How to Figure Out Your Law Firm Marketing Budget

According to the 2018 Latest Trends in Legal Marketing and Business Development research study from the Legal Marketing Association and Bloomberg Law, a majority of the attorneys and legal marketers surveyed (62%) said their firms will be increasing their investment in marketing and business development initiatives over the next two years.

The primary catalysts for their increased investment in marketing include:

  • Pressure to generate revenue (61%)
  • Less work coming from corporate counsel (51%)
  • Pressure from other law firms that are using marketing effectively (48%)

Some of the initiatives these firms have found most effective over the past two years — and where they will continue to spend — include:

  • In-person events to foster direct relationships with clients
  • Investment in new technology
  • Increase in social media efforts
  • Hiring more marketing and business development staff

Determining your marketing spend

Most attorneys have no idea how much they should be spending on marketing their law firms. When trying to figure it out, you may Google “law firm marketing budget” and find that, for example, the AM Law 200 firms spend approximately two percent of annual gross revenues. Most law firm management consultants recommend spending between two percent and five percent of gross revenues (more if you practice personal injury law).

While that may provide you with a general guideline, it really doesn’t do much to help you set a specific number for your individual firm. In fact, there are a number of factors you need to consider and use to guide you in setting your annual legal marketing budget.

But first, there are two critical things you need to keep in mind about marketing your firm:

Your marketing budget must support the goals of your firm. If you underfund your marketing, you will be less likely to achieve your overall business goals.

The purpose of legal marketing is lead generation and conversion. You are in business to make money. You make money by obtaining new clients. You get new clients from the leads you are able to generate and then convert.

These 10 factors are what you need to consider when setting your law firm marketing budget:

  1. The kind of law you practice. If your practice is B2C — personal injury, bankruptcy, family law, etc. — you will typically need to spend more to generate leads from consumers. Typically, personal injury and litigation require significantly more investment in marketing.
  2. Your firm’s profit margins. The bigger your margins, the more you can afford to spend on marketing. While some practice areas like litigation have large profit margins, there are others that have traditionally low margins, like real estate and insurance law.
  3. Your firm’s gross annual revenues. The more successful you are, the more you can afford to spend to increase that level of success. It is not unusual for highly successful law firms to spend more than 15% of gross annual revenues on marketing.
  4. Your firm’s target market. If you market to consumers, you must spend more simply to get their attention. Some highly targeted practice areas may need to invest more in specialized marketing strategies to reach their target market. It is critical that you are able to define your target market as narrowly as possible to accurately gauge how much you will need to spend to reach them.
  5. Your geographical market area. If your practice is located in a densely populated urban area, your market area may be as little as five square miles. If it’s in a rural area, your market area may be up to 50 square miles.
  6. Your competitors. Are you competing with hundreds of other law firms that practice the same type of law that you do, or are there just a few? The more competitors you have in your market area, the more you will need to spend to compete against them for new clients.
  7. Your technology. Typically, firms that have invested in technology to streamline their business operations do not have to spend as much on marketing as less automated firms. Being able to automate marketing tasks like email marketing saves both time and money. If you can’t automate the process, you have to throw people at it, which is more expensive and time-consuming.
  8. Your sales cycle. Some practice areas like personal injury or criminal law generally have a short sales cycle — someone is injured in a car accident or arrested and they need help right now. Other practice areas like estate planning or family law have a longer sales cycle, where the need to hire an attorney may not be so immediate. If your practice area is one with a long sales cycle, you will probably need to spend more on marketing to keep in touch with those prospects so you stay top-of-mind when they are finally ready to make their decision.
  9. Your average sale. Firms whose average clients spend more than a few thousand dollars with them will typically need to spend more time educating those high-dollar clients on the benefits of doing business with their firms. That education process means you need to spend more on marketing your firm to establish your credibility.
  10. Your average client’s lifetime value. If your average client spends $5,000 a month with you and stays with you for an average of five years, their lifetime value to you is $300,000. You can use this information to determine how much you can afford to spend in obtaining new clients before your profit margins begin to suffer. On the other had, if your average client is a “one and done” and never returns, you will have to use lower cost marketing strategies to obtain those clients and can budget accordingly.

Once you are able to calculate all these factors for your individual firm, you will have a good idea of how much you will need to allocate to fund a marketing plan for your law firm that will support your growth goals.


May I recommend a perfect complement to this blog post? Once you have your budget nailed down, take a listen to this free, on-demand, webinar that is solely dedicated to improving the ROI on your firm’s marketing efforts. Why? Attorney advertising is a multi-billion dollar industry. Yet every year law firms waste millions of dollars on ineffective marketing. Why? Because they enjoy losing money? Of course not! They do it because they don’t know how to set up the systems to track their marketing efforts or they don’t know how to interpret the data that is shown to them. Let us teach you how in this riveting on-demand webinar!

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