Liquid Legal

There is currently a robust debate among progressive lawyers and contract and commercial managers about how to deploy a relatively new economic actor, the online platform, to create a one-stop legal shop: a shared source of legal knowledge, including templates, clauses and commentaries on new legislation, as well as offering a neutral place for contract negotiations, professional discussions, exchange and learning. One area of debate involves questioning how legal knowledge is created, stored, updated and shared. Another is more fundamental and controversial. It questions access to, and the cost of obtaining, legal services. Legal service providers across all sectors, in both the public and the private domains, are engaging in this debate, from the restructuring and rationalisation of old ways of working to a transformation in the way that legal expertise is made available within both organisations and society. One of these efforts revolves around the fine-tuning of a vision for a free online Common Legal Platform (CLP). The opportunity offered by the free online CLP is about changing not just the way legal services providers participate in the market, or “play the business game”, but the game they play.

The digital transformation as a matter of fact is having a strong impact on the evolution of the Legal profession itself. It spans over how we organize ourselves cross-functionally, what capabilities and resources we need, how we leverage new means of technology and what shifts in culture and mindset this creates and demands. Having worked for more than 1.5 decades in a company that creates software solutions and services which enable the digital transformation of our industrial customers, this article is to share my respective experiences and observations, in particular as it relates to my involvement in building so called Transformation Centers. These are real-production environments which are demonstrating real-world industrial use cases, with that reduce complexities in understanding digital transformation and instead do provide for a “tangible” experience on the prerequisites and impacts of such transformation. Moreover, such centers evoke new collaboration models in the ecosystem that I had the pleasure to help enabling, both within and outside my classic Legal role, including creating a global collaboration with McKinsey on so called Digital Capability Centers, all of which provided me with valuable insights and tons of inspiration. Given that digital transformation on the one hand requires building new and holistic expertise as it relates to how the Legal profession advises its internal and external customers and clients throughout their journey of transformation, and on the other hand enables and calls for transforming the Legal profession itself, with this article I would like to suggest new methodologies and settings of capability building through collaboration that do support both of the aforementioned aspects in a comprehensive and interdisciplinary way. After all, this article is meant to provide inspiration and insights into what a Digital Legal profession on the rise can learn from trailblazers in the Industrie 4.0 space, how such learnings translate to our profession and the ecosystem we are operating in—and what limitations would have to be taken into account and dealt with on such exploration. By giving concrete examples and making specific suggestions on how Digital Legal can embark on a journey that other disciplines have already advanced on, I would like to contribute to triggering ideas and actions that make us embrace and actively shape our very own digital transformation.

Automation is transforming most industries. Yet, by comparison, adoption of automation in the legal sector has been poor to date. Only now are we starting to see a greater focus on automation and the emergence of an increasing number of applications which showcase their tangible benefits and practical effects. This article provides an overview of the status quo of automation, current developments in the field and the present suite of practical applications leveraging the power of automation. Firstly, this article introduces the theoretical foundations of automation (including rule-based reasoning) and illustrates tools and applications which utilise automation technology. The article then goes on to explain the most relevant concepts relating to automation, such as process automation, business process modelling, notation and the emerging field of decision automation. Secondly, this article summarizes the concept of rule-based technology and how this differs from modern machine learning approaches. In doing so, this article identifies the present challenges and limitations that applications utilizing machine learning face when working with unstructured data in the legal sector. Finally, this article examines technologies which are feasible for legal reasoning and explains their characteristics. Here, the article also emphasizes the benefit of a common legal platform to aid the proliferation of automation technology in the legal sphere. In doing so, the article also explains how legal automation can benefit from the industry-agnostic concept of “platform economy” alongside the advancement of a more rounded automation ecosystem.

