What is legal tech?
In a broad sense, «legal tech» («tech» for technology) stands for the digitalisation of the legal sector, i.e. law firms, corporate legal departments and the judiciary. This includes the digital preparation of legal advice and legal processes by the clients themselves, the digitalisation of communication, e.g. through online advice, the automated creation of legal documents such as contracts, even self-executing contracts, so-called smart contracts, digital tools for document analysis, e.g. in the context of due diligence, artificial intelligence (AI) to support lawyers and judges, e.g. to calculate the chances and risks of litigation, the complete digitalisation of the justice system, right through to automated court processes (sic!). However, AI that makes judgements itself is generally rejected. The final decision must lie with judges.
The world’s first virtual court
In 2017, the world’s first virtual court opened for business in the Chinese city of Hangzhou. It is responsible for disputes arising from online activities and, significantly, is located in the city where IT giant Alibaba Group has its headquarters. (LTO 29.09.2017 Chinas erstes Digitalgericht; Hangzhou Internet Court (China) – https://www.netcourt.gov.cn – Video CGTN (Chinesische TV-Station)
However, a distinction must be made between digital tools that are also used by the legal sector, e.g. lawyers, such as word-processing programmes, and digital tools that have been developed specifically for the legal sector and are only or primarily used by them. Only the latter belong to legal tech.
With legal tech, traditional providers of legal services, such as law firms and trust companies, are facing competition from legal tech companies that offer their services exclusively on online platforms. For example, it is possible to obtain advice on traffic fines, delayed flights and administrative orders simply, quickly and cheaply from online services. These include, for example FlightRight, DoNotPay, Winit and TurboAppeal. The business model of these new legal service providers is generally based on a high degree or only the automation of standard cases.
👉 Examples of LegalTech applications on digilaw.ch
Students asked me during an interview for a bachelor’s thesis, why the digitalisation of the legal sector is progressing so slowly. The answer is simple. Lawyers, alongside medical doctors, are among the most conservative professionals*. In the case of the latter, the problem with digitalisation became evident during the pandemic. Covid test results were effectively sent by fax to the relevant federal authorities (sic!), leading to utter chaos. It is not the legal service providers themselves pushing for legal tech, but rather the clients, the management, and the parties involved in the process who demand their services. Services must be more adequate, transparent, faster, and above all, more cost-effective for them. The user experience is absolutely crucial.
*Here’s a personal anecdote. When we launched a purely online legal consultation in 2000 as young attorneys, the Bar Association of the Canton of Bern filed a disciplinary complaint against us with the Bar Association of the Canton of Luzern. According to our colleagues from Bern, online consultation was completely unprofessional and unworthy of an attorney (sic!). Twenty years later, I primarily advise online, and I’m not the only one. My clients simply want to have their problems solved and don’t have the time to come see me. By the way, the Luzern attorneys were, at least at that time, evidently more progressive than their Bernese colleagues and dismissed the complaint a priori …
For the legal sector itself, the question is how to utilise the vast amounts of data, techniques, tools, knowledge, and news to generate real added value.
Legal service providers that oversleep legal tech will no longer be able to keep up in the industry and will either disappear into niches or disappear altogether.
Legal Aspects of AI
There are numerous and constantly new legal issues relating to the use of artificial intelligence (AI). Below are some currently relevant topics with reference to the details on intla.ch and digilaw.ch.
AI and copyright
digilaw.ch Chapter 08.05.04 ChatGPT & Co. and copyright
AI and data protection
intla.ch Chapter 08 Data Protection
Liability for AI tools
digilaw.ch Chapter 09.12 Liability for artificial intelligence
EU Artificial Intelligence Act (AI Act) und Council of Europe AI Treaty
digilaw.ch Chapter 15.02 EU Artificial Intelligence Act (AI Act)
digilaw.ch Chapter 15.03 Council of Europe AI Treaty
AI and Ethics
digilaw.ch Chapter 12 Digital Ethics
ChatGPT & Co. in the legal field
Which is the best chatbot for legal applications?
Just as there is generally no «best chatbot», there is also no «best chatbot for legal applications». It is also generally advisable to use several chatbots in parallel. You don’t need a subscription for every chatbot. However, a subscription to a chatbot is probably worth the price.
Validation of chatbot outputs in the legal field
Essential! When using chatbots in the legal field (as effectively as in all other areas), the outputs of the chatbots must be checked. To achieve this, you should instruct the chatbot to always indicate the sources of its results. Depending on the chatbot, this instruction can also be made generally in the personalisation of the chatbot.
