Digital disruption may be no laughing matter, but Christoph Schalast, a corporate lawyer in Frankfurt, grins as he recalls his office’s uncomfortable first encounter with legal automation. “One day, a client came in the office and wanted legal advice, but he insisted our firm use artificial intelligence,” he said. The request set off a sweeping reassessment of the effects on his firm of so-called “legal tech,” a potent mix of legal services with technology.
While digitization is far advanced in sectors such as retail, the legal trade has lagged far behind. But Germany’s 160,000 lawyers are beginning to feel the pinch. Generally, legal tech refers to software programs that can reap mind-blowing efficiencies, performing in mere seconds tasks that would take human attorneys hundreds of thousands of hours to complete manually. The profit potential of such software and the many new startups employing it is huge and stands to take a big bite out of the €20 billion ($24 billion) of fees lawyers earn annually in Germany.
The first thing Mr. Schalast did was to convert his entire documentation, as well as that of 40 other lawyers, into digital files. The firm experimented with different software for lawyers, including learning programs that scan documents using search terms. The transition took a year, but greatly simplified a range of tasks, and productivity soared.
To offset a drop in lawyers’ fees, Mr. Schalast’s firm now offers legal tech solutions. That’s a big reason the firm became the majority shareholder in Hamburg-based startup Clarius Legal earlier this month. Clarius Legal offers standardized legal tech services such as document analysis and contract drafting at a set price. Meanwhile, Mr. Schalast offers individual consultation on a fee basis.