Legal Tech and the Legal Services Act

Legal tech under the Legal Services Act: the core rule

Legal tech business models in Germany are shaped by one statute above all: the Legal Services Act (Rechtsdienstleistungsgesetz, RDG). It reserves out-of-court legal services to lawyers and a limited group of authorised providers.

A legal service is any activity in a specific matter of another person that requires a legal examination of the individual case (§ 2(1) RDG). Providing such services independently is prohibited unless the RDG or another statute permits it (§ 3 RDG). Whether a digital product needs a lawyer, a registration or nothing at all therefore turns on how it is designed: does it examine a user's specific case, or does it provide standardised tools and information?

The consequences of getting this wrong are significant. Unauthorised legal services can be enjoined by competitors and bar associations under unfair competition law, contracts with users may be void, and — for claim aggregators — assignments of claims may be invalid, so that entire mass actions fail. The Federal Court of Justice (Bundesgerichtshof, BGH) has decided several leading cases that define the room for legal tech, and the legislator responded with the 2021 reform often called the Legal Tech Act.

Document generators and self-service tools

The BGH's judgment of 9 September 2021 – I ZR 113/20 concerned an online contract generator operated by a legal publisher. Users answered mainly multiple-choice questions, and software assembled a contract from pre-drafted clauses. A regional bar association sued for an injunction. The BGH held that this is not a legal service: the publisher does not act in the user's specific matter, but programmed the software in advance for typical situations, comparable to a book of precedents; users do not expect a legal examination of their individual case, according to the BGH press release.

The decision provides a workable line for self-service products:

• Generally outside the RDG: standardised templates, document generators based on pre-defined decision trees, legal information portals, calculators that apply published rules, and software sold to lawyers or in-house departments.
• Potentially within the RDG: tools that analyse the user's specific facts and documents and produce individual legal advice or assessments, especially where a human or AI system tailors the result beyond standard options.
• Clearly within the RDG: pursuing a user's claim against a third party, or advising on whether and how to do so in an individual case.

Generative AI makes the line harder to draw. A chatbot that responds to a user's specific facts with an individual assessment looks more like a legal examination of the individual case than a form generator does. The BGH has not yet ruled on this, and providers should design such tools, their marketing and their terms with the RDG test in mind.

Collection licences and claim aggregation

The most important permission for claim-enforcement platforms is registration as a collection service provider (Inkassodienstleister) under § 10(1) no. 1 RDG. Since 1 January 2025, registration is with the Federal Office of Justice (Bundesamt für Justiz); previously the courts kept the registers. Registered providers may collect third-party claims or claims assigned for collection, and since the 2021 reform the definition expressly includes the legal examination and advice related to collection (§ 2(2) RDG).

BGH case law

Three BGH judgments map the scope of collection licences:

In the 2019 decision on a rent-cap platform, the BGH emphasised the broad understanding of collection that the legislator had in mind, in line with constitutional case law, as the BGH press release explains. In 2021 the BGH confirmed that business models aiming primarily or exclusively at court enforcement, including bundled claims, are covered. The 2026 cartel decision adds limits for very large and heterogeneous bundles. See our insight on litigation funding for the funding implications.

The 2021 Legal Tech Act: duties for providers

The reform that entered into force on 1 October 2021 strengthened consumer protection while confirming the collection model. Key elements for platform operators are:

1. Information duties to consumers: before a consumer signs up, the provider must explain, among other things, alternative ways of enforcing the claim where a success fee is agreed, any arrangements with a litigation funder concerning the conduct of proceedings, and whether and how it may settle the claim (§ 13b RDG).
2. Explaining rejections: where a provider declines a consumer's case, it must state the main reasons in text form and say whether the legal examination was wholly or partly automated (§ 13b(2) RDG).
3. Funding: reporting duties to a litigation funder do not in themselves create a conflict of interest (§ 4 RDG).
4. Lawyers' fees: lawyers may now agree success fees in debt collection matters and for monetary claims of up to EUR 2,000, and may bear costs in collection cases (§ 4a of the Lawyers' Remuneration Act, RVG; § 49b(2) BRAO). This allows lawyers to compete with collection platforms on the same terms in small claims.

