Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.― Jim Collins

During a re-read of the Jim Collins classic “Good To Great”, I was struck by the profound difference discipline in decision making could have on law firms.

One of the glaring areas where a disciplined approach has a notable and measurable impact is in the utilization of discretionary resources.

All solvent law firms have discretionary resources. These are defined as funds available beyond mandatory spending. Mandatory spending includes all expenses that are fixed in the relatively short term; payroll, rent, benefits and contractual obligations.

Discretionary resources are the monies that are used to fund:

  • Developing new clients
  • Opening new offices
  • Technology upgrades
  • Adding new practices
  • Renovating or acquiring new space
  • Hiring new lawyers
  • Expanding existing client relationships

Most law firms, big and small, finance virtually all of the practice related activities of its individual lawyers. The budget for each year reflects anticipated spending that, if categorized honestly, would fall into three categories: fixed spending, strategic spending and the non-strategic spending that satisfies the whims of a few. Such an approach is a long way from disciplined decision making.

Great law firms apply discretionary spending in a laser-like fashion, concentrating investment where it can have the greatest value in pursuit of creating a great organization.

Karen Martin in her excellent book The Outstanding Organization discusses how typical companies suffer from Attention Deficit Disorder. These firms randomly pursue the latest and greatest ideas proposed, having no ability to focus and prioritize.

A great tool to help firms focus and make rational choices is the Effort Impact Matrix




Using this tool during the annual planning and budgeting process (all great firms have such a process) will help the firms invest in a prudent manner. We recommend directing resources as follows:

  • 25-30% upper right
  • 55-65% upper left
  • 10% or less elsewhere



Does your firm use any type of planning tools to help direct the investment of resources? Tell us about your experience.