If you give me 30 minutes I’ll share the powerful (little-known) secret to being able to work much less, but earn a LOT more.
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Important Takeaways From This Presentation
To be exceptionally successful you need radical gains in both efficiency and results. How can this happen?
Simple (but not obvious)…
When you eliminate 80 to 90% of the inefficiency that most solo and small firm lawyers tolerate in their businesses then you’ll be on the path to becoming exceptionally successful.
The 80/20 Principle
When you can identify the 80% of things that make little or no difference in getting big results then you can reallocate your effort, time, energy, and investment capital away from those things and redirect them towards the 20% of things that matter a lot.
In 1897 an Italian economist named Vilfredo Pareto stumbled upon an interesting pattern that involved wealth distribution in Italy. Roughly 20% of the people owned 80% of the land. Upon further study, it was revealed that this ratio was consistent across other nations.
Other economists came along later and made further studies and discovered that this benchmark ratio was present in many other areas of business and life.
I say “benchmark” because the ratio isn’t always 80/20. Sometimes it’s 70/30 or 90/10 somewhere in between or close to those ratios. The key insight is that many resources aren’t just unevenly distributed. The insight is that there’s a wildly disproportionate distribution.
And further study revealed that this disproportion isn’t just for resources. It’s also applicable to causes of outcomes.
The 80/20 principle has been called “Pareto’s principle” after the economist who first noticed the disproportion. But it’s also been called the Rule of the Vital Few, and the Principle of Least Effort.
All of what I’m about to tell you is explained in an excellent book called The 80/20 Principle: The Secret of Achieving More with Less, by Richard Koch.
In a nutshell, we now know that in most cases, 20% of causes contribute to 80% of the consequences.
20% of effort is what causes 80% of the results.
There are other examples of how this severe imbalance occurs naturally and pervasively in nature. And I’ll give some examples in a bit.
But for now, here’s…
The Essential Insight
Most people are oblivious to a simple, but powerful fact that is illuminated by the 80/20 principle…
Most things that we do don’t matter much (or at all).
But a very select few things that we do matter a LOT.
So in our modern world, where we are surrounded by opportunities and new ones are popping up every moment, it’s important to be able to identify which ones matter most.
The 80/20 principle is important for this reason.
First, because it alerts us to the fact that there are widespread imbalances in the value of resources, effort, and causes.
We tend to believe that to get better results we need to apply incrementally more effort. When the reality is that, in most cases, if we apply effort in the right places, we get 80% of the results we want with very little effort.
If you can get 80% of the results you want or need with 20% of effort, do you really want to spend an additional 80% of effort just to get the next 20% of results?
Or would you rather use that additional 80% to go look for another 80/20 imbalance to take advantage of?
As lawyers, we are particularly prone to perfectionism. Chasing the extra 20% of results by using 80% of our time, money or energy is a widespread phenomenon in the legal profession.
But it’s not the way to quickly and efficiently scale up your practice.
Examples of 80/20 Imbalance
The 80/20 principle as expressed by Richard Koch asserts that 80% of results, outputs or rewards are derived from only 20% of causes, inputs or efforts.
There are many examples of the 80/20 principle in everyday life, and here are a few given by Koch in his book:
- 80% of the world’s energy is consumed by 15% of the world’s population
- 80% of the world’s wealth is possessed by 25% of the world’s people.
- 80% of the wealth in most long-term portfolios comes from 20% of the investments
- 20% of products or customers are responsible for 80% of a company’s profits
- 20% of book titles in bookstores comprise 80% of books sold.
- 20% of people’s clothes in their wardrobe are worn 80% of the time.
Notice in the first two examples above that the ratios don’t have to add up to 100%. Again, the 80/20 ratio is just a benchmark.
For example, a study of 300 movies created in an eighteen month period revealed that 4 of the movies accounted for 80% of the overall profits. Which means that 1.3% accounted for 80% of the profits, and 98.7% for the other 20%.
How can you use the 80/20 principle?
The key is to become more aware of the need to pay attention to the allocation of resources and measure which resources yield the best returns.
If certain kinds of cases or certain kinds of clients are yielding most of your profit then consider how you can get more of that kind of work.
Or, taking a more quality-of-life view, which 20% of clients or type of work brings you 80% of your satisfaction?
I first heard about the Pareto Principle when I read entrepreneur Tim Ferriss’s book The Four Hour Workweek . (see pages 68-73).
(If you’ve never heard of Ferriss ) read his Wikipedia page
Ferris claims thatPareto’s 80/20 principle “changed [his] life forever.”
Ferriss said that, once he realized the powerful truth behind the Pareto Principle, he sat down and asked himself the following two questions:
- Which 20% of sources are causing 80% of my problems and unhappiness?
- Which 20% of sources are causing 80% of my desired outcomes and happiness?
He spent an entire day and put aside everything “seemingly urgent” and did some “intense truth-baring analysis.” And the result?
Ferriss says “in the 24 hours that followed, I made several simple but emotionally difficult decisions that literally changed my life forever and enabled the lifestyle that I now enjoy.”
He discovered that out of 120 wholesale customers, 5% were bringing in 95% of his revenue. He came face to face with the realization that all customers are not equal. And most of them aren’t worth the trouble it takes to support them.
So he started firing customers. (i.e. making “emotionally difficult decisions”)
But the result was his management time decreased from 5 to 10 hours per week to 1 hour per month.
And so his biggest realization was this…
“Most things make no difference. Being busy is a form of laziness—lazy thinking and indiscriminate action.”
Action Steps to Take Now
Start by identifying the 80% of less-important things that are bogging you down. And figure out how to let go of them.
As Tim Ferriss said, you will probably face some emotionally difficult decisions.
Realize that what you are really doing is shifting your mindset.
You won’t fully appreciate the power of the 80/20 principle until you use it to radically improve your life.
Right now you need to…
Read Richard Koch’s book to gain further insight. And to get a clear sense of how to better use the 80/20 principle.
The first 50 pages contain 80% of what you need to grasp.
It shouldn’t take you more than one hour to learn the most important aspects of the 80/20 rule.
And the more you absorb the more aware you’ll become of how to use the rule to get exponentially better results from everything that you do.
Want help applying the 80/20 rule to YOUR practice?
Understanding how to apply the 80/20 rule is the crucial lever that will lead you to a practice that’s easier to manage, more profitable, and much more fulfilling.
What happens in the C0-Pilot program?
Lawyers in my Co-Pilot membership program get personal guidance from me to help them avoid the 80% of stuff that has little to no value. And I help them zero in on the 20% of actions that have exceptionally high value.
When you join the Co-Pilot program I’ll show you the simplest, most effective things you can do to create your ideal practice.
To find out if the program is right for you…
Book a FREE 30-minute call and I’ll share more details on how I help lawyers like you streamline their practices in mind-boggling ways.