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Guest Editorial: An Overview of the Legal Market in Austria

Guest Editorial: An Overview of the Legal Market in Austria

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There are two interesting developments on the Austrian legal market: First, Legal Tech and Digitalization initiatives are on the rise. Second, the Top 20 law firms in Austria have increased their revenue last year, and the legal business is flourishing.

Legal Tech

Digitalization has influenced most areas of everyday life and is increasingly entering the Austrian legal market. 

Austria set a world-wide example in 1990 when the Austrian Ministry of Justice, in cooperation with other Austrian entities, launched the ERV platform, allowing for a streamlined electronic exchange of communication between courts and parties. This has led to considerable savings so far (for instance, EUR 12 million in postal charges was saved due to the ERV platform in 2016 alone). 

In order to further boost legal tech initiatives made in Austria, seven major Austrian law firms have joined forces to establish the Legal Tech Hub Vienna (LTHV), dedicated to promoting ideas and solutions in the field. The overall goal of LTHV is first and foremost to extend the range of services to clients by introducing new automated processes and additional digital services. One of the key initiatives in this context to make sure that the LTHV will soon start is a so-called “accelerator program” designed to create tighter collaboration of law firms with legal tech start-ups and SMEs. 

Another frontrunner on the Austrian legal market is the Legal Tech Initiative Austria, which regularly organizes events for lawyers on topics such as smart contracts and which recently organized the Vienna Legal Tech 2019 conference to increase the awareness of new developments in the tech area which could be applied to the legal market.

During the past few years some of the several legal tech start-ups which have been formed have been quite successful, and the technologies they have created have been implemented by a number of law firms. For example, the Austrian legal research tool LeReTo, which automatically provides users with a list of all legal references in a judgment or an appeal, thereby saving lawyers many hours of research, has become widely used in the Austrian market, and the company has already expanded to Germany.

Out of a concern that the attorney-client privilege is regularly challenged, given that email, the main communication medium between attorneys and their clients, is in most cases not very secure, particularly when involving cross-border communication, the Austrian Bar Association has initiated the development of a tap-proof communication channel which Austrian lawyers may use for their communication with clients. Some of the larger law firms have already developed individual solutions as well by making use of platforms which allow for a secure exchange of business data.

One thing is for sure: the legal market will be revolutionized by new legal tech developments, particularly when it comes to standard contracts, and it will be interesting to observe how technologies made in Austria will succeed in the market.

Performance of Austrian Top Law Firms

Last year was once again a successful year for the Austrian legal market. According to one publication, Austria’s Top 20 law firms accounted for an increase in their revenue of around 2.8 percent on an aggregate basis in 2018 – approximately the same growth as the preceding year. Most of the Top 10 law firms were able to increase their revenues in 2018, with one of them leading the way with 12.9 percent. The twenty largest Austrian law firms employed an average of 60 lawyers in 2018, with an average annual turnover of approximately EUR 415,000 per lawyer. The five largest law firms in Austria each employed around 100 lawyers.

There were 6,325 lawyers and 2,215 trainee lawyers in Austria as of December 31, 2017. Around 22 percent of the lawyers and 50 percent of the trainee lawyers were women. Still, women are rarely to be found on equity partner level. While more and more women have been promoted to contract partners in recent years, there is still a big gap compared to the number of women making the leap to equity partnership. On the other hand, for the first time, two of the leading Austrian law firms – one of them being Dorda – have recently promoted a female equity partner to their management boards. Furthermore, the Top 10 Austrian law firms are increasingly pushing women’s promotion programs in an attempt to close the still-considerable gender gap soon.

By Martin Brodey, Partner, and Patricia Backhausen, Associate, Dorda

This Article was originally published in Issue 6.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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