Legality of *non*-encryption

I heard an interesting new slant on the legality of 
encryption today.

I was talking to a colleague who is employed in a law firm 
here in Germany. It appears that under the current 
interpretation of German law, communications of a 
confidential nature (for example, contracts, medical 
records and so forth) over an insecure network *MUST* be 
encrypted to protect the Client. It is therefore a breach 
of German law to send unencypted eMail, unless it can be 
proved that every stage of the transmission happens over 
internal (secure?) paths.

I will dig further on this - perhaps there is a useful 
precedent to be established here. At very least we might be 
able to keep lawers (and doctors) off the net ;-)