Helping your firm operate smoothly is a big enough task – but balancing your firm’s budget? Trying to decide how much to spend on marketing? Whew, it’s never-ending, but we’re here to assist.
In this post, we venture deep into setting a law firm marketing budget and how to allocate that budget to best fit your needs.
The goal isn’t just to win more clients
As a business objective, “winning more clients” is fairly vague and misleading. When someone says they want more clients, what they really mean is they want more people to trust them. Every strong client-attorney relationship is built on trust.
That being said, ditch “winning more clients” for “winning more trust.” That’s the real goal, and everything else – more leads, higher call volume – tends to fall into place once trust is established.
The majority of small law firms’ annual revenue comes from existing clients.
When clients trust you, it’ll be much easier for your firm to:
- Become an authority in your practice areas(s)
- Establish itself as the go-to firm in the area
- Generate marketing leads by engaging potential clients online
- Nurture current client relationships.
First things first – sit down with your team and come up with specific, attainable goals for building trust with your clients.
For example: Set up your firm’s social media channels by July, plan a website redesign by October, and invest in a full SEO plan by January.
Being active on social media takes care of the “nurture” element; website redesign fulfills the “engagement” aspect, and SEO delivers on the “authority” and “generating leads” front. Sorted!
The 5-15% rule
You read rules and statutes all day as an attorney, so we’re going to keep it brief. As a rule of thumb, your annual marketing budget should be the equivalent of about 5-15% of your firm’s annual revenue.
Let’s say your firm brings in $2,000,000 a year. Ideally, you’d set aside $100,000 to $300,000 in your marketing coffer.
Specific amounts will change depending on the size of your firm (bigger firms have bigger pockets) and where your firm is located (areas with a higher attorney density means higher spending). Each law firm has varying needs and capabilities, so you should certainly evaluate where your business stands before making any spending decisions.
Cheaper doesn’t mean better
Now, we’re not naive. We know and expect that you’ll spend a fair amount of time researching average law firm marketing budgets. You’ve probably seen statistics touted by other marketing firms, claims like “You should spend 2 to 5% of revenue on marketing.”
Cheap services will get you cheap results.
After seeing those kinds of figures, you might think we’re pulling your leg with the 5-15% rule. But what those other agencies aren’t telling you is that the 2 to 5% rule doesn’t even cover foundational marketing costs like website redesign and content strategy.
Those low numbers might cover some SEO and maybe a little bit of web development, but you won’t meet your goals with “some” of this and a “little” of that. That’s just not how it works. Trust us, Google is far beyond the point of ranking businesses that trick them with cheap tactics.
Cheap services will get you cheap results. Keep that in mind as you establish a digital marketing budget for your firm.
The average marketing budget for small law firms and how to allocate
First off, let’s clarify what we mean by “small” law firm. (Some specialized firms prefer the term “boutique,” but we’ll stick with small.)
Generally, small law firms will employ less than 15 people, including lawyers and paralegals. Such firms usually bring in around $1 million to $3 million in annual revenue, but those numbers can vary greatly depending on where the firm is located, their areas of practice, and other factors.
To keep things simple, let’s say your firm of 5 lawyers brings in $2 million a year in revenue. Let’s break down your marketing budget based on the age of your firm and the 5-15% rule:
- A new small law firm that makes $2 million annually should spend 8 to 14% on marketing ($160,000 to $280,000, respectively). If the firm is in a highly competitive market, they’ll probably need to spend a bit more, closer to 16% ($320,000). That’s because they’ll need more services to perform well alongside competitors.
- A more established small firm should spend 6 to 12% on marketing (with the same $2 million in annual revenue, which works out to $120,000 and $240,000, respectively). In a more competitive market, an established small firm should spend closer to 14% ($280,000).
Break it down
Now that we’ve discussed marketing budgets for small law firms, we’re going to take it one step further and split up the budget by category. By no means do you have to follow our formula, but it’s been tested and found successful by dozens of firms across the country.
For this scenario, we’ll stick with $2 million in annual revenue with a 12% marketing budget ($240,000):
- 30% on SEO ($72,000)
- 20% on PPC ($48,000)
- 15% on Business Development ($36,000)
- 10% on Website Development ($24,000)
- 5% on Social Media ($12,000)
This is not an exhaustive list. Depending on the location and size of your firm, you may want to allocate part of your budget to TV ads and other mediums.
The average marketing budget for midsize law firms
Time for the middlemen – law firms with about 20 to 75 attorneys. This is the sweet spot – as a midsize firm, you probably already have a foothold in your community, so the intense marketing strategies required by small firms likely aren’t needed here.
But it’s still important to dedicate a chunk of your firm’s gross revenue to digital marketing. You may have a foothold online, but you’ve got to work to keep it up. Well, us, not necessarily you. Fortunately, EverSpark has over a decade of legal-centric marketing experience. We get clients to the top of their market, so much so that many have to open new offices to keep up with demand.
If you’re a midsize firm, you have a little more leeway in your marketing budget. For firms of your size with ample resources, you should allocate 5 to 11% of your revenue to digital marketing.
Let’s say your firm generates $6 million annually, and you decide to put 9% ($540,000) of that towards marketing. Here’s how you could break it down:
- 40% on SEO ($216,000)
- 20% on Website Development ($108,000)
- 20% on PPC ($108,000)
- 10% on Business Development ($54,000)
- 10% on Social Media ($54,000)
This is not an exhaustive list. Depending on the location and size of your firm, you may want to allocate part of your budget to TV ads and other mediums.
The average marketing budget for large law firms
Large firms, consider yourselves lucky: you have the most budgeting freedom of any size firm in this blog. But that doesn’t mean you should wield your earnings freely; keeping an itemized budget will help you lower expenses and get the most out of your marketing strategy.
Large firms are generally considered those with more than 75 attorneys, and most will generate more than $10 million each year in gross revenue. Depending on their goals and resources, large firms should set aside 5 to 15% of their revenue towards digital marketing.
For this exercise, let’s say your firm brings in $15 million a year, and you decide to put 10% (1,500,000) of it towards your marketing strategy. Your plan might look like this:
- 35% on SEO ($525,000)
- 30% on PPC ($450,000)
- 15% on Website Development ($225,000)
- 15% on Business Development ($225,000)
- 5% on social media ($75,000)
This is not an exhaustive list. Depending on the location and size of your firm, you may want to allocate part of your budget to TV ads and other mediums.
We’ll help you make the most of your marketing budget
Take the guesswork out of your budget. With over a decade of legal marketing experience, EverSpark has the know-how to help you dominate in your area.
Call us today at (877) 323-4661. We’re looking forward to hearing from you!