Wolters Kluwer has finally won a landmark battle in Germany for the right of people and businesses to download ‘DIY legal documents’ without the input of lawyers, in what was a key test case in Europe for consumer legal rights, as well as the rights of legal tech companies to provide such services.
The case began in 2019, with Artificial Lawyer reporting how local lawyers in Hamburg wanted to ban the use of Smartlaw, a Wolters Kluwer product that allowed customers to access a legal document template and fill it in by using an online Q&A system – and importantly without needing the input of a lawyer.
But, local lawyers claimed the tech-based platform was in effect offering legal services that could harm consumers.
Of course, others in Germany, and around the world, saw this attempt to block the use of DIY legal documents as not an effort to protect consumers, but to exert monopoly rights over ‘legal work’. Wolters Kluwer also argued that what they were offering could not be seen as impinging on German lawyers’ rights, as the template system was not giving specific legal advice to individuals.
After an extended legal battle, Wolters Kluwer has finally won the argument, and Dirk Hartung, Executive Director of the Bucerius Centre for Legal Technology and Data Science, who is based in Germany, has kindly provided this special report.
Document Generation Not Practice of Law in Germany
On Thursday, September 9th, the Federal Court of Justice, Germany‘s highest authority for Civil Litigation put an end to the efforts of the Hamburg Bar Association to prevent Wolters Kluwer from offering Smartlaw – their dialogue-based document generation tool.
The Hamburg Bar Association had argued that the publisher, which charges a small amount for some documents and provides others for free, violated the German Legal Services Act (Rechtsdienstleistungsgesetz).
That rule stipulates a licence for the provision of legal services, which are defined as services offered to another party which requires a legal assessment of the individual case. Lawyers admitted to the Bar are granted such a licence, as are some other providers including debt collectors, (a category many legal technology companies use in Germany).
A legal publisher, however, is generally not allowed to practice law. Wolters Kluwer therefore argued that offering self-service tools in the form of an expert system, which results in a slightly individualised document does not constitute a legal service at all.
The court has now confirmed this position. Though the full text of judgement is not yet available, the press release (German only) cites the lack of an individual legal assessment as the main reason for its decision. The main purpose of the German Legal Services Act (LSA) is consumer protection and the court felt that users do not expect an individual assessment when using a tool like Smartlaw.
The outcome confirms the decision of the Higher Regional Court (the German court of appeal for these matters). Controversially, the Cologne Regional Court had originally ruled against Wolters Kluwer and declared Smartlaw a legal service.
One part of the original decision, which forbade Wolters Kluwer to advertise the service as ‘cheaper and faster than a lawyer’ and ‘more individual and safer than templates’ or describe it as ‘legal documents with lawyer quality’, is still standing since that part had not been appealed. Given the nature of the service, it is pretty obvious why not.
Those hopeful for innovation in the profession might see the decision as following a more liberal trend in Germany’s highest court, which also has recently ruled in support of allowing the legal assessment of rental agreements and class actions under the debt collection exception of the German LSA.
In sum: everything is back to normal in Germany and providers of expert system-based document creation services can breathe a sigh of relief.
Many thanks to Dirk Hartung for the report on the case’s conclusion, which brings to an end a difficult chapter in legal tech’s evolution in Germany, and to some extent in the EU, given the country’s importance in Europe.
If the case had gone the other way then lawyers and local Bar groups elsewhere may have taken up similar challenges, bringing to an end in Europe the idea that people should be allowed to build their own legal documents.
It would also have taken some of the energy out of the legal tech world on the Continent, as providers would have perhaps been more cautious about offering new products in case they upset the local status quo. Fortunately, that has not happened and Germany now has legal clarity over the use of such systems.
It’s also good news for Wolters Kluwer as a business, which would have potentially have had to close down its Smartlaw arm in Germany – or come up with some new way of guaranteeing lawyers were involved with the production of every document. So, a good day for legal tech and consumer rights.