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IT Department

Digital Transformation

While the digital transformation is generally initiated by Management, it is technically implemented by the IT department. In the following, we therefore present some typical examples of digital transformation that our clients’ IT departments are implementing and on which we are advising.

Data-driven business models

In addition to the general topics of data-driven business models and e-commerce, we are particularly dealing with regulated sectors such as Automotive, Transportation, Banking, Energy, Healthcare, and Insurance.

Practice Group IP, Media & Technology

With the global economy increasingly switching to data-driven business models and moving from “offline” to “online” processes, there has been a significant increase in digital processing operations, i.e., the collection, use and, where applicable, transfer of (personal) data. Data protection plays a significant role in this context, because every processing operation requires a separate legal basis in accordance with Article 6 GDPR.

The protection of trade secrets (Trade Secrets Act) is also becoming increasingly important. We support our clients in developing, realizing, and implementing these digital business models in the company and advise them to avoid possible fines.

E-Commerce

E-commerce is possibly the most important driver of digitalization offering the opportunity to adapt the business to digital advances in all organizational and sales areas and to remain competitive.

 Practice Group Distribution & Trade  Practice Group IP, Media & Technology

In an international market, international regulations must also be observed. The confluence of national and international laws in online sales presents companies with the challenge of tailoring sales to all locally applicable laws. We advise our clients (frequently supported by our international network partners) on creating and operating e-commerce solutions that are in compliance with statutory requirements, on drafting terms and conditions for international use, and on compliance with data protection provisions.

Sector: Automotive

In the automotive industry, digitalization has already had a significant impact.

Practice Group Distribution & Trade  Practice Group Transport, Traffic & Infrastructure

The term “connected car” has rapidly evolved from utopia to general standard. As much as it has become common automotive terminology, expectations are changing in terms of contemporary and environmentally friendly vehicle and mobility management, assisted driving, and safety functions (some of which may be optionally added at a later date), and even entertainment and in-car shopping offerings. In addition, it isnot only the drive technology of vehicles that is changing, but also the business model of mobility as a whole. Vehicle purchases are increasingly being replaced by temporary models of vehicle use, which are often made possible, but at least made suitable for consumers, by digital technologies. We advise companies at all stages of the supply chain on the transformation of the automotive sector, in particular also on legally compliant implementation of e-commerce offerings of in-car shopping.

The most innovative advance in the digital transformation of vehicles is probably autonomous driving. On the road to “full automation,” without the need for drivers, steering wheels, or pedals, integrated, semi-automatic assistance systems are shaping individual and mass transportation and have become an indispensable part of everyday life. The automotive sector is subject to strict legal regulation, however, particularly since the health of road users is directly affected. Aspects of environmentally friendly mobility are becoming increasingly important. A wealth of statutory provisions must be observed in the entire automotive sector and we support our clients in complying with them. Related areas of law (such as IT/Data Protection) also play an important role, for example in the legally compliant implementation of cloud platforms with extensive databases to which vehicles require permanent access.

Sector: Transport/Infrastructure

Transport and infrastructure are also subject to digital change.

Practice Group Transport, Traffic & Infrastucture

In the future, (autonomous) vehicles and drones will be constantly connected with integrated passenger transport systems tonot only relieve the traffic network through optimization, but also to protect the environment and to reduce costs through a variety of offerings (car sharing, taxis, rental cars, bike sharing, etc.). The highly regulated areas of Transport and Infrastructure will therefore undergo major changes that will necessitate a high degree of legal certainty for companies operating in these sectors. We advise and support our clients in their projects and reduce legal and financial risks.

Sector: Transport/Logistics

The logistics sector has already been in the process of switching to digital technologies for years. Containers are monitored worldwide by satellite in real time with regard to location, interior temperature, vibration, etc., thus significantly reducing the risk of damage to the transported goods.

Practice Group Transport, Traffic & Infrastucture

Driving systems contain countless sensors informing operators in real time which parts of the system need timely maintenance to maintain operational readiness. Supply chains are being optimized through the use of on-site 3D printers, while warehousing is fully automated with robots. The use of these technologies requires reliable contractual bases with the respective system providers and operators; otherwise, there is a risk of considerable damage in the event of partial or total failure. We support clients in drawing up contracts and safeguard the use of the new technologies (including in terms of data protection law).

Sector: Public administration

The public sector is in the midst of digital transformation and digitalization of public administration has been at the top of the list of major challenges for years.

Practice Group Public Sector & Public Procurement

Digital management

Public sector leaders at the municipal, state, and federal levels all share this view. Compared to other EU and OECD countries, Germany has a lot of catching up to do with a focus not only on economic efficiency but above all, on its citizens. The Online Access Act will digitalize and bundle all interfaces between “state” and “private” environments with the objective of “one stop” and “once only.” Citizens should be able to access all administrative services via digital access and only have to create user data once.

Important digitalization projects are also underway in emergency services, municipal hospitals, and public transportation. We assist the public sector with the associated challenges in terms of procurement, IT contracts, data protection, and security law.

