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The Eighty (80) - Twenty (20) Rule (The Pareto Principle)

5/18/2024

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I am inspired this week by something my Tai Chi instructor said in the context of learning forms – a series of complex Tai Chi movements. Rather like skiing, just when you think you have mastered them, you realise how much more you have to learn. He advised that in order to do 80% right you must excel at 20%. In other words, concentrating on the very very basic initial moves until they are absolutely mastered will improve your performance of the whole form. In very traditional Chinese teaching of Tai Chi especially as a martial art the master or sensei would not permit their pupils to move to the next stage or movement until they had completely mastered the first. 

You will notice in the title that I have used words and figures. In contracts lawyers generally do this in setting out key financial information on, for example, limits of liability. Why worry about such a small point? The answer is because there have been occasions when say a zero has been missed off a number with dire consequences. A court MAY correct this if there is an obvious mistake, but that would take time and money. There is far less likely to be an error in a written expression as opposed to a numeric one. This precision and focus on small things will or at least should flow through into all other drafting.

As is often the case in writing this blog I seem to have come across something here that is not only well documented, but is an accepted principle. See, for example, this article The 80-20 Rule (aka Pareto Principle): What It Is, How It Works which describes the 80-20 rule as “The 80-20 rule, also known as the Pareto Principle, is a familiar saying that asserts that 80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event.” This is not a new concept: “It was introduced in 1906 by Italian economist Vilfredo Pareto, who is best known for the concepts of Pareto efficiency. Pareto noticed that 20% of the pea pods in his garden were responsible for 80% of the peas. Pareto expanded this principle to macroeconomics by showing that 80% of the wealth in Italy was owned by 20% of the population.” The key takeaways include:
  • The 80-20 rule prioritizes the 20% of factors that will produce the best results.
  • A principle of the 80-20 rule is to identify an entity's best assets and use them efficiently to create maximum value.
  • This rule is a precept, not a hard-and-fast mathematical law.
See this article which builds on the above What Is the 80/20 Rule? A Guide to Saving Time and Money  and proposes that this rule “is by far one of the most influential time-management and self-improvement mantras around”. Some examples defined by Forbes are:
  • 20% of customers account for 80% of total profits
  • 20% of manufacturers supply 80% of the market
  • 20% of sales reps generate 80% of total sales
It cites a famous Microsoft example (I had never heard of this!) when back in 2002 they applied the principle “and allocated resources to patch only the top 20% of bugs impacting their software.” Their former CEO Steve Balmer wrote “One really exciting thing we learned is how, among all these software bugs involved in the report, a relatively small proportion causes most of the errors. About 20% of the bugs cause 80% of all errors, and—this is stunning to me—1% of bugs caused half of all errors.”

Now I come to think about it, I have been applying this principle for a long time without fully appreciating that this is what I was doing. In private practice for example we recognised that most of our new business was likely to come from our top 20% of existing clients and focused our marketing efforts on them. This Forbes article Pareto Principle: How To Use It To Dramatically Grow Your Business acknowledges this and says you can take it a stage further. It cites Perry Marshall who in his book 80/20 Sales and Marketing found that “within that initial 20%, the 80/20 rule also exists. Meaning that the top 20% of the top 20% of your customers (or the top 4% overall) represent 64% of your sales”.

This principle applies equally well to how we manage our tasks in a professional practice and organise our time most effectively. This enables us in these complex and busy times to work more efficiently and incidentally reduce the stress of a hard working professional life. See this blog Managing Your Time And Practice Using The 80/20 Rulewhich comments “The 80/20 Rule is about optimizing your time. It is about focusing on the important 20% as a way to save time and maximize effort. Determine what types of tasks in your law practice produce the best results for clients and your business and focus your attention on those.” It recommends:
  • Do the 20% first
Many lawyers manage their time with a to-do list. However, each task on the list doesn’t produce the same value for your practice. About 20% of your tasks will have 80% more value than the others.
  • Schedule uninterrupted work time
If 80% of your daily tasks can be done in 20% of the workday, then it makes sense to block off 20% of your workday for uninterrupted work. That’s 1.6 hours or 96 minutes in an 8-hour workday. Concentrate on the “20% tasks” during this block of time.

So my proposition here is that this principle applies not only to the growth of professional practices and businesses generally, but also to the way we practice in industry and private firms. I started with the drafting example, and this clearly extends to time management. It also can apply to other professional activities such as research – see, for example, this blog The 80/20 Rule for Legal Research which determines that  “out of all the searches you do and sources you read, only about 20 percent of them will appear directly in—will be cited in—your final work product.”

As the British consultant Richard Koch said in his book The 80/20 Principle: Achieve More with Less:

“Not all inputs are equal; some inputs are far more important and influential than others”.