Legal systems evolve procedures designed to resolve legal problems. Gradually, however, problems are molded to be well-suited to the procedures available to resolve them. Legal problems and procedures thus co-evolve, mutually adjusting as new sorts of problems challenge existing procedures, or as procedural innovations prompt us to see problems (and ultimately ourselves) in fresh ways. This ongoing relationship between legal procedures and legal problems may be at a historically significant moment, one calling for thoughtful social response and re-design of traditional legal platforms. Legal problems have become more difficult in the Information Age, and traditional legal procedures may not be keeping pace. The evolved procedures of legal systems are not designed to deal with the complexity, breadth, or volatility of modern problems. Traditional legal approaches should thus be strengthened through incorporating new problem-solving methods that offer greater sophistication and versatility. Artificial intelligence offers one set of potentially powerful tools to augment legal capabilities. This Chapter examines both the advantages and disadvantages of using AI to resolve legal disputes. On the positive side, AI may reveal patterns of human behavior that facilitate early interventions to prevent problems from arising, and increase the effectiveness of the legal systems in coping with problems of great complexity. Yet AI creates its own risks. First, the historical databases on which AI algorithms are trained may perpetuate social discrimination. Second, AI’s immense pattern recognition and explanatory powers may, ironically, eventually divert legal and moral attention from social issues. Too many issues that now are addressed normatively by the law may be perceived as belonging to a realm of scientific or psychological explanation that is impervious to conscious social control or design. As a result, we may come to constrict both the range of legal problems and our ethical imagination.

Typically, customers have approached law firms only for legal services (“buy”). Increasingly over the last decades, companies have started to build their own legal departments (“make”; insourcing). As a next development, the legal arms of the big auditing firms (Big Four) and other alternative legal service providers (NewLaw) are starting to enter the market, competing with the traditional legal service providers. And finally, as the most recent phenomenon, online offers and platforms are putting existing relationships with lawyers under pressure. Depending on the customer’s experience and whether a company has a legal department of its own, the purchase of legal services occurs differently. However, the questions raised and the topics addressed in this context remain the same. Therefore, one must understand and recognize the different facets of every service provider and the underlying relationship. Only then can a customer find the optimal composition and make use of the advantages each of them offers to solve a particular problem. This article investigates the question of trust in a relationship between customer and lawyer, explains why legal expertise is no longer sufficient to win and retain customers, and provides an answer to how lawyers can face the challenge of digitalization. The term “customer” is uniformly applied to both customers of outside counsel and internal customers of legal departments to express the view that providing legal advice is considered a service with customer orientation in both cases. (This article is a further development of the following publication: Mascello, Bruno (2019), Vertrauensvorschuss vs. Kostenvorschuss – Trusted Advisor?, in: Anwaltsrevue 4/2019, pp. 149–161. There, you can find further comments and explanations, sources and references as well as an extensive bibliography. For the sake of readability and brevity, this article uses the masculine form of pronouns only, but the feminine form is always understood to be included as well.)

Lawyers are trained to think “backwards”. Students learn legal content, and exams essentially test this knowledge. There is little or no time left for how law should or could be. Law is assumed, not designed. What would it look like to re-imagine how we study law? What would a course look like that consistently engages young lawyers in creative work and introduces them to a more natural understanding of digital tools. That is what this article is about. First, we take a brief look at the present state of law studies. In doing this, the contrast to our new proposal becomes clearer. Afterwards, we will describe in a more concrete way the kind of lawyer that this program seeks to create. This is followed by the proposed new curriculum in seven parts. The whole chapter is written from the perspective of the German legal education.

The topic of “Digital” has made it to the top of company boards’ and C-levels’ agenda. Boards regularly discuss their companies’ “digital transformation”. New senior roles like “chief digital officer” are created, and there is a war on the job market for scarce digital talent. Yet, investments in digital skills and latest technology alone are no guarantee for a company to be successful in the digital era. Studies (https://​www2.​deloitte.​com/​content/​dam/​insights/​us/​articles/​mit-smr-deloitte-digital-transformationst​rategy/​2016_​MIT_​DeloitteAligning​DigitalFuture.​pdf) show that digitally mature organizations—companies which have made best use of the opportunities offered by digital technology to transform business models, processes and talent engagement—share common features, features that consistently appear across different industries. They practice a new model of management—applying “Digital Leadership” throughout the organization. Speaking with business executives across industries about Digital Leadership of the legal function, you may be faced with reactions like: “digital leadership and legal – isn’t that a contradiction in terms?” Or you hear complaints about the legal department in their companies which allegedly does not understand the business, let alone technology and digital business trends. They rather keep legal out of digital projects as long as possible because “the lawyers would only see problems and hinder innovation instead of creating solutions and moving the business forward”. But of course, there are also positive examples of general counsels and legal teams who are praised for their Digital Leadership; some even developed themselves into digital innovation engines for the whole company. The purpose of this article is to promote Digital Leadership for lawyers. This requires as a first step (1) to explain why and how technology is now fueling significant changes in all industries and at exponential speed, then (2) to briefly outline the mega trends that have emerged as a consequence in business and that impact how modern organizations operate, before (3) we will take a view on the leadership traits that are found in successful, digitally mature enterprises. I will be adding thoughts and ideas what general counsels and legal leaders can do to apply Digital Legal Leadership in their role and in their function.

