Legal tech in Germany: “It’s no secret we’re behind the curve”

Legal tech in Germany is not at such an advanced stage as it is in UK and US law firms. As one IT director at a leading Germany firm admits: “It’s not a secret that we in Germany are a little bit behind developments in the US and UK markets.” They are, however, paying particularly close attention to data security as they implement legal tech solutions.

No business these days can survive without embracing technology. Firms around the world are grappling with artificial intelligence (AI), remote working and so-called ‘legal tech’ apps designed to enhance the client experience.

But each jurisdiction has its own challenges as to how this new technology is implemented and what it can do. Many of the best-known platforms are designed and run by companies based in common law jurisdictions such as the US and UK – what might be needed for a firm to handle disclosure in one of these countries is not always needed elsewhere.

External data hosting – no cloud for us

In Germany, the country’s biggest independent law firms are taking a range of approaches to technology. Some are investing heavily, building in-house development teams, and embracing legal tech and all the opportunities it can bring. Others are sticking to off-the-shelf systems and moving more slowly.

A common theme is a reluctance to use externally hosted cloud servers for data hosting and storage, with two firms interviewed for this report setting up their own internal cloud storage. Heuking Kühn Lüer Wojtek partner Philip Kempermann notes that until recently it was unclear under German law whether client-attorney privilege would be protected if using external service providers, although this has now been clarified and privilege is safe.

Not every German firm feels comfortable talking about technology, with several approached for this report declining to be featured. They either said they were “not really investing in new technologies”, that the technology they were using was nothing unusual or that they were in the process of planning investments they were not comfortable sharing with the market.

However, many of the rest are keen to share the ways in which technology is changing their working lives and where their investment is focused. As in other parts of the world, the impact of new tools on the German legal market is enormous.

Legal tech in Germany: firm by firm

Beiten Burkhardt

Beiten Burkhardt IT director Stefan Eckert is responsible both for the firm’s internal technology use and its legal tech initiatives, working with the board.

“It’s not a secret that we in Germany are a little bit behind developments in the US and UK markets,” Eckert says of technological development in the legal world in his jurisdiction.

“We’ve invested a lot of money in the past two or three years in our office technology, environment and platforms” Stefan Eckert

Beiten Burkhardt is seeking to catch up with its overseas rivals.

“We’ve invested a lot of money in the past two or three years in our office technology, environment and platforms,” Eckert reveals.

This has seen investment in the firm’s document, knowledge and client relationship management systems as well as e-billing.

The firm is also happy to develop its own tools where there is a gap or a particular need.

“If we have a need on specific client matters we develop specific solutions, especially in the area of case management,” Eckert says. “We’re working with a company called Knowledge Tools.

“We’ve also invested in collaboration platforms; that’s something our clients are keen to do with us, to make it easier to share documents and data.”

Beiten Burkhardt has a strategy of digitisation in the next two to three years, which Eckert points out means also spending money on improving cyber security.

Part of this strategy involves developing apps, with the firm having recently released a data protection app aimed at clients.

The firm is also one of those to have introduced its own private cloud system for staff and clients.

“There’s an extra cost effect to using external cloud servers,” Eckert notes. “We have the people in place, we have the knowledge and the environment.”

But his main aim as IT director is to keep on optimising Beiten Burkhardt’s systems with the aim of providing a better service to clients.

“We’re always trying to optimise our processes, to be more efficient and to ensure quality of work – that’s what I think our clients expect,” Eckert says. “They expect only high-quality legal service for a reasonable price.

“I’ve never heard our clients ask us for a tool. If we need technology and tools to optimise the process, we do that if it makes sense.”

Gleiss Lutz

“Legal tech is the hot topic in Germany at the moment,” says Gleiss Lutz managing partner Alexander Schwarz, adding that it would be possible to attend a meeting on the topic “almost every day”.

“Everybody talks about how is it going to develop and we’re all still wondering in what ways this will affect what we’re doing,” Schwarz says. “Legal tech is the new recruiting tool.”

Legal tech in Germany, Alexander Schwarz“Legal tech is the new recruiting tool”
Alexander Schwarz

With this in mind, he says Gleiss decided early that while its focus would remain on being a tier 1 firm advising clients on complex transactions and disputes, it also needed to be a leader in developing technology – “being someone who’s not following but who’s at the forefront in all the developments we think will influence our daily business,” Schwarz says.

