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Why Do Law Firms Lack R&D-Departments?

By Michael Grupp

At first glance, the question sounds silly: for us, research and development comes with laboratories and test tracks and has hardly anything to do with the law firm library. Research for lawyers takes place somewhere between university, courts and law firms. The only (very rarely) occurring empirical evidence consists of surveys. The experimental development of legal solutions occurs strictly speaking, but in the form of cautious testing in everyday working life, i. e. in clauses, strategies and decisions – due to the lack of actual laboratory conditions (I am just imagining a miniature civil senate – John Oliver’s Supreme Court dogs are certainly the only conceivable legal animal experiments) trial and error will then take place as a reference decision to the ECJ. The scientific special status of jurisprudence is particularly clear here, because one of the few sciences that does not take place in human nature, but exclusively in the relationship between man and man, the law lacks the neutral, objective, quantifiable and non-influenced by nature. The discussion of natural rights and Radbruch’s formula once excluded. The few points of contact in the natural sciences, such as brain research, are rarely expressed in legal experiments.

Nevertheless companies, even entire industries, invest in research and development, even if they are not originally active in the natural sciences: economists develop models and programs, computer scientists test functionalities, even literary scholars measure changes. Of course, there is an active, continuing legal science, but only in the rarest of cases it is specifically related to the commissioning and ultimately marketing of legal services. However, there can and should also be research and development in the legal field, and there are several areas in which this seems feasible and sensible or even necessary:
The entire field of Legal Tech can and must be the subject of specific legal investigations. By Legal Tech I do not only mean legal informatics i. e. S. as a branch of science that investigates the modelling or general use of legal content by means of information technology structures, but the entire field of legal technologies. Legal tech is becoming increasingly relevant and the considerations about possible applications are still neglected exotic areas. The scope and consequences of technological applications in legal practice cannot be explained here, but from the management of law firms with e-acts and EGVP, improved research techniques and general work facilitation to actual expert or decision support systems, the legal profession in particular will change considerably. It should increasingly focus on which areas of the law firm and which activities could now or in the near future receive technology support. In view of the lawyer’s inadequate or non-existent IT knowledge, there is a lot of catching up to do. It is worthwhile to allocate funds for these studies, even on a small scale, and also if the first steps consist only of familiarisation and learning. Law firms lack interface knowledge between law and IT, i. e. the connection of both areas in one or more closely cooperating persons. Those responsible for IT will not be able to make suggestions for applications or general improvements without legal knowledge, but on the other hand lawyers can hardly develop a feeling for feasibility or feasibility without a rough understanding of computer science.

There are also other, larger or smaller areas in which legal research and development would make sense: the entire complex of acquisition, i. e.“distribution“, can be examined in depth for sensible, efficient and sustainable channels and techniques. From better search engine findability to defined pitch documents or presentations; legal client relationship management and/or client communication. Legal pricing and the associated marketing of legal services can and must increasingly become the focus of attention, especially in areas beyond the scope of the RVG.
The shortcoming refers in particular to traditional legal service providers – the more worrying for the administration of justice is the tendency of other service providers to increasingly involve legal services. This has been driven by and underpinned by extensive R&D. Even the (fewer) hybrid companies, which are mainly competing with the lawyer market and have already become a serious threat in the Common Law area. First and foremost, the Legal Process Outsourcing companies are active in this area. Only last week, Frankfurt-based LPO provider Xenion Legal announced the establishment of a proper and independent Research & Development unit in a contribution to the LTO. In particular, applications from the Legal Tech area, which are also intended to support legal decision-making, will be examined.

In a blog post worth reading, Jason Furlong describes the problem from the point of view of the US attorneys:“While companies worldwide reinvest up to 3.5% of their annual turnover in research and development, there are not even figures for lawyers on R&D yet. Worldwide sales of legal services are expected to be between USD 300 and 500 million (depending on the source), but investors and venture capitalists‘ associations only have a global total of around USD 300 to 500 million. USD 400 million invested in legal or quasi legal entities (often start-ups and spin-offs). However, this figure also includes financing to companies that are not primarily active in the legal field and that provide largely related services. That would be more or less 1%. However, this figure also does not take into account the fact that these funds were not raised by the law firms or legal institutions themselves, but rather by competitors and investors and that they do not directly benefit the market participants. In Germany, the annual turnover of legal services in 2014 will be just under EUR 20 bn, of which not even close to 1%, i. e. EUR 200 mn, will be invested in research into legal technologies, strategies, etc. In Germany, the annual turnover of legal services will amount to almost EUR 20 bn in 2014. It seems to me that there are about 10 active, legal start-up companies in Germany, with a cumulative capital contribution of EUR 5-7 million. If we take into account the annual short presentations of the few Knowledge Management Lawyers in large law firms and the efforts of the few legal-tech companies in addition, a three-digit million Euro amount is still hardly reached. The law firm does not yet want to afford research and development, but (pun intended!) cannot actually afford that either.

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