In a ruling, the Regional Court of Cologne ruled that smartlaw's legal and fee-based online contract generator was unlawful. The service violates the German Legal Services Act (RDG). The Regional Court criticises in particular the misleading advertising, which promises "lawyer quality", and places corresponding services under the licensing requirement.
The online contract generator smartlaw, a LegalTech offer in Germany, is affected by the ruling. The website promises the user a tailored legal document (e.g. letter of termination, rental agreement, etc.) by simply clicking through a catalogue of questions. The provider declares in his general terms and conditions that the services offered are not legal services in the sense of the German Legal Services Act (RDG) and rejects any liability.
The Regional Court of Cologne has now approved a complaint of the Hanseatic Bar Association Hamburg (RAK Hamburg) and assesses the services offered by smartlaw as legal services within the meaning of §2 RDG. The provider advertises with slogans such as “Legal documents in lawyer quality” or “As with a lawyer you receive an optimal document for you”. Due to the qualification as a legal service, the offered service is subject to the licensing obligation and may only be provided by licensed lawyers.
Unfortunately, it is not clear from previous media reports whether it is only inadmissible to praise the contract generator as a lawyer’s activity or whether the offer is made by a non-lawyer per se. It is necessary to wait for the written reasons for the decision. The operator of smartlaw, the specialist publisher Wolters Kluwer Deutschland, wants to appeal against the ruling. In a press release Wolters Kluwer compares her service with physical form and sample collections, which have been in existence for years and have never been regarded as legal services.
Similar online services also exist in Switzerland. Here, however, the authorisation requirement is linked to the authority to represent parties in court and not to the provision of legal services in general. However, applying as a lawyer’s service without a corresponding patent can at most be punished by cantonal law or by the Federal Act against Unfair Competition (UWG) with a fine or even imprisonment for up to 3 years.
There is now a certain legal uncertainty for providers of automated legal services. However, the ruling of the Regional Court of Cologne should not be interpreted as a ban on LegalTech services. LegalTech services using complex algorithms or even artificial intelligence can hardly ever be understood and operated by one lawyer alone. The historical image of the lawyer as a freelance carrier of full responsibility for his legal services is no longer up to date due to digitisation. For certain areas of application, automated LegalTech applications certainly have their right to exist. The technologies will also develop further and penetrate more and more into the current activities of lawyers. The lawyers’ guild must face up to this fact. Instead of prohibitions, the distinction between automated legal tools and legal services should be considered. If LegalTech applications sufficiently point out that it is a purely automated decision, this can be useful in addition to the usual legal services. However, the promotion of such services as “individual” and “legal quality”, as Wolters Kluwer does, is not conducive and cannot be justified by clauses in the general terms and conditions.