Firm Management-The 80-20 Rule
By Robert James Henderson ©

Good management requires not only the knowledge of needed organizational and practice management skills but also the leadership capabilities to apply those skills to obtain, guide, and motivate good people. Good management also involves the ability to delegate tasks to the people who can do them in the most cost efficient manner.

Management in a smaller law firm involves a delicate balancing act on the part of the managing partner between carrying out management responsibilities and serving his/her clients’ needs and maintaining his/her fee production. A good law firm manager therefore must have the judgment to focus his/her time on what is most important. There simply isn’t enough time to change everything at once, so it is necessary to prioritize.

There was a nineteenth century Italian economist named Pareto who conducted a study of the distribution of wealth among the population. He found that 20 percent of the population controlled 80 per cent of the wealth. His discovery, which became known as the 80/20 rule, has since been demonstrated to be universal. Thus, for instance, 20 percent of the population reads 80 percent of the books; 20 percent of your checks probably account for 80 percent of your dollar checking activity, etc.

In a law office, it has been shown that approximately 20 percent of clients account for 80 percent of revenues, 20 percent of expenditure categories account for 80 percent of total expenses, etc. Therefore, the point is that by focusing his/her time on the important 20 percent, a manager can obtain 80 percent of the benefit from 20 percent of the effort. This is not to say that less important items should be ignored. It just means that more of your firm’s management time should be spent on important management matters in order to get the biggest “bang for the buck”.