Christoph Vaagt (consultant to top lawyers and law firms) in an interview with Vertec

Christoph Vaagt, an consultant to top lawyers and law firms, says about himself on LinkedIn:

“If you want to work with someone who understands all aspects of law service types and the management of law firms, then I look forward to hearing from you. Because I am specialized in systemically agile processing of changes in law firm partnerships and implementing them in a consensus-oriented manner, I focus on culture, i.e. the way people interact with each other, by organising processes in such a way that all stakeholders can contribute their wishes and fears.”

Vertec ist ein Anbieter eines integrierten CRM und ERP Systems für Anwälte und andere Professional Services Unternehmen und wählt einen anderen Ansatz als klassische Kanzleimanagementsysteme. Bei Vertec steht die unternehmerische Tätigkeit im Vordergrund, um für mehr betriebswirtschaftliche Transparenz im Sinne des Mandatscontrollings aber auch der Gewinnverteilung, sowie der Profitabilität von Kostenträgern und Kostenstellen in der Kanzlei zu sorgen.

Vertec:
Mr. Vaagt, both LAW FIRM CHANGE CONSULTANTS as well as Vertec deal with the processes in law firms. Their expertise lies in the focus of change management and Vertec’s in the digitization of business processes. On your website, I find that processes in law firms are often historically grown and partner-specific, which makes the organisation cumbersome, slow and expensive. This is very much in line with our experience. What do you think are the biggest hurdles to getting out of this stage and making a real improvement in law firms?

Mr. Vaagt:
Partnerships find it difficult to make decisions because everyone wants to be involved; that makes the processes political. That is not helpful for economic success. So it is a question of building consensus in the partnership on the financial objectives, measured against the competition, and then on the measures necessary to achieve them, so that the individual has the freedom to decide how he wants to achieve this, but not whether.    

Vertec:
What is your experience of how most medium-sized companies are positioned today with regard to the digitization of core processes? How consistent are the data and figures in the law firms today, especially with regard to servicesservices invoices controllingcontrolling

Mr. Vaagt:
Very few law firms are driven by key figures. Lawyer have not grown up with them. At the same time, they want as much profit as possible. This contradiction can only be resolved through good controlling. Most law firm management systems do not have sensible, useful key Kpi and leave partners in the dark.    

Vertec:
At the end of the day, law firms are also entrepreneurial and should aim to work sustainably and transparently and to optimize profits. What is your experience with how most lawyers view this topic these days?

Mr. Vaagt:
Profit is relative: all the partners of a law firm always claim to be satisfied with what they earn, but at the same time they like to argue about what seems to be too small a percentage. Transparency is seldom desired and almost never really 100% can be achieved. But it would be helpful to have a sensible agreement on what and how much to earn and how to do that. In this respect, UK and US law firms are clearly different from German law firms, which receive only two-thirds of the turnover per professional and often less than half of the profit.  

Vertec:
Why do law firms need to be more competitive, especially if they earn well? Be it also about finding and retaining good lawyerslawyers the classic “war for talents,” or what are the main reasons?

Mr. Vaagt: In every segment in which they operate, law
firms are exposed to competition for clients, cases and employees as well as partners. There is no escaping this competition. Anyone who ignores it will be handed down to the bottom. It is therefore about all dimensions of entrepreneurial activity. It cannot be reduced to the starting salaries of good employees, but it is particularly clear that many law firms simply cannot find employees if they cannot pay the market price that applies in their segment.  

Vertec: Let’s us
take a look at how a law firm can become even more successful. It comes to mind spontaneously: standardize processes and digitize them where possible, introduce controlling and create relevant key Kpi, and draw the right conclusions from them. What are your experiences? Would you agree with this, or do you have anything else to add? What is the attitude of the law firms you are in contact with?

Mr. Vaagt:
We would rather start from the top down: consensus on market position and necessary steps for further development; benchmarking of KPIs in order to identify further potentials, since law firms are usually poorly managed; To do this, we often have to broaden the mindset, since “KPI” are seen as something “evil” that only limits “freedom”. This also includes optimizing time recording, which alone usually brings about €50,000 additional turnover per year and professionals (if IT plays a role).    

Vertec:
Was sind denn für eine mittelständische Kanzlei relevante Kennzahlen zum Steuern? Wie messen Anwaltskanzleien den Erfolg oder Misserfolg mit welchen Tools?

Herr Vaagt:
Anwaltskanzleien zerfallen in zwei Kategorien: jene, die messen und jene, die das nicht oder so gut wie nicht tun. Die ersteren sind UK oder US Kanzleien oder Anwälte, die aus solchen kommen und das Geschäftsmodell der Wirtschaftskanzlei verstanden haben. Die anderen messen meist nicht, verstehen es auch nicht, fürchten sich vor Zahlen und der Konsequenz, nämlich der Offenlegung von Unterschieden der Beiträge. Die meisten Kanzleiprogramme haben keine ordentlichen Auswertungsmöglichkeiten; das liegt auch an den Kunden, aber auch daran, dass sich die Entwickler nicht damit beschäftigen, obwohl viele von den Programmen beispielsweise Buchhaltungsmodule haben, also über fast alle relevanten Kennzahlen verfügen. Relevant sind zum Beispiel Anzahl Soll/IST, Stunden, Auslastung und realisierte Stundensätze. Gemessen werden aber nur Umsatz, Anzahl Stunden, evtl. Gewinn, und zwar im Nachhinein, mit grossem Abstand zur Leistungserbringung. Das bedeutet, der Großteil der Kanzleien fährt mit Blick in den Rückspiegel.     

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