Matthias Kilian

Legal expenses insurance and legal aid—two sides of the same coin? The experience from Germany and Sweden

Publicly funded legal aid schemes flourished in many western societies in the post-war era. While legal aid is the most well known and widespread legal services policy of that era it was not the only policy development worthy of scholarly attention. The legal aid schemes can be understood as attempts by governments to use public subsidies to overcome market failures in the provision of legal services. That is, the governments subsidise the cost of legal services for those citizens who would otherwise not have been able to afford such costs. Such legal services are necessary for citizens to be able to effectively defend and assert their legal rights against the state, companies, or other citizens. In this way, it was hoped that many societies would come close to the ideal of equal justice for all regardless of income and wealth. Unfortunately, the ideal of equal justice remains a stubbornly elusive goal in western societies. There are a number of reasons for this. Sometimes legal aid schemes did not, for a number of reasons, live up to expectations but instead appeared to be a bottomless pit of increasing expenditure with minimal extra cases undertaken. Meanwhile, while a number of schemes were apparently relatively successful in improving equal justice, governments in the 1990s began to lose faith in large public policy programmes. In other words, preferring to do less harm rather than more good, many governments steadily reduced expenditure on public programmes, including legal aid. While in some societies the decline of legal aid created a vacuum of mechanisms to ameliorate the effects of market failure, Legal Expense Insurance (LEI) developed as an additional solution. That is, LEI also developed in a number of societies at approximately the same time that publicly funded legal aid emerged and flourished. To a certain degree, they are therefore two sides of the same coin, different responses to the same problem of the failure of the market for delivering legal services to all. INTERNATIONAL JOURNAL OF THE LEGAL PROFESSION, VOL. 11, NO. 3, NOVEMBER 2004

Germany: towards a legal profession of specialists?

On 1 January 2018 an omnibus law dealing with issues ranging from construction law to the use of digital seals for the land register will introduce changes to the federal law on the constitution of the courts (Gerichtsverfassungsgesetz). It will establish specialised chambers at the High Courts (Landgerichte) and specialised senates at the Courts of Appeal (Oberlandesgerichte) for a number of areas of law. Specialisation is one of the defining developments of the German legal profession of the past decades. It will for the first time make significant inroads into the courts of general jurisdiction (Gerichte der ordentlichen Gerichtsbarkeit). Disputes arising from banking and financial transactions, from construction and architectural contracts, from therapeutic treatments by health professionals and arising from relationships governed by insurance contracts will henceforth be heard at specialised chambers and senates every court has to establish pursuant to the new law. While special branches of the courts of general jurisdiction were established in the past – the family court (Familiengericht), the insolvency court (Insolvenzgericht), the criminal court (Strafgericht) – because of their specific procedural rules, no similar rationale existed for the specialisation within the main branch of the courts of general jurisdiction that hears cases according to the Code of Civil Procedure (Zivilprozessordnung). While some informal specialisation was possible through the assignment of cases to a specific chamber or senate, this was a decision each court would make independently and could alter on an annual basis. The general idea was, however, that judges should be able to hear all kinds of civil cases. This approach pretty much was in line with the traditional concept of legal practice and legal education in Germany: Well into the twentieth century, being a lawyer meant for most practitioners being a generalist dealing with various areas of law. This was, to a certain degree, the logical continuation of the philosophy behind legal education in Germany: With a state legal examination instead of university degrees in law (which typically allow students some specialisation on preferred subjects) and a post-graduate legal clerkship (Rechtsferendariat) that covers the practice of all the main legal professions

Speculative fees and their impact on access to justice: German experiences

Abstract The paper explores the long road to the Federal Constitutional Courts 2006 landmark decision on the unconstitutionality of the century-old prohibition of output-based remuneration of lawyers, analyses the courts ruling and outlines the regulation of speculative fee agreements that is now in place in Germany. Another focus of the paper is an analysis of how the change has affected the German legal services market, drawing on empirical research on the subject carried out between 2006 and 2014.

To Be a Lawyer or Not To Be a Lawyer, That is the Question: The German Federal Social Court's Views on In-House Lawyers

When Josef Berchtold, president of the 5th Senate of the Federal Social Court of Germany (Bundessozialgericht), closed the door of his courtroom on 3 April 2014, he was probably not expecting the storm of outrage that a ruling he had just delivered would cause among lawyers in the days and weeks that followed. In short, Berchtold had ruled that a professional who is a member of the bar and employed by a non-lawyer (‘Syndikusanwalt’), is, as far as social security law is concerned, not a lawyer, but merely a jurist who happens to hold bar membership. Somewhat casually, he had stripped tens of thousands of in-house lawyers of their traditional collective self-image and relegated them to being some type of second-tier lawyer. He argued that a lawyer employed by a non-lawyer lacks the professional independence typical of a lawyer who is a member of a bar and thus cannot enjoy the benefits linked to the status of a proper ‘Rechtsanwalt’. Berchtold’s meteoric rise to the status of (arguably) Germany’s most unpopular judge—at least among lawyers—was further cemented in the following months as all that was released initially by the court in writing was a short summary of the oral ruling. To the great dismay of lawyers and bars, the full judgment was not published for almost five months, in late August 2014. The lawyers’ press, professional organisations and academic commentators quickly picked up the story and almost unanimously criticised the court. Headlines read: ‘Division of the lawyers’ profession’, ‘In-house lawyers up in arms’ and ‘The end of in-house lawyers?’.

Germany: The Future of the Lawyers' Profession

Leonard Cohen once said, ‘I don’t consider myself a pessimist at all. I think of a pessimist as someone who is waiting for it to rain. And I feel completely soaked to the skin.’ As we all know, Cohen is a songwriter, but with this view he could pass for a lawyer. Over the past decade, a number of publications have dealt with lawyers as pessimists, and observe that lawyers are generally an unhappy bunch of people. While pessimists tend to be losers on many fronts, they may fare better in law. Seligman, Verkuil and Kang argue that lawyers are selected for their pessimism or ‘prudence’. The drawback is that pessimism is not limited to their professional sphere, but generalises to the rest of their lives. The tendency to expect the worst, worry about the future and see a glass as half empty rather than half full might explain lawyers’ concern about the future of their profession. I recently treated myself to a collection of bound volumes of the official journal of the German Bar Association from the 1920s, the Anwaltsblatt. It is not reading material for the faint-hearted. It could easily be mistaken for the annals of the national association of doomsayers—and this at a time when there were only relatively few lawyers who were protected by wide-ranging monopoly rights. The picture does not change much when browsing through bar journals of the 1950s, 1980s or the past decade. Pessimistically looking into the future has been a popular pastime of lawyers for almost a century. In the mid-1980s, the German Bar Association (Deutscher Anwaltverein), together with the Ministry of Justice and some other stakeholders, commissioned a study into the future of the legal profession in Germany. When this study was carried out in 1986/87, the world of lawyers was quite different from today. The Reunification of Germany was still three years away, and in what was West Germany, only 50,000 lawyers were admitted to the bar—compared with more than 160,000 today. Legal practice was a strictly regional