IT procurement

Public procurement itself has switched to e-procurement a long time ago. No procurement office operates without e-procurement nowadays. Federal, state and local governments have more and more competent IT service providers of their own, including Dataport, Bundesdruckerei, and DigitalService4Germany. All of this is not possible, however, without purchasing hardware, software, and IT services on the private market. The digital transformation generates a considerable need for procurement, associated with numerous challenges. These include not only the correct handling of the “Supplementary Terms of Contract for the Procurement of IT Services” (EVB-IT). Thanks to a Heuking initiative (abbreviated link to website: t1p.de/lqkd), these mandatory contracts are now also being digitalized. But this is only the beginning.

The challenge remains the appropriate design of the bidding documents: How to achieve a product-neutral description of services? How to design evaluation matrix and hold negotiations so that users really get the best solution? How to exclude data protection, IT security, and supplementary risks? How to procure open source software (OSS) and to structured public-public IT cooperation? We support you with our many years of experience from hundreds of projects in all legal issues prior to and during the award procedure. And we protect you when it comes to a review procedure.

Expansion and award of broadband cable networks  

The digital transformation of public administration also requires fast Internet across the country, which is not possible without government investment and regulation. Germany has recognized that it is lagging behind in fiber-optic expansion, which is why massive investment and funding is being provided. We have extensive experience with multi-million-euro projects in the area of broadband expansion and advise you on procurement, award, and state aid law, whether public contracts, concessions, or grants are involved.

Building Information Modeling (BIM)

The public sector is a beacon when it comes to digitalization in the construction sector, focusing on construction projects with BIM (“Building Information Management”). The promotion of digital planning methods in public construction projects require legally compliant implementation. How can the new type of cooperation and coordination made possible by BIM be contractually depicted? We are at your side with our comprehensive expertise, providing advice and offering legal compliance.

Sector: Banking

The fundamental transformation process also impacts (traditional) financial services.

Practice Group Banking & Finance

Digital efficiency enhancement programs

With persistently low interest rates and the shrinking of revenue as well as capital cover, banks are trying to keep up with other financial service providers by using digital efficiency enhancement and cost reduction programs. This has spawned numerous new business models based on blockchain, cloud computing, and artificial intelligence. The financial services sector is also subject to heavy (European) regulation through EU and national statutory provisions, such as the German Banking Act or the German Payment Services Supervision Act. We support our clients in introducing such new programs, drawing on our many years of experience in the banking sector.

Alternative payment methods

In digital business transactions, goods and services can now be paid for using various payment instruments and alternative payment methods. PayPal, instant transfers, Apple Pay, or mobile systems for payment in stationary retail, including the use of NFC technology, are only a selection of the possibilities available to date. Depending on the business model and its design, this may result in licensing obligations under the Banking Act or the Payment Services Supervision Act. Under certain circumstances, the requirements for a deposit business or a guarantee business (Section 1 Banking Act) may be met, which has considerable legal consequences for the operator. We review any licensing obligations that may arise for our clients from any new offering of payment instruments and advise on their use and legal requirements.

Algorithmic trading

The use of systems that serve automated order forwarding to one or more trading venues and the automated processing of orders without determining the order parameters is referred to as algorithmic trading. Although these systems are frequently not subject to the organizational obligations of securities service companies (Sections 80 Payment Services Supervision Act in conjunction with Sections 25a, 25e Banking Act), a number of notification obligations must be observed. For clients wanting to take advantage of algorithmic trading, we determine existing legal obligations with respect to appropriate system and risk controls as well as labeling obligations and perform the notifications to the supervisory authorities.

Promissory note financing via blockchain

Digitalization also results in efficiency gains in financing. A number of promissory note loans havealready been processed entirely via blockchain (e.g., promissory note loans taken out by NRW Bank, Daimler, or Sixt), which has significantly simplified and shortened the required settlement steps. Typically, promissory note loans are placed with a large number of investors, so that when promissory note loans are raised, a large number of bookings and settlement steps have to be performed, which can be made considerably more efficient using blockchain technology.

Sektor: Investmentfonds

The digital transformation has a significant impact on traditional business models and processes in the investment sector. Many providers of investment funds particularly focus on establishing a digital subscription channel, allowing investors to subscribe to shares in investment funds or investments on the Internet.

Practice Group Investment Funds

Various legal requirements must be observed and processes need to be implemented that are necessary for setting up such digital subscription channels. Among others, it must be ensured that processes such as the Postident or Videoident procedure are set up to meet due diligence requirements under money laundering law, enabling it to identify the investor without having to be physically present. In addition, there is a regular need to make sales documents – such as sales prospectuses in particular – available in digital form for cost and sustainability aspects, in compliance with the relevant statutory provisions, and to minimize liability risks.

