Digitizing Traditional Business Models: The Law is Less of an Ass Online

By David Knight |

This is a guest post by the SmartLaw team

Every week, Berlin sees innovative startups rise (and fall): Dating apps, social media solutions and gadgets for everyday life are just some of the ideas presented in the past weeks. When it comes to digitizing traditional business models, however, not many have the specific industry knowledge as well as the necessary technical skills to add to the Berlin startup scene.

More than for others, this is true for solutions in the legal field. In the US, companies like LegalZoom or Rocket Lawyer have been successfully offering legal services online for years. Rocket Lawyer, for example, attracts over 100,000 new accounts per month with affordable legal documents and information services. Having these services at hand, a startup in New York would hardly ask a lawyer to draft an employment agreement for an intern, especially in the cash-strapped founding phase.

Often, companies abroad are forerunners. This is not only due to a more digital-centric attitude in general. These new firms were able to introduce a new understanding of what services lawyers should render. As Gregor Angus wrote on The Cashroom: “For most, a lawyer is somebody they have to use in order to achieve a particular outcome, and the quicker and cheaper it is to reach that outcome, the better.”

Accordingly, offering basic legal services online can optimize business processes especially for startups. Their dynamic environment requires quick solutions when it comes to legal matters. Entrepreneurs want new employees to start as soon as possible – and in the war for talent it can be crucial to offer employment agreements in a timely manner.

Startups need high-quality, legally bullet-proof contracts to decrease the risk of labour disputes and lawsuits. Frequently, HR managers lack the specific training necessary to cope with the complexity of ever-evolving legal frameworks. A simple employment agreement, for example, can have several hundred versions, depending on, among other things, termination provisions, working hours, regulations of overtime pay and bonuses. Hence, startups had to either turn to expensive lawyers who might charge €300 euros for a single such document, or just gobble up the risk.

Meanwhile, the first companies are emerging which aim at implementing similar business models in Germany. Daniel Biene, a former lawyer who at the time worked in senior management of a large German media company, had the idea for SmartLaw when faced with the exact same dilemma: He needed a legally sound custom contract immediately. Together with Christoph Herrlich and Ralf-Michael Schmidt, also lawyers with media industry backgrounds, SmartLaw was founded in August 2012. Shortly thereafter, they recruited David Linner, a seasoned developer with an engineering PhD, to head the IT team. SmartLaw went live with 12 customizable contracts in September 2013 and has doubled its product portfolio since.

SmartLaw clients go through a web-based Q&A dialogue, while in the background, a technological platform creates the ready-to-sign custom document. So far, SmartLaw offers employment documents as well as various documents for private use. “We basically process complex legal expertise through a technological platform”, said Biene. “And unlike other offerings in the field, our documents are fully optimised for each individual situation.”

SmartLaw is a good example of how traditional business services are being digitized. As technological possibilities advance, opportunities for mass-customised services increase. Mass customisation started out with printing t-shirts, and now the concept has moved on to basic legal services. But of course, technology has its limits, as Biene said: “At some point, information gets too complex to be machine-digestable. If a case depends a lot on experience-based reasoning, a computer can quickly reach the end of its rope.”

Nonetheless, we are getting there. Vision is everything – and, according to the rumours, Google developers are actually trying to rebuild Star Trek’s computer interface. That’s the kind of vision that can enable technology to help us live long and prosper.