IT director Marc Geiger leads Gleiss’s work internally, but associates and partners are also closely involved. The firm has a legal tech group set up over a year ago, where it discusses developments and examines the effect of legal tech on Gleiss’s own business.

Geiger says one example of a development the firm has carried out in partnership with external providers is a virtual assistant tool known as Vari, to help lawyers keep track of complex cases.

“We have some ideas for really fancy projects – we’re talking intensively and have already kicked off the first few,” he reveals.

Schwarz says the size of the firm and its client base is an advantage as technology providers know Gleiss can provide useful data to work with.

“Teaming up these two worlds is a really interesting story for both sides,” he says.

Internally, the firm is careful to acknowledge that different generations will have different skills with technology.

Schwarz explains how legal tech can be a recruiting tool: “We can tell people that the boring parts of their work will be done by technology in future. We can say to them that as a top lawyer that’s been hired by Gleiss Lutz, you can do the interesting part of the work.”

The firm’s investment has already altered its structure, with its traditional one lawyer to one secretary model long gone. Schwarz says the number of staff will not decrease dramatically, but he acknowledges that the assistant’s role has “completely changed”, becoming more complex.

Heuking Kühn Lüer Wotjek

Heuking Kühn Lüer Wojtek partner Philip Kempermann says his firm is somewhere in the middle of the pack when it comes to technological innovation.

The firm is implementing a document organisation system provided by German company LexSolution. Kempermann says where possible Heuking prefers to use German providers for its platforms.

Heuking has also recently introduced a “much better conflict check system” and is in the process of introducing digital dictation.

“It’s a double approach,” Kempermann says of this. “With the same system you can dictate to a secretary or dictate to text directly.”

Which option lawyers prefer, he says, is very much connected to their age and he admits his assistant has never used a Dictaphone, while some older partners still use normal dictation.

Kempermann says Heuking has also embraced the use of technology for agile working, with all lawyers able to log on to the firm’s servers remotely and be reached on a static phone number wherever they are.

Heuking is exploring other areas in which to use technology, such as e-disclosure.

“In Germany we don’t have disclosure procedures in civil law so this is not as common as in the UK,” Kempermann acknowledges. “We’ve also discussed various AI options.”

“We’re open to anything so long as it doesn’t affect the overall strategy”
Philip Kempermann

The firm remains undecided on whether to plunge into using AI. Kempermann points out that some international firms are using data from 250 fee-earners to train AI software, a resource to which firms such as Heuking do not have access.

“If you look at a structure like ours, we’re reviewing whether that’s sufficient for using AI or whether, by using it, we’d have challenges in completeness of advice,” Kempermann adds.

“We’re open to anything someone wants to do so long as it doesn’t affect the overall strategy,” he says. “When you introduce something new, people try one new thing and then they might try other new stuff as well.”

He predicts that clients will drive future investment, for example in co-operation platforms. But Heuking is also exploring possibilities with legal apps, having recently developed an e-learning tool for associates. Perhaps Kempermann’s claim of being middle of the pack is overly modest.

Luther

Luther has a chunky budget to invest in IT each year – managing partner Markus Sengpiel says the firm spends more than €1m (£880,000) on technology annually.

“In recent years we’ve invested in software which could be described as ‘legal tech 1.0’,” Sengpiel explains, citing examples of systems such as voice and handwriting recognition software and knowledge management solutions.

Luther’s client relationship management and document management systems are from Aderant and iManage, rather than a German provider.

“We try to be as much up-to-standard as possible, taking our specialities into
consideration,” Sengpiel says. “I’m convinced that it’s better and cheaper to use standard software.”

However, Sengpiel says Luther also likes to challenge its IT providers to help develop tools and improve them for the German market. It has an ongoing project with Aderant for this. The firm is also looking at developing tools to help it with staffing and with organising complex litigation.

“It’s all about organising the work in a better way,” Sengpiel says. “We have some proof of concept for solutions using IBM Watson software.”

Although Luther does do some technology development in-house it also buys straight from the provider or develops software with them.