Various innovations in connection with digital investment advice/brokering also arise for intermediary sales partners. Models are already available on the market where the appropriateness of a capital investment, which is to be provided by financial investment brokers in accordance with the Financial Investment Brokerage Ordinance, is carried out automatically by an algorithm.

By involving specialized peers from IT and data protection law, we support capital management companies and issuers and providers of investments as well as their sales partners in implementing digital subscription channels.

Sektor: Energie

Competition in the energy sector is steadily increasing. Due to the ambitious goals associated with the energy transition, the sector is also becoming increasingly complex. A significantly higher degree of digitalization is required to make business processes more efficient and thus more cost-effective, while at the same time maintaining or improving the security and reliability of the systems. This applies not only to the sales activities of energy suppliers, but also to the activities of other energy service providers and companies with respect to generation, grid operation, and consumption facilities.

Practice Group Energy

New, smart grids reduce costs for their operators – and consequently for the general public – and provide more data and information for future demands on the grid, e.g., for grid expansion and adapting the grid to the requirements of electromobility. It is already common practice for generation plants and other plant technology to be controlled, monitored, and in some cases maintained remotely. The trend toward digitalizing the operation and maintenance of plant technology is set to continue. Consumption facilities, grids, and generation plants must communicate with each other to optimally coordinate and control generation, transport, and consumption and to ensure a secure, efficient, sustainable, and low-cost supply of energy. This also includes smart metering.

The value and usefulness of the data generated via smart metering must also be carefully examined without losing sight of consumers’ legitimate interests. In addition to technical issues, various legal aspects must also be considered. These include the question of which devices may be used at all in the context of smart metering, or which IT security and data protection requirements must be met and how consumers’ trade secrets can be protected.

With the Act on Digitalizing the Energy Transition, which includes the Metering Point Operation Act, the legislature has taken important steps toward digitalizing the energy sector. In connection with the development of a smart infrastructure and the availability of large amounts of data, however, the IT Security Act also plays a significant role, because smart grids and, in particular, generation plants – conventional large-scale power plants, but also wind or PV plants – are vulnerable to cyberattacks. We support our clients in complying with regulatory requirements when implementing new technologies and regularly involve our legal experts from other specialist fields such as IT law and data protection law in this process.

Sector: Health

The digitalization of the healthcare sector is frequently referred to as “e-health.” New technical innovations, which often automate and accelerate administrative processes, touch on a large number of different legal fields.

Practice Group Health Care, Pharma & Life Sciences

Digital medical devices

Legislators have recognized this trend and passed the E-Health Act in 2017 and the Digital Healthcare Act in 2019. The former also aims to introduce digital applications in healthcare. Such digital medical devices, however, require risk class determination, CE marking, certification by a notified body, and notification to the relevant notification authority prior to being placed on the market. We support our clients in these certification procedures and secure the operation of digital medical devices not only from a regulatory point of view in accordance with health law, but also from a contractual and data protection point of view. We also check compatibility with the EU Medical Devices Regulation, with the German Medicines Act, and with the German Act on Advertising in Health Care.

Hospital information systems

The use of hospital information systems to collect, process, and use health data entails a number of risks for patients’ interests in protecting their sensitive health data. The associated issues relating to data protection law are extensive and require detailed examination prior to implementation. We advise our clients from the healthcare sector not only from a perspective of data protection law, but also from a general regulatory perspective.

Sector: Insurance

The digital transformation is also gaining importance in the insurance sector because insurers will have to cut costs even more in the future to remain profitable, to maintain or increase customer satisfaction, to protect themselves against fraud scenarios, and to remain innovative. Even more effective sales methods, technology-supported contract conclusions, simplified communication with policyholders, e.g., “on demand” via apps, and, in particular, technology-based claims processing help in the pursuit of this objective, because they offer opportunities for considerable process optimization. Regulatory requirements must also be taken into account, in particular those of the Insurance Contract Act, Insurance Supervision Act, and on electronic commerce.

Practice Group Insurance / Reinsurance

New insurance products

Due to new risks triggered by digitalization and an expanded range of services offered by insurers, existing insurance products must be adapted, new insurance products developed, and new distribution channels found. We support in the legal protection of these insurance products, including a redrafting of the insurance terms and conditions, and assist in communication with the supervisory authorities.

Use of artificial intelligence

AI is increasingly being used in the insurance sector to initiate and conclude contracts and to process claims. In some cases, processing is outsourced to third parties, although the responsibility for compliance with supervisory regulations and requirements remains with the insurer. It is therefore necessary to carefully examine which service or software providers are selected and to ensure that tailor-made contracts are concluded in strict compliance with the regulatory requirements of the German Federal Financial Supervisory Authority. Our insurance law experts assist our clients in all of these processes.

Claims processing

Many years of experience with highly complex claims cases have led us to offer our clients interfaces for comprehensive data exchange tailored to their individual needs. Particularly with respect to collective redress, we assume technology-based project planning and project control in addition to legal case processing to make opportunities and risks transparent in time, to implement a professional reporting system that may be accessed at any time, and to achieve optimal results.

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