When you get ‘good grades’ from your clients, when your team executes the strategy really well, but when you, at the same time, anxiously look at a team that is on the edge, working long hours, powering on a high burn rate and actually being haunted by its own success—this is the moment you know that you are missing something. At that point in time, I came across Agile and embarked on what has proven to be the most fascinating journey of my career. And it is ongoing ever since. In this chapter I will share how the world of Agile opened up for me and how it led me to truly understand the underlying challenges for legal teams, as they work in the massively and rapidly changing environment of today. I will then explain, why we identified Scrum and Kanban as being the best combination to change how we approach our work and how to adapt our modus operandi. Scrum to organize the communication within the team, and Kanban to organize the information flow around our work. This part will include a detailed overview of exactly how we adopted and adapted those two Agile methodologies as a legal inhouse team. Against the background of our journey, I will finally put a spotlight on the cultural aspects of Agile. On the one hand, it is proven that Agile has positive impact on team culture. On the other hand, however, I know from experience that Agile also requires a strong culture and ongoing cultural awareness to come to fruition. This specifically includes the positive challenge for legal leaders to rethink their role, their skills and their interaction with the team. Based on what I am about to share, I am convinced, just like Rowan Bunning, one of the first Agile Coaches in Australia, that “… the Agile movement in software is part of a larger movement towards more humane and dynamic workplaces in the 21st century.” (Stated in “Who is Agile – Volume 1”, by Yves Hanoulle, Andrea Chiou, Marcin Floryan, Peter Doomen, Guy Nachimson, and Amber Ankerholz).

Legal Design Thinking as a method to achieve innovation and customer centricity in a legal context is used more and more by legal departments and law firms worldwide. It can contribute tremendously to the change of how law and the legal profession are appreciated which ties in with the idea of this book and also its 1st edition to transform the legal industry into a more business savvy function. This chapter describes the way legal design thinking was used as a new method to experiment and solve detected pain points in the Commercial&Contract as well as legal areas at Airbus Defence and Space, with the first use case being to create a newly designed/visualised NDA for start-ups. Sections 1 and 2 will provide background as to why Airbus Defence and Space conducted this project and which research methods were used in the preliminary project phases. Section 3 is describing the results of the research which informed the choice of redesigning the NDA and laid the basis for our legal design thinking process, and it also describes how the project was conducted. Section 4 summarizes the lessons learnt. Section 5 illustrates the outcomes of the redesign process.

Ever more complex issues, new challenges all the time and within ever tighter deadlines, coupled with an uncertain outlook facing careers, the economy and society. Lawyers today must master a balancing act between the most varied of incentives and the options accompanying them. And it’s not uncommon that the pressure of trying to meet these demands while maintaining a healthy work-life balance gets the better of them. Our health can be seen as the sum total of various factors which to a greater or lesser degree take their toll on us. Based on the “Formula for a Healthy Life”, Fritjof Nelting explains how these often hidden factors can bring about crisis situations in life, and how we can adjust our life compass in the direction of a life-long, healthy development that strengthens our resilience, so that joie de vivre, work and social life all coexist in harmony in our lives. The clinical work of the Gezeiten Haus Group, which has seen thousands of people through life crises, together with Gezeiten Haus Academy’s many years of experience in prevention and resilience training is the background he can bring to bear in his work.