Legal tech in Germany, Markus Sengpiel“Most firms see this on a cost-efficiency basis; I think it’s more a motivation piece” Markus Sengpiel

“In each case we decide whether we make it or buy it.,” Sengpiel says. “We have only limited resource with regard to IT people doing the work. We’re quite innovative because we have some joint ventures with software companies.”

He says working with external companies gives Luther an advantage in terms of getting hold of a product sooner than it otherwise would, even if a provider then markets the tool commercially.

“We probably have more innovative tools to use than when we decide to develop it just on our own,” he adds.

Luther’s plans for investment in IT follow a three-month change project.

“We’re doing more modelling because we’ve grown so fast that we require more sources with regard to storage and computer facilities,” Sengpiel says. “It’s a long journey. You can’t say ‘we’re ready’ – you’ll never be ready.

“The thing now is to get our staff in a position to use the tools in the best way,” he adds. “Most firms see this development on a cost-efficiency basis; I think it’s more a motivation piece.”

Noerr

Noerr splits its technology investments into three tranches: office technology, legal tech and AI products.

“Our legal tech group, consisting of highly specialised lawyers as well as dedicated IT experts, has implemented a strategic development plan to ensure we meet the requirements of digitisation,” explains
co-managing partner Tobias Bürgers.

Tobias Bürgers, legal tech in Germany“Today’s clients demand state-of-the-art AI review capabilities as well as a billing platform which is easily accessibleTobias Bürgers

The firm is implementing a legal tech tool for managing multiple proceedings. Known as Case Tracker, it is a self-developed system for resource planning, monitoring progress and reporting in mass litigation cases. Noerr has also already implemented new AI review platforms for due diligence, internal investigation and discovery and disclosure in litigation.

Internally, the firm has replaced all its physical servers by what Bürgers describes as a “modern, highly scaleable, virtualised data centre environment”.

Next on the to-do list is the introduction of virtual access to desktops and client data worldwide which, Bürgers says, goes “hand-in-hand with the creation of a digital learning platform for our employees to facilitate the digital transformation of Noerr”.

Next on the list is virtual access to desktops and client data worldwide

He predicts that firms will have to focus on three key areas of investment in the future: AI review platforms for due diligence, internal investigation and litigation; legal project management tools and dashboards; and finally but perhaps most importantly, IT security systems to protect against increasing threats of cyber crime and theft of know-how.

Client demand is also a factor for Noerr.

“Today’s clients demand state-of-the-art AI review capabilities as well as a billing and reporting platform which is easily accessible, transparent and compatible with their own accounting systems,” notes Bürgers. “But most importantly, they expect secure means of collaboration that meet their compliance requirements.”

Schultze & Braun

Schultze & Braun’s offering has two strands, and the firm has therefore had to adopt two strands to handle its technology needs.

Around half the firm’s work is insolvency administration which is document-heavy and required Schultze to implement a separate document management system enabling staff to scan and file what partner Annerose Tashiro describes as “tremendous amounts” of files. These come from both debtors and creditors of companies in administration. Every document scanned into Schultze’s system has keywords attached to make it easy to find later.

Annerose Tashiro, legal tech in Germany“We like to have our own server system and not rely on external servers” Annerose Tashiro

Tashiro says the system has changed the way the insolvency administration team works.

Documents are also important for the advisory side of the firm, and Schultze is implementing a new case management system linked to its email system.

The introduction of such systems has changed the shape of the firm. Tashiro says Schultze used to employ far more typists. Their skills are no longer needed, and instead of personal assistants printing out and filing documents they are now saving them from email attachments.

“We like to have our own server system and not rely on external servers” says Tashiro. “We’ve established our own cloud system to exchange a large amount of documents with a client or investor company.”

Schultze is implementing a new case management system linked to its
email system

She says Schultze is more confident that it can protect its and clients’ data this way than by trusting it to an external provider, adding: “It’s a question of data protection and security within the jurisdiction we’re most comfortable with.”

Schultze is at a fairly early stage of technology development though, like its peers, it has the tools to enable all its lawyers to work flexibly if they wish. Tashiro says the firm’s current need is to ensure that it is using its document and case management systems on both sides of the practice as much as possible before venturing further into the world of IT innovation.

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