
Given these circumstances, bright LegalTech providers had the idea of automating these processes. This is how so-called contract generators came into being. These guide the user through the process of answering legal questions. With the help of the answers, an individual number of contract clauses is compiled from a database and a perfectly formatted draft contract adapted to the individual case is created.
Legal services according to Section 2 Legal Services Act (RDG)
The question of whether offering a contract generator constitutes a legal service within the meaning of the RDG has not yet been clarified by the highest court. According to the legal definition of Section 2 para. 1 RDG, A legal service is any activity related to the concrete affairs of others as soon as it requires a legal assessment of the individual case.
It should first be noted here that, according to general opinion, the mere provision or publication of standardized sample contracts does not constitute a legal service, as this is not regularly associated with a legal examination in the individual case (see OLG Karlsruhe, NJW-RR 2011, 119; Deckenbrock/Henssler, RDG, 4th ed. 2015, § 2 recital no. 54; Krenzler, in: Krenzler, RDG, 2nd ed. 2017, § 2 recital no. 43). On the other hand, the (human) preparation of individualized contract drafts can be assessed as a legal service without further ado (cf. BGH, NJW 1978, 322).
However, contract generators go far beyond the mere provision of sample contracts by automatically individualizing these sample contracts with the help of the user. In view of this, it remains to be clarified whether
a) the scope of application of Section 2 (1) RDG requires human activity,
b) contract generators provide an examination of the specific individual case,
c) contract generators perform a legal review.
Conclusion
Whether and how contract generators and similar tools for automating legal documents are covered by the RDG will ultimately have to be decided by the BGH or an amendment to the law. As always, the relevant literature is divided on this issue. A first indication could be the SmartLaw ruling of the Cologne Regional Court (see Part 3).
