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Innovations in the legal market: legal advice reloaded


The world of law firms has never seen this before: Xenion Legal, known for a lawyer-on-demand service, is setting up a research and development department. The aim is to examine how legal advice can be made more efficient and cost-effective and to develop corresponding IT-supported products. If these models prevail, it could turn the legal market upside down.

Innovations. Most lawyers think of developing a new type of transaction structure or a clever tax model. However, innovations that allow law firms or other service providers to open up completely new business areas in the legal environment are rare in the legal market. The German scene is only gradually getting used to the so-called alternative providers such as PerConnex or Xenion Legal with their lawyers on demand service. But these are already igniting the second stage.

Xenion Legal announced its intention to set up a Legal Innovation Center. As far as is known, it is the first research and development unit of a legal service provider or a law firm in Germany and one of the first worldwide. In the USA, Akerman established a Research & Development (R&D) Council in the spring.

The unit at Xenion is managed by the 37-year-old Belgian Filip Corveleyn, who wants to develop software-based products for standardized processes together with IT experts. The computer is supposed to take over some of the work that lawyers have done up to now, for example in the document business. The company is still keeping a low profile on what is specifically planned. They have developed prototypes that are already being tested in practice at a US company for two countries before they will be rolled out to 21 European countries, says Felix Rackwitz, Chief Operation Officer (COO) of Xenion Legal. He cannot be elicited more.

Research and development - in the industry long since day-to-day business

Research and development departments are common in the industry. Large corporations spend large amounts each year in order to be at the forefront of their industry with innovations. A pharmaceutical company that does not regularly bring a new drug onto the market is quickly left behind by the competition.

Of course, lawyers and business development departments in many law firms also regularly develop product innovations, i.e. new consulting products. Recently, for example, the high demand in the area of ​​compliance has given many law firms the idea of ​​bundling the know-how on the subject that is already available in the various practice groups in a comprehensive team and thus appearing on the market.

Xenion is building a segment with its software products, which it intends to establish under the "Tools4Legal" brand, but in addition to the legal advice that its lawyers provide for clients, which will become a further mainstay in the future and not least The company's revenue generator.

The idea of ​​making legal advice more efficient with computer-aided processes is new, but not: With software products that generate documents such as employment or rental contracts, service providers such as Legal Zoom or Rocket Lawyer have already established themselves on the US market, in In Germany there is the start-up SmartLaw, which, like LTO, belongs to Wolters Kluwer. Xenion, however, is primarily targeting the legal departments of large companies and international corporations as customers; the other service providers are currently targeting private individuals and smaller companies with their offers.

Is Xenion abolishing the legal profession?

Should corporate legal departments actually use the new software products in everyday business, this would inevitably have an impact on the legal scene. Because if the in-house lawyers no longer have to deal with standard business, they have more time for other, more complex legal questions. This could also mean that external law firms are less likely to be mandated.

So does Xenion Legal want to abolish the legal profession? "No," says Felix Rackwitz. "But we see Tools4Legal as the answer to the trend towards 'More for Less' that Richard Susskind in his book Tomorrow‘s Laywers describes."

Susskind, one of the leading analysts in the legal market, describes in this book the most important challenges for law firms in the coming years. He mainly observes the Anglo-Saxon market, so not everything can be transferred to German conditions. But the expectation of clients that lawyers should provide more services for less costs has long been felt by law firms in this country. They react to this by increasingly using transaction lawyers and commercial lawyers for standard work and due diligences and by accepting lump sums and capped fees.

Markus Hartung, director of the Bucerius Center on the Legal Profession, also does not believe that Xenion is ringing the death knell for the legal market. IT-supported services that automate administrative or process workflows don't make legal work superfluous, he says. "Such services only threaten law firms that live from this standard business. That is fate and happens in every branch," says Hartung. "The challenge for law firms is to redesign their 'manufacturing processes', that is, to offer their services more efficiently and cheaply with the help of such technologies."

It is uncertain whether the commercial law firms will accept these challenges. However, if the alternative providers with their new product ideas prevail with the clients, they will probably have no choice.