How can technology replace lawyers

Legal market: in transition

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by Prof. Dr. Leo dust

08.09.2017

Everyone is staring at the digitization of the legal market. The transformation that is fundamentally changing the legal profession is about much more than new technologies. Leo Staub on the new challenges for legal advisors.

The keyword "digitization of the legal market" dominates the current discussion. Conferences, articles and books on legal tech are springing up like mushrooms. We lawyers are bombarded every day with expressions such as artificial intelligence, machine learning, big data analysis, cloud computing or blockchain, whereby it is often unclear whether the artillerymen see themselves as saviors or warners. In any case, we are unsure. Whether you are a partner in a large law firm or an individual practitioner, we all stare spellbound at everything that moves in the field of modern technology development. Is this the disruption of our profession and our market that everyone is talking about?

Modern technologies will undoubtedly play a significant role in the creation of legal services in the future. In the foreseeable future, we will have systems that analyze large amounts of data more reliably and probably more accurately than human expertise. Computer programs will effectively support us in drafting contracts, in legal research, in drafting briefs or in communicating with our clients and will make our work more efficient, cheaper and in many cases better quality.

Of course, this can also be seen as a threat: Human legal work will only be justified in the high-quality area. When it comes to processing standard legal services, the computer will replace us. Legal advice in complex cases, with reference to issues outside the law or from clients who require human assistance, will also have to be provided by qualified lawyers in the foreseeable future.

So far so good. But can we leave it at that? Is the upheaval in the legal market just a question of the future use of modern technologies?

More for less

Numerous studies in recent years show that we have to learn to deal with some other trends that have already reached the virulence stage.

First, there is the enormous pressure on legal fees. More and more corporate clients are no longer willing to pay for services whose efficiency is not obvious. It is no longer accepted as a matter of course that more than one lawyer is present in the client interview, that the hourly expenditure of career starters can be billed or that travel time can be billed in the consulting mandate. In addition, there are more and more alternative providers of legal advisory services who - provided that the market in question is not monopoly legal services - offer their services free of charge and often much cheaper.

In addition, corporate clients are increasingly building up their own legal resources and thus doing so-called in-sourcing. Even calculated at full cost, legal departments are usually cheaper than external lawyers. Only services are awarded to law firms that cannot be produced more cheaply with the same quality or if peak loads have to be absorbed.

When external lawyers are then employed, corporate clients often request a binding cost estimate, a cost ceiling or even an offer at fixed prices. The processing risk in legal work should no longer lie solely with the client, who will simply be billed for the time incurred. Many clients today expect the law firm to share the risk of the imponderability of the course of a legal advisory or representation project. In addition, law firms are often confronted with the requirement to provide certain services such as client training, so-called secondments or checklists and templates even free of charge. "More for less" is making the rounds as a catchphrase.

The globalization of law

Legal markets have long been proprietary markets in the respective jurisdictions. The internationalization and standardization in many areas of law, but especially the development of uniform contract types for corporate transactions, have led to the globalization of law. Large, internationally active law firms today create contracts even in complex transactions, the details of which only need to be adapted to country-specific circumstances. As a result, these law firms have to rely less and less on local correspondents when it comes to handling such mandates.

Globalization reaches the law from another direction: The breaking of supply chains in many branches of the economy and the so-called "off-shoring" of individual parts of the value chain have strengthened the supply business. Even small and medium-sized companies are now often involved in global supply chains. Such companies, however, are traditionally associated with smaller and medium-sized law firms.

There is great potential for these law firms if they succeed in supporting their clients in legal issues that go beyond their own national law. This can be done by setting up a high-quality network of correspondents or by connecting to an existing office network.