How Much Should your Firm Spend on Marketing?

Firm Issues

By Bob Weiss
February 2007

How much should your firm spend on marketing every year?  As budgets are finalized and final numbers parsed for 2007, here are some basic budgeting guidelines for marketers and firm management.

Our national survey of corporate/transactional and defense firms indicates the average for local/regional firms of about 50 lawyers is 3.5% of annual gross fee volume. That total includes out-of-pockets and does not include consultant fees or salaries for in-house marketing personnel, or charitable contributions.

Of course, the size of your firm, what the partners expect of your marketing staff, your firm's strategic plan, where you are located and in what areas of law your firm practices, particularly if you have a consumer practice or do insurance defense work, all effect, and to varying degrees, what your budget should be. I'll quickly explain here the possible effect of each.

Size of your firm matters because there are economies of scale. Among other things, size of firm affects how marketing materials are distributed. National firms tend to send most client communication by email not by snail mail. In local firms, the opposite is more common.

Marketers working alone in local and regional firms may spend large amounts of time on RFPs and on publications and planning events. In larger firms, marketers often take on developing and participating in new business presentations, attorney training, client interviews, and the managing of sophisticated advertising programs and resulting leads, all of which increase out-of-pocket costs and distort a percentage approach.

Your firm's strategic plan, if it calls for growth or establishment of new practice areas, will affect marketing costs. Growth and new practices area plans, or repositioning of lawyers from low-paying into higher paying areas, will increase costs as a percentage of existing revenue (but maybe not projected revenue.)

Advertising costs vary geographically on a per thousand basis and from industry to industry, so this may distort your budget from the norm.

What areas of law your firm practices also is key. Consumer practices-- personal injury, bankruptcy, qui tam and others, require a higher budget. Our surveys show 18% of annual fee volume is the level at which consumer firms report the greatest level of satisfaction. Meanwhile, insurance defense groups can easily get by on, say, 2.5% of annual fee volume, because their target markets, predominantly claims executives and counsel at self-insureds, are easily identified, congregate at discrete meetings and can be reached through, at least for now, comparatively less-expensive specialty publications. (Please don't tell the publishers!)

So while there are "rules of thumb" to help your budget-setting there are also many factors which justify substantive variances.

ALYN-WEISS & ASSOCIATES, INC.
Public Relations | Marketing
1331 - 17th Street, Suite 410
Denver, CO 80202

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