The following article deals with the phenomenon of increasing acceleration and its effects on legal advice practice. Digitalization is changing all areas of life, and this with exponentially increasing speed. This requires government institutions, companies and every single person to be able and willing to change at ever shorter intervals. Both the state and many companies and people are having increasing difficulty keeping up with this speed of change. In addition, an unprecedented, ever-growing flood of information, new social fears due to climate change, geopolitical conflicts and declining confidence in democratic institutions are increasingly overburdening the individual. Complexity is becoming more and more difficult to communicate in this environment, and answers are expected ever faster. Legal advisors who want to remain successful in this environment must rethink the core of their advisory services. In order to remain relevant for their clients, they will have to provide advice much faster, less complex and more comprehensible, and better tailored to individual client needs. There is no patent recipe for this. However, a Common Legal Platform could help to master these challenges.

SMEs are an important economic factor, not only for the economy as a whole, but also for legal services. Yet large organizations dominate how legal services are delivered. This situation is reinforced by today’s data-driven economy. SMEs typically do not have access to a comparable amount of data like large organizations. The way for SMEs to compete in such an environment is through indirect collaboration and anonymous coopetition. In these models, collaboration is facilitated through a commercial provider that uses its participants’ data to train models and offers a service to all participating organizations as customers. Such a collaboration may also be an anonymous coopetition model, if competitors participate with no active knowledge of the respective other(s). Indirect collaboration will not only enable SMEs to use AI models which are based on more data alone, but also more diverse data, resulting in a higher quality of models. In the legal market, SMEs will thus be able to compete with larger organizations on an equal footing.

To many lawyers, the notion ‘contract is code’ may seem far-fetched and unrealistic. Indeed, business contracts contain legal terminology, yet almost all are written in human language and not in software code. It is hard to imagine a world in which contracts are not the outcome of human activities, and especially of lawyers’ activities. Meeting with clients and opposing counsel, assessing the matter, drafting and negotiating documents, shaking hands and signing papers—how could machines ever do all of these things? And yet, this digital contracting world already exists! Smart Contracts and Blockchains no longer require intermediators like law firms and banks to execute and record business transactions; Artificial Intelligence (AI) systems assemble contracts and predict the likelihood of winning legal cases in court; and the Internet of Things (IoT) enforces contractual rights and obligations directly via the product itself: if used illegally, the product does not function. These intelligent technologies change both what lawyers do and how they do it. They will not, however, replace lawyers or render the legal profession obsolete. On the contrary: As the digital world and innovative business models become regulated by material law, new practice areas for lawyers emerge. Automating repetitive tasks leaves more time for core legal deliverables such as compliance; moreover, technology provides better insights into legal and contractual data and enables innovative services for internal and external clients. In this article, we refer to the automation of the contracting process as Smart Contracting. Smart Contracting manages traditional legal language contracts as digital assets in a central repository along a lifecycle. Analyzing the content of these legacy contracts reveals business opportunities and reduces legal risks. The whole contracting process becomes smart through simplification and digitalization. This article first presents a Contract Lifecycle Management (CLM) process model which was jointly agreed on March 13, 2019 at the SAP CLM Process Forum in NYC by representatives of Airbus, Arcadis, Boeing, Lockheed Martin, Meggitt, Microsoft and SAP, and with input from IACCM. On the basis of this previous work, we now here analyze which activities within this CLM process can be automated using intelligent technologies. Finally, we outline how a Common Legal Platform may facilitate Smart Contracting.

Document automation is one of the few legal tech applications whose meaning is easily understood even by the most old-fashioned lawyers: The automated production of documents is not only considerably faster but often also of higher quality than manual drafting based on the documents “from last time” as a template. It can also become the basis for self-service structures with the lines of business (for an in-house legal department) or clients (for law firms). Lawyers that can answer requests from their internal or external clients, e.g. for a standard NDA, simply by referring to their document generator in the inter-/intranet also appreciate the fact that, after the wording and inner logic of a document has been programmed into a ‘smart template’, the document needed by the end user can be created without further action on the part of the human lawyer. It is therefore not surprising that many law-firms and legal departments are considering to introduce document automation into their organization—or have already done so in the past and consider upgrading to a more powerful automation tool. It is tempting to see the introduction of document automation as an IT project, i.e. as the selection and implementation of the right software. This is only logical since introducing document automation into an organization indeed typically requires the selection and implementation of a new piece of software. But: If you don’t know exactly what you want to do with document automation and who should in what way use the software in your company, you will only stumble into the right tool by chance—if at all. And more importantly: Even with a great piece of software in place, it can still happen that the end users and other stakeholders ignore the new tool because they don’t feel that it is worth the effort of changing their style of working. It is therefore important to take a clear look at the objectives to be achieved and the underlying target operating model. The desired outcome could be as diverse as mass contract repapering, template standardization through automation, qualitative control of legal issues outside the legal department or simply to enable the business. Anyone who does not view the introduction of document automation in a larger context and fails to include the analysis and optimization of the associated work processes will be working towards a “crappy digital process”, a term made famous by the former CEO of Telefonica Thorsten Dirks. And finally, while the legal tech enthusiasts in your company may be longing for the changes in their daily work that document automation brings about, other stakeholders in the company will be critical of them (and may even be right, especially if you haven’t done your job well). Whoever wants to inspire more than just the early adopters in the company should think about communication and change management ahead of time. This article provides suggestions on all the above points and summarizes them in a manageable checklist.

