Markus Hartung is a lawyer and mediator, and he directs the Bucerius Center on the Legal Profession at Bucerius Law School in Hamburg, Germany. Bucerius is the first and only private law school in Germany, and its curriculum and student body have a strong international profile. Its Center on the Legal Profession is focused on management and leadership of commercial law firms and legal departments, conducting research on the development of the legal industry and its regulatory environment.
Hartung is also one of three editors of the book, Legal Tech: Die Digitalisierung des Rechtsmarkts (Legal Tech: The Digitization of the Legal Market), published in 2018 in English and German. An all-English version is due out this fall.
Hartung sat down with David Curle, director of the technology & innovation platform at Thomson Reuters Legal Executive Institute, at “Beyond Our Borders,” a two-day global legal innovation summit held at Northwestern University’s Pritzker School of Law.
DAVID CURLE: We’ve just taken part in a global legal technology conference – do you think there is such a thing as a global legal market?
MARCUS HARTUNG: Well, except for US or UK law, legal systems are national regulatory systems. Regarding legal tech, there’s a global community of people who think about changing things in the market from their national perspective. I don’t think that there’s a global market for legal technology … today. But things are changing. If you include software for generating documents, editors and the like as legal technology, then there is a global market, as systems like Contract Express® are being used all over the world.
Let me put it this way: The technology behind LegalZoom is globally applicable and useful, but the content is not. And when it comes to what is called artificial intelligence (AI) today, it is very much depending on language and the availability of data.
So, there is an English-speaking market for legal technology applications, and there’s a market for German-speaking countries. We meet many legal tech entrepreneurs whose products are basically usable only in the US and Canada, and maybe in the UK, but not in other countries. So there is no global market, but there is a global group of people who like to meet and exchange ideas across boundaries, yes.
CURLE: How about Germany specifically? Tell me a little bit about the development of legal technology and innovation there.
HARTUNG: Germany is lagging behind, but things are now moving into the right direction. For example, there are law firms in Germany with innovative management that are offering legal tech applications to their clients. Then there are typical start-ups who develop a product and then try to grow and be successful. And Germany has three or four platforms for matching clients and lawyers, and we have some innovative document management and editing applications.
AI-based applications are rarer birds. This is not due to a lack of innovative or creative brainpower in Germany – that’s not our issue. But Germany is extremely cautious when it comes to data. It seems to me that data protection comes first – before everything else. And maybe the market in German-speaking countries is too small for it to really make sense to develop something like Kira or Luminance, which are so far developed with their algorithms that I don’t see a business case for German document review algorithms. There are two German AI applications, LEVERTON and RFRNZ. LEVERTON, a real estate-focused document review algorithm, is widely known; and RFRNZ is still rather small.
So overall, I would say that the scene in Germany is … okay-ish. It would be easier if we would stick less to our German language so that we could work with applications from other countries. As I said, the availability of data remains an issue. All the global law firms like Freshfields and Linklaters work with RAVN or Kira or other applications, but only to a limited extent in their German offices. That clearly shows to me the German market is not big enough or attractive enough to develop something native.
CURLE: What’s the picture in the rest of Europe? Are there countries that are getting ahead in legal tech or innovation?
HARTUNG: Interestingly, Austria and Switzerland are both very innovative countries. Switzerland has a very active fintech scene, which is not so far away from legal tech. Fintech and legal tech meet a very investor-friendly environment in Switzerland; and Austria has a long tradition of electronic communication between lawyers and courts, making them familiar with certain uses of electronic devices.
Now universities are looking at legal tech and are organizing legal hackathons. So you get the impression that it’s not always a disadvantage to be a small market because people are pretty motivated. It’s fun to go to Austria to see what they are doing.
Among the larger countries, I would say France is far more developed than we are. The regulatory environment is more legal tech friendly. Although France is not an unregulated market, the Paris bar takes a very open approach and has an incubator where legal tech start-ups can, within the regulatory regime, be innovative and develop new ideas. In Germany, this would be inconceivable.
Regarding legal tech, there’s a global community of people who think about changing things in the market from their national perspective. I don’t think that there’s a global market for legal technology … today. But things are changing.
CURLE: In your presentation at the summit today, you presented some interesting data about your law school and incoming students and their characteristics. Can you summarize that?
HARTUNG: When it comes to lawyers, archetypes spring to mind. We all believe that there are typical attributes of lawyers’ behavior and their approach to technology and change. Much of this is based on the great work of Dr. Larry Richard, who has published research on the lawyer persona. Richard’s research shows that typical attributes of lawyers differ significantly from the general public. For example, lawyers are not very sociable. They are loners. They have a high sense of autonomy, a high degree of skepticism, and they are not very resilient. This fits perfectly into what we think about lawyers.
But, is this an eternal thing? What about Generation Y, the millennials – do they have the same or similar personal traits? In recent years, we have interviewed students and alumni about their values and behaviors. Then, we took the questions and traits from Richard’s research and did a small survey (with plans to extend it), and we found out that today’s generation of incoming lawyers has some significant differences compared to earlier generations.
We have found that our students are very resilient – more than the general public – and they are far more sociable. They have a certain sense of autonomy, but not to the degree the typical lawyer has. And that tells you that the attributes that make lawyers difficult to manage, or make change management so difficult, are possibly going away in the younger generation.
So, from our research, it appears that the new generation of students coming has some different attributes that perhaps make it easier for them to accept law firms as “normal companies” providing legal services, having a proper resource management, combining lawyers, nonlawyers, technology, data analysts and other professionals.
CURLE: I think that was a big theme of this conference, the importance of integrating those other professionals into the legal industry. Would you agree?
HARTUNG: Yes, it clearly shows some limits in today’s industry. At the moment, a data analyst could not fully join forces with a lawyer in the US or in Germany because they are not allowed to share profits.
One could call it a segregated mind-set in the legal profession: The world consists of lawyers and non-lawyers, and lawyers must not join forces or share profits with non-lawyers. Our organizational structures do not allow for alternative career professionals, even if lawyers wanted them as partners, and even if they are so important for clients.
I think a structure which is so focused on certain professions only, without opening itself to other value-adding professions, has a very difficult future. And if law firms don’t open up to those professionals, then they miss out on the next generation of people.