In the matter “Smartlaw”, the appeal has just been decided. While the Regional Court of Cologne had held that the litigious offer regarding the supply of electronically generated contractual documents constituted a breach of the law, the Higher Regional Court of Cologne has now rejected this view in the proceedings on appeal, holding by judgment of 19 June 2020 that offering legal documents which have been generated in this manner is permissible and does not constitute a legal service for which a licence is required.
Users of the “Smartlaw” solution provided by the publisher Wolters Kluwer can, based on a Q&A system, create and purchase customised legal documents, for example, contracts, powers of attorney or templates for shareholders’ resolutions. This offer was advertised on the company’s website using slogans such as “Rechtsdokumente in Anwaltsqualität” (which translates as “Lawyer-quality legal documents”), „günstiger als ein Anwalt“ (translating as “less costly than a lawyer”) and “Unsere Partner: Top-Anwälte und Spitzenkanzleien” (translating as “Our partners: top lawyers and leading law firms”). The legal notice on the website pointed out that the generated documents were (merely) publishing products and not the result of legal advice rendered.
The Hamburg Bar Association took the view that both the contract generator and the slogans used to advertise it were impermissible and filed a lawsuit with the Regional Court of Cologne. The Bar Association was of the opinion that the offered solution provided services according to the German Legal Services Act (Rechtsdienstleistungsgesetz) without the required licence for this purpose. It further claimed that the quoted advertising slogans were misleading as they deceived the users about the lawfulness of the services provided, and also that the slogans conveyed the wrong impression that the documents were of the same quality as a lawyer’s advisory products. The publishing house objected that the contract generator’s function was similar to that of the long-established programmes used to prepare tax returns and that the target customers were persons who would otherwise draft their contracts themselves, without obtaining assistance from a lawyer, having previously used pre-printed forms and templates. The Regional Court adopted the Bar Association’s views and found for the Bar Association. Its judgment has now been successfully appealed against by “Smartlaw”.
According to the Higher Regional Court of Cologne (hereinafter: “OLG Cologne”), the alleged violation of the German Legal Services Act has not taken place, as the generation of legal documents is not a legal service requiring a licence. The OLG Cologne has pointed out that according to the ruling of the German Federal Court of Justice (hereinafter, “BGH”) regarding the rent calculation tool “wenigermiete.de” (we reported on that ruling here), the term “legal service” is to be understood in a narrow sense and describes an activity performed on behalf of a third party in a concrete matter which requires a legal examination of the individual case. According to the OLG Cologne, the offered “Smartlaw” solution does not, however, include a legal examination of the individual case in the above sense; instead, it is based on a Q&A scheme that follows a pre-determined routine, which is evident to the user. The OLG Cologne has conceded that the drafting of contracts may, in individual cases, be one of the supreme disciplines in the legal advisory business. It has also pointed out, however, that by contrast, the contract generator merely provides a pre-defined scheme that can be filled with facts or circumstances, and that this does not constitute a legal examination. According to the OLG Cologne, the contract is created by the user, who merely obtains computer-based support from the generator; therefore, the contract generator can be classified as a user-friendly and attractive help tool for consumers and businesspeople. The OLG Cologne has based its decision on the BGH’s elaborations on the rent calculation tool, where the BGH pronounced itself in favour of a generous view, or rather of a narrow interpretation, of the term “legal service” in a step towards liberalising the legal services market.
As far as the appeal concerned the slogans quoted above, the publishing house withdrew these slogans after a hint from the Senate; as a result, the prohibition on using these slogans has already become final and non-appealable.
The “Smartlaw” case remains exciting. The Senate has allowed an appeal on questions of law because of the fundamental importance of this matter, and the Hamburg Bar Association has already announced its intention to file such an appeal.
While it appears that the liberalisation of the legal services market will continue after this judgment, the OLG Cologne has also pointed out that tools generating standard forms cannot replace genuinely customised legal advice; instead, they merely extend the existing range of help in the form of templates and of manuals containing standard forms that can be used to handle one’s legal affairs on one’s own responsibility by an obvious digital option. It has remained open at what point the boundary between offering help and providing legal services is crossed – for example, because users get the impression from an offer that they can handle their legal affairs fully and reasonably by means of documents that have been generated using a standard procedure. This question is relevant because, according to the OLG Cologne, protection from unqualified legal advice must be guaranteed wherever legal advice is, de facto or allegedly, provided. It remains to be seen whether the opinion of the OLG Cologne will be upheld in proceedings on appeal on questions of law, that anybody using “Smartlaw” is aware that he/she is not getting legal advice when selecting options but is rather entering facts or circumstances in a pre-defined scheme on his/her own responsibility while a purely schematic yes/no code is running in the background.
The permissibility of such digital solutions and help tools depends on the expectations that the person seeking to safeguard his/her rights has when using them. In light of the fact that following a hint from the Senate, the appeal was withdrawn as far as it related to the advertising slogans at issue, LegalTech providers would be well advised to carefully examine both now and in the future how they present and advertise their products. Furthermore, LegalTech providers must always examine how “close” the products or services that they offer are to legal services.
Murat Deniz Akgül