The “80-20 Rule”, also referred to as the “vital few and trivial many rule” is a principle based on work of Italian economist Vilfredo Pareto. His 1906 observation that eighty percent of the wealth of Italy was owned by twenty percent of the people has lead many to conclude that 80% of the effects come from 20% of the causes since the concept holds true in a number of arenas, including in the business of law.
Examples offered by Arthur W. Hafner, Ph.D., M.B.A., Dean of University Libraries (Ball State University) in his article “Pareto’s Principle: The 80-20 Rule” include:
“20% of the customers generate 80% of the revenues, and 20% yield 80% of the profits, but these two groups are not necessarily the same 20%.”
“80% of advertising results come from 20% of your campaign.”
“80% of your success comes from 20% of your efforts”.
Imagine the increased productivity and profitability that could be achieved if you could discover which 20% of the activities or individuals are contributing the 80% of your positive (or even negative*) results, harness that 20% and eliminate the rest! Analysis of financial records could show attorneys which types of cases are the greatest source of revenue and the less productive types of cases would ultimately be extinguished from the firm’s repertoire. Seeking to maximize activities throughout the day which contribute the most powerful results is one of the goals of many time management programs. Can you think of just one ineffective activity that you could stop doing RIGHT NOW? What will you do with your recaptured time?
Hopefully, the awareness of this principle will motivate attorneys and other business owners to take advantage of potential dramatic improvements by maintaining focus and devoting resources to the most effective realms while removing focus from the rest.
*An example of a negative result is that 80% of complaints come from 20% of customers or clients. The goal, in this case, would be to identify early on which types of clients generate the most complaints and head them off at the pass.