Contract Platform Shock Ban: Wolters Kluwer To Appeal + Clarify German Regulation

Following a shock court ruling against a German contract platform, that effectively bans the provision of automated contract services without lawyer input, the parent company, Wolters Kluwer, has said it will appeal the decision against, going all the way to the highest court in the country, if necessary, to win the argument and clarify the European nation’s regulation of legal tech companies (see below). The company also set out its reasoning as to why its automated contracts don’t need human lawyer input and therefore are not in breach of any rules.

In a prepared statement sent to Artificial Lawyer after a request for comment, Kristina Schleß, Head of Legal & Compliance at Wolters Kluwer Germany, said: ‘In our opinion, Smartlaw does not fulfil the obligation of legal services within the meaning of §3 of the [German] Legal Services Act.

‘In particular, no legal examination of an individual case is required [as the contract-making system only…] covers a large number of standardised facts.’

This point is key, as the regional German lawyers organisation, the Hanseatischen Rechtsanwaltskammer Hamburg, had argued that no computer-based system can replace a human lawyer when it came to making sure a contract was ‘legally secure’.

The claimants said: ‘When drafting legally secure … contracts, it is usually necessary to clarify the relevant facts in cooperation with the client…. This can not be provided by a computer that asks different questions about the desired contract design in a question and answer system and then delivers a contract that has been compiled considering the answers.’

Wolters Kluwer in response is saying this is simply not a reflection of reality, as the key information a consumer or SME adds into their contracts via the platform is just ‘standardised facts’, i.e. this is not complex legal reasoning that requires a human lawyer to help, it’s just very basic Q&A. So, QED, you don’t need a lawyer for that and therefore it’s not breaking the rules on offering legal services.

That said, it seems as if the RDG, or German Legal Services Act, has some grey areas, and it’s perhaps these legal lacunae that are leading to the problem over what is, and what is not, permitted with legal tech platforms.

For example, if the company’s defence is that the data added is simple, then what happens if the data added by a person into the contract is highly complex? Does that then demand a lawyer? And if you don’t get a lawyer to help in such complex legal documents is that then a breach of the rules? It seems as though no-one knows at present.

Overall, it looks like this case has opened up a can of legal tech regulatory worms….!

Meanwhile, Wolters Kluwer Germany CEO, Martina Bruder, said as part of the statement: ‘It is by no means our goal to replace individual legal advice with a lawyer with Smartlaw [the platform that was taken to court by the Hanseatischen Rechtsanwaltskammer Hamburg].

‘Depending on the choice of topics and pricing, Smartlaw is geared towards a target group that would typically not seek individual advice from a lawyer or other legal service provider [regulated under the German Legal Services Act] … for cost or time reasons, but would like to draw up its own contracts.’

Again interesting. This time the company highlights the cost point, which looks to Artificial Lawyer to be a deliberate effort to undermine the case as simply protectionism on the basis of price competition.

The company also added that when it came to paying your taxes, self-service forms and documents have been allowed for many years. They see no real difference in relation to what they offer.

The platform that was taken to court in Germany.

Artificial Lawyer also tracked down Ralf-Michael Schmidt, who originally co-founded Smartlaw back in 2012 and in 2018 moved on to a new company. He told Artificial Lawyer: ‘The contracts and legal documents (in Smartlaw) are created in an automated and schematic way, with no need of a legal examination by a lawyer of the individual case.’

So, one of the key people who helped to create the platform seven years ago sees no problems there. And, it’s worth asking: why have lawyers in Hamburg waited seven years to bring this case?

Meanwhile, Daniel Biene, another founder of Smartlaw, reached out to Artificial Lawyer to add: ‘From my perspective this is quite obviously an attempt to preserve a monopoly that just isn’t aligned with today’s realities. It [the court case] sails under the guise of consumer protection, but in fact has just the opposite effect. As in any other industry, the legal industry would be better served partaking in new opportunities instead of trying to block them. This approach has never worked anywhere and won’t work here either.’

Biene is currently at ALSP, Axiom, where he is the general manager for Germany and Switzerland.

Wolters Kluwer added that not only will they appeal, but they see this as a chance to clarify the law about legal services regulation.

Wolters Kluwer Deutschland GmbH will file an appeal against the judgment of the Regional Court of Cologne and, if necessary, have the highest court decision. Smartlaw represents a growing number of so-called LegalTech solutions for private users and companies. Accordingly, it is necessary to clarify in principle for this market whether and which digital offers are to be regarded as unauthorised provision of legal services within the meaning of §3 RDG,‘ they said in the statement. 

