THE GERMAN LEGAL TECH MARKET AT A GLANCE
The Legal Tech market in Germany is dynamic, growing, and diverse. With around 300 active companies, up to 10,000 employees, and an estimated total balance sheet volume of €800 million, the Legal Tech Monitor 2025 clearly shows that digital legal services are no longer a niche. Digitalization is reshaping law firms, businesses, and the judiciary alike – with Artificial Intelligence (AI) at the center of this transformation.
KEY INSIGHTS
Growth and Challenges in a Heterogeneous Market
The Monitor reveals that over two-thirds (approx. 67%) of providers operate in the B2B space, while the remainder focus on consumers (20–30%, depending on metric) or the public sector (3–13%). Market segments such as tax and finance software, law firm solutions, digital tools for the judiciary, and research/writing aids help structure this highly diverse landscape. At the same time, the industry faces challenges including long sales cycles, complex implementations, regulatory hurdles, and bureaucracy – especially in public procurement.
Artificial Intelligence as a Key Driver
AI is seen as the central innovation factor. Over 80% of providers integrate AI into their business models, primarily for document analysis and generation. Technologies like Retrieval-Augmented Generation (RAG) and large language models are leading the way, with international players such as OpenAI and Harvey dominating. German AI solutions currently play a more limited role. However, successful AI initiatives are already driving measurable gains in efficiency and cost reduction.
Capital Needs and Funding Gaps
The study highlights a growing need for external capital: One-third of providers will require more than €500,000 in the next 12 months, particularly for investments in AI. At the same time, funding gaps persist – especially among younger companies that often rely on bootstrapping. Nevertheless, successful funding rounds such as rightmart’s €27.5 million Series B, Bryter’s €66 million Series B (both in Germany), and Fynk’s €3.1 million seed round (Austria) showcase the market’s potential.
Regulation: Barriers and Opportunities
Many view the regulatory framework as a brake on innovation. Criticism is directed at both German (RDG, RVG) and European (AI Act, GDPR) regulations, as well as bureaucratic procurement procedures. Still, successful providers are increasingly adapting to these conditions. Reforms – such as simplifying procurement processes – could significantly enhance the sector’s innovative power.
Talent Shortages and Next-Gen Recruitment
The “war for talent” remains a pressing challenge. Courts and smaller legal departments are particularly affected, while Legal Tech providers tend to recruit more effectively thanks to modern work models like New Work. The Monitor highlights the importance of interdisciplinary education to equip future professionals for the digital transformation of the legal sector.
With the advance of digitalization and the rise of AI, the Legal Tech sector in Germany is entering a pivotal phase. The Legal Tech Monitor makes it clear: clear regulatory frameworks, modern IT infrastructures, and improved access to financing are essential for sustainable growth.
ABOUT THE LEGAL TECH MONITOR 2025
The Legal Tech Monitor is a comprehensive study modeled after the German Startup Monitor, aiming to systematically map the German Legal Tech market and provide data-driven insights for legal market stakeholders. This first edition offers a solid foundation of data, based on extensive research, a survey of 300 participants, and 40 expert interviews. The Monitor will be conducted regularly in the future.
PROJECT PARTNERS
The initiative for the Legal Tech Market Monitor comes from the Legal Tech Association Germany, representing over 180 companies and advocating for innovation and modernization in the German legal market. The first edition is supported by three renowned partners: Verlag C.H.Beck, Legal Tech Colab, and the Bucerius Center on the Legal Profession. The study also features forewords by Dr. Marco Buschmann, former German Federal Minister of Justice, and Georg Eisenreich, Bavarian State Minister of Justice.
Read the full report here.