Collaboration can be regarded as the “leitmotif” of digital transformation. When carrying out LegalTech projects, a combination of elements of modern creativity techniques with an overarching structure familiar to lawyers can be very helpful in promoting effective collaboration. Such a “legal business innovation journey” brings together the legal business, IT and other involved stakeholders. The chapter focuses on tools and methods that have worked in practice during such “legal business innovation journeys” at Roedl & Partner. The experiences reported in this article clearly show that a Common Legal Platform (CLP) could make an important contribution when stakeholders want to transfer knowledge and exchange experiences. On the basis of two practical examples these aspects are discussed in more detail. The first example called “raising awareness” focuses on internal processes within a law firm. The second example called “the grey eminence” relates to working with clients. Here, too, collaboration is the main subject but with special regard to rather hidden stakeholders whose needs may not be apparent at first glance.

In our experience, there are three key points for successfully establishing and running a modern Legal Spend Management system in order to generate significant value for Deutsche Bahn group of companies (DB), DB’s legal department and DB’s business of selecting outside legal counsel. Firstly, in order to get a full picture of our rationale behind selecting outside legal counsel we had to carry out a full-scale analysis of our demands and our requirements for external legal services. Based on this analysis we were able to recognize certain patterns regarding our needs and requirements to be fulfilled for outside legal services, to look at our legal spend with a broader strategic view, and to plan when and where we spend money for legal services (Sect. 2.1). Secondly, for the legal department to face the task of fundamentally rethinking our outside counsel management together with the DB procurement department based on a clear allocation of responsibilities brings together the best of two worlds that is currently mainly located in rather separate functions (Sect. 2.2). Thirdly, in order to truly control our outside legal counsel business, we needed to find ways to collect and organize, as well as understand relevant data concerning our outside legal counsel relationships and make that data available to those who have to work with it. Aiming at an equally modern as well as efficient and user friendly long-term solution, we finally managed to integrate these tasks of data exploration and data analysis in a fully digitalised retainer management workflow. And even though developing such single all-encompassing integrated digital solution was hard work, it was worth taking the challenge in order to finally get a full lifecycle view on our overall legal spend (Sect. 2.3).

Legal departments today face multiple challenges, including cost pressure and an increase in workload due to a rapidly changing regulatory environment. The reaction to the challenges will have to be rethinking the way a legal department operates: The authors assess the current state of legal departments and their processes and paint a picture of the legal department 4.0—the future legal department with a new operating model, new processes and new sourcing strategy underpinned by technology.

Artificial intelligence (AI) leads to disruptive innovations in every aspect of life. This technology not only changes the rules of all data-related fields, it also either has or will soon reach the point where it generates innovation without human input. As its economic relevance increases, the question of protectability and enforceability of AI-generated inventions naturally arises. After evaluating the nature of AI-driven innovation, this chapter assesses the possibilities and restrictions of such protectability and enforceability. As will be shown, the legal system already provides instruments for IP protection, particularly patent protection. However, this technological progress poses challenges to the legal framework and to the common understanding of IP protection. Notably, current law does not allow patent protection of autonomously AI-generated inventions that were created without human contribution.