So, what next? Artificial Lawyer has not seen the full written judgment of the court, which is expected to set out the legal reasoning. However, it seems like that point is now almost moot, as what really is at the root of the problem is the RDG, or German Legal Services Act.

It looks like there perhaps will need to be a reform, or rephrasing, of the RDG, which allows clarity around the use of such platforms and perhaps while they are doing that, to also set out rules for other areas of legal tech to make sure all of this is cleared up once and for all.

Ironically, this could have a silver lining and create a very modern and forward-looking set of regulations that really help German legal tech in the long term. (Of course….it could all go the other way too, and reinforce such bans and opposition to legal tech platforms, though such an outcome seems unthinkable.)

Statement by Wolters Kluwer

Köln, Oktober 2019. In seinem Urteil vom 8. Oktober 2019 hat das Landgericht Köln entschieden, dass unser Angebot smartlaw eine unerlaubte Erbringung von Rechtsdienstleistungen im Sinne des §3 Rechtsdienstleistungsgesetz (RDG) sei. Vorbehaltlich der noch ausstehenden schriftlichen Urteilsbegründung nehmen wir hierzu wie folgt Stellung:

smartlaw ist ein intelligentes und digital nutzbares Angebot, das sich an Privatpersonen und kleinere/mittlere Unternehmen richtet und eine Vielzahl standardisierter Fälle zur Vertrags- und Dokumentenerstellung abdeckt. Damit ist smartlaw eine digitale Weiterentwicklung der bereits seit Jahrzehnten in Printform angebotenen Formular- und Mustersammlungen, mit welcher der Anwender software-gestützt selbst Verträge erstellen kann. Solche oder ähnliche Lösungen verschiedener Anbieter sind bereits länger im Markt etabliert.

Auch im Bereich Steuern werden formularbasierte Lösungen, mit denen Steuerpflichtige selbst unter Eingabe der maßgeblichen Informationen ihre Steuererklärung erstellen können, bereits seit vielen Jahren angeboten. Hierbei ist unumstritten, dass der Anbieter der Software keine unerlaubte Hilfestellung in Steuersachen erbringt.

Kristina Schleß, Head of Legal & Compliance bei Wolters Kluwer Deutschland: „Nach unserer Auffassung erfüllt smartlaw nicht den Tatbestand der Rechtsdienstleistung im Sinne des §3 des Rechtsdienstleistungsgesetzes. Insbesondere ist keine rechtliche Prüfung eines Einzelfalls erforderlich. Abgedeckt wird eine Vielzahl standardisierter Sachverhalte. Dafür, dass auch ein Computer oder eine Software die „Tätigkeit“ im Sinne des RDG erbringen könnte, findet sich in Gesetz und Entwurfsbegründung kein Beleg. Diese Entscheidung des Gesetzgebers durch eine großzügige Auslegung zu korrigieren, greift unzulässig in die Kompetenz des Gesetzgebers ein, der sich bekanntlich ohnehin aktuell rechtspolitisch mit dem Thema befasst.“

Martina Bruder, CEO von Wolters Kluwer Deutschland: „Es ist keinesfalls unsere Zielsetzung, mit smartlaw die individuelle Rechtsberatung durch einen Anwalt zu ersetzen. smartlaw richtet sich nach Themenauswahl und Preisgestaltung an eine Zielgruppe, die typischerweise aus Kosten- oder Zeitgründen keine individuelle Beratung durch einen Rechtsanwalt oder sonstigen nach RDG tätigen Rechtsdienstleister in Anspruch nehmen würde, sondern ihre Verträge selbst erstellen möchte.“

Die Wolters Kluwer Deutschland GmbH wird gegen das Urteil des Landgerichtes Köln Berufung einlegen und ggf. höchstinstanzlich entscheiden lassen. smartlaw steht stellvertretend für eine wachsende Anzahl sogenannter „LegalTech“-Lösungen für private Anwender und Unternehmen. Es ist entsprechend eine grundsätzliche Klärung für diesen Markt notwendig, ob und welche digitalen Angebote als unerlaubte Erbringung von Rechtsdienstleistungen im Sinne des §3 RDG zu sehen sind. Wolters Kluwer Deutschland begrüßt eine solche grundsätzliche Klärung ausdrücklich.