Are you hoping to grow your practice and collect more in fees this year? Are you hoping to work less and make it home for dinner more often, so you can be with your family?
The majority of attorneys are surprised to hear that these goals do not have to be mutually exclusive. In fact, they are easier to achieve than most attorneys think.
Have you ever heard of the Pareto Principle? The 80-20 Rule? The Rule of the Vital Few and the Trivial Many?
If you have not heard of the Pareto Principle, here’s a quick summary of the rule: The Pareto Principle simply states that 20 percent of input yields 80 percent of output. As applied to your law practice, 20 percent of your clients yield 80 percent of your income. Conversely, 20 percent of your clients account for 80 percent of your headaches.
While 20 percent of your marketing efforts yield 80 percent of your new clients, 80 percent of your marketing efforts yield only 20 percent of new clients. In short, the Pareto Principle, when applied correctly, suggests that you should focus on doing more of the 20 percent and less of the 80 percent.
The correct application of the 80-20 Rule is what allows you to make it home for dinner most evenings while still growing your practice. You focus more of your attention on what works and what is making you money, and spend less time on those trivial things that do not add much to your practice.
Let’s look at how you can apply this to vital areas of your law practice. First, we’ll look at client selection, and then we’ll look at marketing.
Applying The 80-20 Rule To Client Selection
Print a report from your accounting software that shows you how much income you generated from each of your clients for the past year. You will notice that roughly 20 percent of your clients yielded 80 percent of your total revenue. You obviously want to increase the amount of those types of clients.
The next exercise may be a bit more difficult, but you need to make a list of your most difficult clients – the ones who expect the world, cause you the most stress, or who are constantly complaining about your services.
These are the 20 percent of clients that cause 80 percent of your problems. They are the type of clients you do not want. You need to cut them loose as soon as possible.
Applying The 80-20 Rule To Marketing Your Law Practice
Like any good business person, you need to track how your new clients heard about you. Just like with your client selection, you will notice that roughly 80 percent of your new clients were generated by 20 percent of your marketing efforts. That 20 percent is what you should focus on. In other words, you need to do more of what works.
You can use your marketing as a way to preselect your clients. If one method of marketing yields the types of clients you want and another yields the types of clients you don’t want, you know which method of marketing you should be focusing on.
The 80-20 Rule is not always completely accurate, but it’s usually pretty close. It’s not only a good guide, but it’s also a very good way to determine what you should focus most of your limited time and resources on. You don’t want to waste your time and money chasing bad clients. You want all of your efforts and resources to be focused on attracting optimal clients.