"And you shall see out of all the people" (Exodus 18:21-23) - you shall perceive them through prophecy. "Able men" - these are the wealthy and people of means. "God-fearing" - these are those who fear the Omnipresent in judgment. "Men of truth" - these are people of reliability. "Hating unjust gain" - these are those who hate to accept money through a lawsuit. These are the words of Rabbi Joshua. Rabbi Eleazar of Modiin says: "And you shall see out of all the people" - you shall behold them through the clear glass with which kings are beheld. "Able men" - these are people of reliability. "God-fearing" - these are those who make compromise in judgment. "Men of truth" - such as Rabbi Hanina ben Dosa and his companions. "Hating unjust gain" - these are those who hate even their own money; and if they hate their own money, how much more the money of others. Why was his name called Jethro [Yitro]? Because he added [yiter] one section to the Torah, as it is said, "And you shall see out of all the people." But surely even in the days of Moses they had this teaching from Sinai, as it is said, "If you do this thing, and God so commands you" (Exodus 18:23). Why then was it hidden from the eyes of Moses? In order to attach merit to one who is worthy, so that the matter would be linked to Jethro.
What Moses Looked For in a Judge and Why Jethro Was Named
Yalkut Shimoni on Torah 270:3
(שמות יח כא-כג) וְאַתָּה תֶחֱזֶה מִכָּל הָעָם, תֶחֱזֶה לָהֶם בִּנְבוּאָה, אַנְשֵׁי חַיִל, אֵלּוּ עֲשִׁירִים וּבַעֲלֵי מָמוֹן, יִרְאֵי אֱלֹהִים, אֵלּוּ שֶׁהֵן יְרֵאִים מִן הַמָּקוֹם בַּדִּין, אַנְשֵׁי אֱמֶת, אֵלּוּ בַּעֲלֵי הַבְטָחָה, שֹׂנְאֵי בָצַע, אֵלּוּ שֶׁשּׂוֹנְאִים לְקַבֵּל מָמוֹן בַּדִּין, דִּבְרֵי רַבִּי יְהוֹשֻׁעַ. רַבִּי אֶלְעָזָר הַמּוֹדָעִי אוֹמֵר, וְאַתָּה תֶחֱזֶה מִכָּל הָעָם, אַתָּה תֶחֱזֶה לָהֶם בְּאַסְפַּקְלַרְיָא בְּמַחֲזוּת זוֹ שֶׁמַּחֲזִין בָּהּ מְלָכִים, אַנְשֵׁי חַיִל, אֵלּוּ בַּעֲלֵי הַבְטָחָה. יִרְאֵי אֱלֹהִים, אֵלּוּ שֶׁעוֹשִׂין פְּשָׁרָה בַּדִּין, אַנְשֵׁי אֱמֶת, כְּגוֹן רַבִּי חֲנִינָא בֶּן דּוֹסָא וַחֲבֵרָיו, שֹׂנְאֵי בָצַע, אֵלּוּ שֶׁהֵן שוֹנְאִין מָמוֹן עַצְמָן וְאִם מָמוֹנָם שוֹנְאִין קַל וָחֹמֶר מָמוֹן חַבְרֵיהֶם. לָמָּה נִקְרָא שְׁמוֹ יִתְרוֹ, עַל שֵׁם שֶׁיִּתֵּר פָּרָשָׁה אַחַת בַּתּוֹרָה, שֶׁנֶּאֱמַר וְאַתָּה תֶחֱזֶה מִכָּל הָעָם, וַהֲרֵי אַף בִּימֵי מֹשֶׁה הָיוּ מִסִּינַי שֶׁנֶּאֱמַר אִם אֶת הַדָּבָר הַזֶּה תַּעֲשֶׂה וְצִוְּךָ אֱלֹהִים, לָמָּה נִתְעַלֵּם מֵעֵינֵי מֹשֶׁה, לִתְלוֹת זְכוּת בְּזַכַּאי, כְּדֵי שֶׁיִּתָּלֶה הַדָּבָר בְּיִתְרוֹ.