Legal tech for businesses: in-house, B2B and AI tools

Most corporate use of digital legal tools does not raise RDG issues. Contract lifecycle management, e-billing, matter management, document automation and AI-assisted review used within a company are permitted: legal matters handled within affiliated companies are not legal services under the RDG (§ 2(3) no. 6), and a company dealing with its own legal affairs is not acting in "another person's" matter. Services that are ancillary to another profession or activity are permitted under § 5 RDG — for example, an IT provider explaining licence terms as part of a software project — as long as they remain a secondary part of the main activity.

The issues arise when such tools are offered to third parties: compliance tools that assess a customer's specific obligations, HR platforms that advise on individual dismissals, or AI systems that draft individual contracts for small businesses. Providers in these areas should check whether the product, or human support behind it, crosses into examining the user's individual case. Where it does, options include partnering with lawyers, limiting the product to standard outputs, or structuring the service around a permitted activity.

AI adds regulatory layers beyond the RDG. Providers and deployers of AI tools need to consider the AI Act, in particular transparency duties and AI literacy, and data protection law. See our page on the AI Act and our insight on AI in arbitration and litigation.

Court representation and its limits

The RDG covers out-of-court services. In court, representation is governed by the Code of Civil Procedure (Zivilprozessordnung, ZPO). Before the regional courts and higher courts, parties must be represented by a lawyer. Collection service providers that sue on assigned claims do so as parties in their own name, which is why the assignment model is so important for mass claims; they must still instruct lawyers to conduct the case. Before the local courts, registered collection providers may represent creditors only in limited proceedings, such as summary payment-order proceedings.

This structure explains how the German mass-claims market works: online platforms acquire or collect claims, litigation funders finance them, and law firms conduct the proceedings. For consumers and very small businesses, the redress action under the VDuG is the main alternative, brought by qualified entities; see our insight on redress actions.

Cross-border providers and the RDG

The RDG applies to out-of-court legal services provided in Germany (§ 1(1) RDG), which includes services offered online to users in Germany by providers established abroad. Providers lawfully established in another EU or EEA state or Switzerland in a comparable collection profession may provide collection services in Germany temporarily and occasionally with the same rights and duties as a registered person, subject to the conditions of § 15 RDG. Permanent activity in the German market requires registration with the Federal Office of Justice.

Providers based outside the EU, including US and UK legal platforms, therefore need to analyse their German offering carefully. A tool that generates standard documents may be offered freely, as the BGH's generator case shows; a service that pursues German users' claims or advises on their individual cases needs a registration or a partnership with German lawyers. Marketing aimed at German users, German-language interfaces and German-law content are typical indicators that the service is provided in Germany.

The same analysis matters for investors in legal technology companies. Due diligence should cover the regulatory status of each product line, the validity of assignment agreements and consumer terms, pending injunction proceedings by bar associations or competitors, and dependence on particular funders. Regulatory risk in this sector is concentrated in a few documents, so a focused review is usually efficient.

Compliance checklist for platform operators

• Define precisely whether the product examines individual cases; document the design logic.
• Obtain registration with the Federal Office of Justice where collection services are offered, and maintain the required expertise and insurance.
• Draft consumer information and terms in line with § 13b RDG, including on success fees, funding and settlements.
• Structure funding so that the funder does not control strategy or settlement.
• Bundle claims in homogeneous groups that a court can manage.
• Review marketing claims ("no risk", "guaranteed") for compliance with unfair competition law.
• Check AI Act and GDPR obligations for AI-based features.

How TRW & Co helps legal tech providers and their counterparties

We advise legal tech start-ups, publishers, software providers and investors on the RDG: assessing whether a product is a legal service, structuring collection and assignment models, preparing registration with the Federal Office of Justice, drafting consumer information and terms, and reviewing funding arrangements. We also act for companies facing claims brought by collection providers and aggregators, where the validity of assignments and registrations is often decisive. In-house legal teams consult us on procuring and deploying legal tech and AI tools within the group. To discuss a legal tech product or a claim, contact us or see our collective actions page.