ChatGPT & Co. make law borderless
The ingenious thing about using chatbots in international law is that neither the country nor the language matters. For example, you can ask the chatbot which law in Chinese law governs the contract. The output will be in your own language. Nevertheless, you can ask for the original source and then have the original source translated back into your own language for verification. However, if the matter is important, you should always consult a local attorney. This could be a partner law firm in your own country, for example.
Study of legal texts, e.g. court decisions
Thanks to the use of chatbots, legal texts no longer need to be read through. You can prompt or upload the texts and then ask specific questions about them.
Example with a decision of the Swiss Federal Supreme Court.
Call up the following Swiss Federal Supreme Court decision in the Uber case about employment/freelancing in Switzerland and copy the text:
Prompt to the chatbot: «I would like to discuss with you the following Federal Supreme Court ruling» and post the copied text.
Interesting: The decision is in French. Nevertheless, the chatbot responds in your own language and automatically translates its results. Of course, you could also ask it to reproduce the results in the original language.
Now ask the chatbot the following question: «What are the decisive criteria according to federal court case law that make an Uber driver an employee under the Swiss Code of Obligations?»
Drafting of contracts
Below, we develop a software licence agreement with the support of a chatbot, based on the following facts and in the primary interest of a software company (licensor).
Important: Never post details of the parties! Anonymise the parties and possibly distort the facts. 8ung! Adapt the draft of the chatbot later to the specific facts of the case.
X AG (licensor), CH-Zug, licences software to the customer (licensee) for its customer management. The licensor is the owner of all rights to the software and also acquires ownership rights to any changes or extensions to the software without compensation. The software has the following functions: Recording of customer data; allocation of documents, in particular correspondence from Microsoft 365, to the recorded customers; management of contracts with customers and suppliers; invoicing. The software is made available to the licensee by the licensor as Software as a Service (SaaS) on its cloud. The licensee is responsible for its own hardware and software and for internet access. Data traffic between the licensee and the licensor’s cloud is encrypted by the latter. The Licensee receives a simple, worldwide licence. The licence is granted for an indefinite period. It may be terminated by either party with 3 months’ notice to the end of a calendar year, for the first time to the end of the second calendar year after conclusion of the licence agreement. The licence fee consists of an annual flat rate of CHF 3,000 incl. VAT and an annual fee of CHF 75 incl. VAT per customer. The number of customers is calculated annually on the basis of the number of customers as at 1 June; in the case of a first-time licence, according to the licensee’s estimate. The licensor shall either request the corresponding number of customers from the licensee or the licensee shall report this to the licensor. If the licensor has any doubts in this respect, it has the option of having the number of customers verified by a Swiss trust company at its own expense. The licence fees invoiced by the licensor must be paid within 30 days of receipt of the invoice, and from the second licence fee onwards in any case by the end of August of the year preceding the licence at the latest. If the licence agreement comes into force in a current year, the licence fee is calculated pro rata temporis. The licensee must accept patches and updates for the duration of the licence. The Licensor limits its liability to a one-off payment of a maximum of CHF 30,000 including VAT. The parties agree to maintain confidentiality with regard to information exchanged between the parties that is not generally known. This confidentiality shall continue beyond the end of the contract insofar as the parties have an objective interest in it. The GTC for software licences and the associated services of the licensor form an integral part of the licence agreement. The licence agreement is subject to Swiss law. The exclusive place of jurisdiction is the city of Zug, Canton of Zug, Switzerland.
To get an overview of the relevant contract type and its possible content in advance, you can ask the chatbot to produce a checklist or a sample contract.
«Please make me a checklist for a software licence agreement as SaaS».
«Please create a sample contract for a software licence agreement as SaaS. Fill in the contract with your facts».
Now we give the chatbot the comprehensive facts listed above and ask it to create a draft for a comprehensive licence agreement based on them. Prompt the facts immediately with the instruction; otherwise, the chatbot may create another sample contract independently of the facts.
«Please create a draft for a comprehensive licence agreement based on the following facts, which I will give you in a separate post. Copy the facts very precisely. Supplement the facts with any additional, necessary and/or recommendable provisions. Please do not use paragraph signs, but numbers. The parties’ signatures must include the place and date of signature. [Facts of the case].»
Check the proposal and ask the chatbot to adapt the draft contract to your requirements if necessary.
To increase the quality of the draft contract, you can now prompt this draft contract of the chatbot to other chatbots and explain to them that you have drafted a contract and ask them to check it and provide any suggestions for changes and/or additions.