“The best way to deal with information overload is to focus on the vital few and ignore the trivial many.”
​

“The goal is not to do more, but to do less and achieve more.”
​

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Is the Medium the Message

5/11/2024

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I have seen business, legal and commercial counsel sought and provided in a variety of ways over my career. In a law firm the main channel of communication when I commenced my professional career was the post supplemented by telexes and then by fax machines. In some firms the partners would all gather in the post room to review incoming letters. Sounds bizarre and impracticable these days, but at least they knew what was going on. These were then gradually replaced by email and then a combination of email, instant messaging and Teams. If I am working on a legal matter now I will typically post messages (with attachments) and file documents on a Teams site set up for the transaction, using IM and email as well. This is enhanced by online professional knowledge databases and of course the ubiquitous AI. But does how we as professionals communicate actually alter the input and advice we are providing? The Canadian Marshall McLuhan first coined the phrase “The medium is the message” in 1964 in a book Understanding Media: The Extensions of Man which is the title of the first chapter available at this link. “For McLuhan, it was the medium itself that shaped and controlled "the scale and form of human association and action". He observes “In a culture like ours, long accustomed to splitting and dividing all things as a means of control, it is sometimes a bit of a shock to be reminded that, in operational and practical fact, the medium is the message. This is merely to say that the personal and social consequences of any medium-- that is, of any extension of ourselves -- result from the new scale that is introduced into our affairs by each extension of ourselves, or by any new technology.”

I accept that the increasing modes of communication facilitated by technology affect and influence how we interact with fellow professionals and clients. Take the increasing availability of online health services which assist in initial diagnosis, reducing the burden on doctors and potentially enhancing patient care.  Yet at the end of the day if you are ill or have damaged your body in some way you will need to see a doctor, though admittedly this could be face to face or virtually through Teams or Zoom.

Please don’t get me wrong here. I acknowledge that the medium we use affects our behaviour, and not necessarily for the better. See this New York Times article I Didn’t Want It to Be True, but the Medium Really Is the Message where the author recognises the iniquitousness and intrusiveness of social media. Over the second decade of the twenty first century “Online life got faster, quicker, harsher, louder. “A little bit of everything all of the time,” as the comedian Bo Burnham put it. Smartphones brought the internet everywhere, colonizing moments I never imagined I’d fill. Many times I’ve walked into a public bathroom and everyone is simultaneously using a urinal and staring at a screen.” He also cites Jonathan Haidt, a social psychologist who’s been collecting data on how social media harms teenagers: “First, that the way Instagram works is changing how teenagers think. It is supercharging their need for approval of how they look and what they say and what they’re doing, making it both always available and never enough. Second, that it is the fault of the platform — that it is intrinsic to how Instagram is designed, not just to how it is used. And third, that it’s bad.”

See also this LinkedIn article How modern technology has changed the delivery of legal services. This commences “Lawyers used to be able to dictate the pace of their day and prioritize their workload far more easily, as the natural delay inherent in posting correspondence allowed them more thinking and reaction time. In the absence of mobile phones and e-mail, daily interactions with clients were largely desk-based or in face to face in meetings. This relatively sedate pace has been almost totally superseded by e-mail, mobile phones, Blackberries and the inexorable rise of social media. However, despite the inconveniences and demands of e-mail and instant messaging, technology has also allowed legal services to be delivered in more efficient and innovative ways.”

I also recognise that social media brings its own perils for professionals. See this short Law Society Gazette piece Step away from the app, juniors warned which says “Compliance experts from both sides of the Atlantic have delivered a stark warning about the potential risks of communicating with clients via social media or text messages. 'I tell juniors that if you text and there’s a discovery process, you’re going to have to give someone you’ve never met your phone and access to everything on it,' said professional responsibility specialist Anthony Davis, Of Counsel at Clyde & Co New York.” It also observes that “Pressure to communicate via potentially unsafe media can come from clients as well as 'Generation Z' lawyers”.

No, what I am suggesting is that whatever the method or medium of communication (and our accompanying behaviour) the underlying professional task (negotiating a contract, providing advice) has, so far at least, remained essentially the same. In other words, the “how” a service is provided has fundamentally changed, but at least to date the “what” that service is has not. I am negotiating an international service agreement at present and we are exchanging drafts and ideas with the other side, meeting in person where necessary or on Teams and debating the usual suspects – liability, termination, service level commitments, etc. In private practice in the 1990’s I negotiated an outsourcing agreement acting for a supplier contracting with a local authority. We perhaps spent more times in meetings at the location of the customer, but that was at their behest and can easily happen now. And what were we negotiating about?  Liability, termination, service level commitments, etc.!

I do however recognise that the evolution of technology may eventually affect the “what” with, for example, the rapid development of AI, though so far that has just been a sort of glorified (and not always right) assistant tailored to support law firms. I also acknowledge the profound thoughts of Richard and Daniel Susskind in The Future of the Professions: How Technology Will Transform the Work of Human Experts, Updated Edition. This book predicts the decline of today's professions and introduces the people and systems that will replace them. In an internet-enhanced society, …. we will neither need nor want doctors, teachers, accountants, architects, the clergy, consultants, lawyers, and many others, to work as they did in the 20th century. increasingly capable technologies - from telepresence to artificial intelligence - will place the 'practical expertise' of the finest specialists at the fingertips of everyone, often at no or low cost and without face-to-face interaction.

We are definitely not there yet, and I still think there is a positive future for us human professionals, though we will need to adapt how we practice to take advantage of evolving technology. Robotic lawyers are still some way off!

As the American writer Elbert Hubbard proposed “One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man”.

While Michael Dell said “Our business is about technology, yes. But it’s also about operations and customer relationships.”
​

And for a last wry thought from Douglas Adams the author of The Hitchhiker’s Guide to the Galaxy. “Technology is a word that describes something that doesn’t work yet.”

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