Data protection law as of now is subject to new challenges evoked by the digitalisation of industrial production, the so-called Industry 4.0. It stands for a high degree of connectivity between production systems involving more processing of more personal data. Data protection law is expected to strike a balance between protecting the rights and freedoms of individuals and allowing socially beneficial and desired processing. However, when laws are applied in contexts they were not designed for, they create conflicts. This article illuminates possible incompatibility between the general thrust of data protection law as of now and Industry 4.0 in three regards: concerning the scope of application of the law, its principles of purpose limitation and data minimisation and the collaboration between the numerous involved different parties exchanging the relevant data. Under what is envisioned as “data protection 4.0”, it explores instruments that serve to ease such tensions: anonymisation and pseudonymisation, data ownership rights, reinterpreted data protection principles, and codes of conduct. Lastly, it evaluates the role of collaboration and standardisation under a Common Legal Platform in data protection 4.0.

The authors provide a brief overview over the challenges introduced by the EU mandatory tax disclosure rules known as DAC 6 and offer an outlook on potential solutions for these challenges. The starts with background on who is affected by DAC 6 and the consequences of non-compliance. Thereafter, the authors discuss the practical issues with DAC 6 disclosures due to the different implementation into national law in the respective Member States and elaborate the different effects of DAC 6 on different types of businesses. The authors than introduce a possible process for a DAC 6 transaction assessment around the disclosure of a reportable cross border arrangements. Finally the article concludes with the proposal for a common Notification Platform, an innovative solution that could minimize the risk of non-compliance due to error prone manual tasks.

The general consensus amongst legal thought leaders is that legal education needs to be re-designed to, amongst other things, reflect the digital transformation of the legal industry. This opinion exposes the long-standing tension between academic learning and vocational learning in the legal profession. Technology cannot be ignored, but where to begin? What do lawyers actually need to know about technology? To answer this question, we have to understand what it means to “be a lawyer” in the twenty-first century. Technology is multi-dimensional and encompasses lawyers as users of technology, as advisers for new legal issues that stem from the application of technology, as designers of technology, as purchasers of technology, as well as consumers of information created by technology. This article will firstly consider which aspects of legal technology are important for legal education and what the ideal curriculum might look like. Next, we will review the current state of technology-related legal education both at law schools and in practice. Is technology becoming part of the foundation of undergraduate legal education? Has technology become an essential element of continuous professional development? Finally, we will discuss whether legal education should be provided by law schools, professional bodies, the open market, or by a mixture of all three.

This article envisions the future work environment of lawyers, both as private individuals and as professional service providers. I believe that the current practice of acting as ‘lone wolf’ and ‘optimizing in isolation’ will be replaced by new ways of collaboration in tribes of competence that transcend organizational borders. The term commoning describes the self-governed people (commoners) using shared resources (commons) (Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (1990)) such as public farmland, shared cars or jointly used technical infrastructures. For the legal profession, the Common Legal Platform (CLP) could be such a common resource which is governed by the users themselves under a framework of standardized legal content, practices and processes, including services, collaboration and technical interoperability. Just like the homo sapiens and the whole history of mankind is characterized by increasing collaboration, so the legal industry will enter a phase of increased coopetition in which lawyers will turn into tech savvy representatives of homo digitalis.

In order to meet the challenges of digitalization in law and to create greater benefits for everybody involved, all relevant legal stakeholders need to collaborate. A digital platform could offer a suitable environment for this form of cooperation, especially since the market is currently dominated by rather isolated applications that offer only limited options, e.g. with regard to the use of data. These single approaches fall short and are not capable of providing appropriate answers to future legal issues. It is therefore suggested that establishing a Common Legal Platform that brings together all participants, and aligns both common and commercial interests, will be beneficial. This involves a business model that supports both of these pillars by design, so that every stakeholder’s interest is taken into consideration and that all such interests complement one another. Only joined forces can make a Common Legal Platform thrive and advance innovation, as well as further development in the legal industry.

“Common goods are usually overused”: that’s a commonplace belief, often called “tragedy of the commons”. This situation is frequently bemoaned. Less widely known, but no less tragic, is work duplication due to lack of collaboration and the underuse of existing resources, which can be dubbed the “tragedy of the proprietary”. In the field of contracting, the contracting parties must collaborate to gain a joint understanding of their business. Pushing the point of collaboration further down the road increases the effort of concluding the business.

Joining efforts on a common platform would eliminate such unnecessary workload and simplify the whole process. The participants would join forces and split the cost of the necessary basic work. Doing such work just once in a streamlined effort would free resources to create a case-specific value.