OGH: Legal-Tech Business Models Set to Advance

Oct 27, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has recently dealt with a legal- tech business model in which the provider uses an AI tool to analyse the client’s legal problems, filters out a suitable lawyer from its partner lawyers, and enables the respective client to retain the lawyer by exchanging data.

The defendant is the operator of a website offering legal services under the .law top level domain. Customers can ask legal questions and then retain the linked lawyer. The lawyer pays a referral fee of 25% and enters into a contractual relationship with the defendant.

The plaintiff is an association (whose members are lawyers) as well as bar associations, whose activities include the prosecution of infringements of competition law, claiming that the defendant’s business model is inadmissible because it infringed the law governing the professional conduct of lawyers.

The OGH ruled as follows:

The outsourcing of certain services is a common practice for law firms and is not generally prohibited by the Code of Conduct for Lawyers in Austria. All correspondence between lawyers and clients can be handled via software platforms without breach of confidentiality. The defendant is regarded as an assistant to the lawyer and is therefore also bound by Section 9(2) of the Austrian Lawyers’ Act (Rechtsanwaltsordnung, hereinafter RAO). As long as the confidentiality of the data is maintained, no code of conduct is violated.

The information provided by the defendant does not restrict the lawyer’s independent and autonomous activity. In the case at hand, the lawyer is not outsourcing to a third party a service that can only to be provided by the lawyer personally to the client. The lawyer is not bound by the results of the research or the recommendations of the AI and therefore does not violate Section 9 (1) RAO.

However, the agreement on the collection of fees is incompatible with Section 47(3)(6) of the Austrian Code of Conduct for the Legal Profession (Richtlinien für die Ausübung des Rechtsanwaltsberufes, RL-BA 2015). The granting of benefits for the referral of clients is inadmissible. The defendant would have to charge for specific services and may not charge a referral fee.

4 Ob 77/23m (27 June 2023)