To develop business in today’s economy, law firms need to provide effective marketing. However, marketing a law firm while keeping costs downa is a challenge. A 2004 study by the Legal Marketing Association found that the marketing budget of a mid-size law firm amounts to 2.4 percent of its gross receipts. In 2005 it had increased to 2.6 percent. Statisticians are of the opinion that the marketing budget of a mid-size law firm varies from 1.6 percent to 2.8 percent of gross fees.
A law firm’s marketing budget normally includes the following categories:
- Alumni programs
- Attendance at industry, trade or professional association meetings
- Client entertainment and gifts
- Collateral materials
- CRM system or client database
- Directory listings
- Events and seminars
- Graphic design and branding costs
- Law firm network activities (e.g., membership and travel)
- Mailings and communications (e.g., newsletters, invitations, announcements, alerts and holiday cards)
- Marketing-related training
- Market research and client surveys
- Marketing staff professional development
- Memberships in industry, trade or professional organizations
- Proposals and pitches
- Public and media relations
- Tickets and sponsorships
- Web site design and maintenance
Client entertainment represents a significant portion of most marketing budgets. However, the marketing department usually does not control those expenditures.
When developing a marketing plan and budget, each firm must consult their respective state’s rules of professional conduct which govern the ethical conduct of attorney marketing. All states have specific rules to regulate attorney marketing. In many states, the spirit of these professional responsibility rules is derived from the American Bar Association (ABA) Model Rules of Professional Responsibility. Each firms marketing strategy of a law firm should be compliant with these ethical standards.
The next important consideration in developing a marketing plan and budget is cost-control and cost pressures. There are a number of categories in addition to the ones listed above which are related to marketing and can be factored into a marketing budget. These include charitable contributions, club dues and expenses, CLE, extranets and intranets, retreats, and stationery. The most effective cost control activities vary depending up on specific marketing objectives of the law firm.
While investing money in marketing the firm, a prudent lawyer has to keep in mind the following:
- Money spent on good clients is almost always well spent.
- Spend more money on specialized legal practice areas or niches than on the firm as a whole.
- Spending money on passive efforts such as buying tables at an event for an organization; writing articles for a trade association without attending its meetings; buying advertisements in an industry publication without speaking at meetings may not help if there is no activity to match.
- Make one significant contribution and be recognized as a giant instead of being one of many law firms with business-card-sized advertisements in charitable programs.
- Evaluate the firm’s return on investments. Ensure that the money spend on marketing is paying off.
- It is always sensible for a lawyer to invest in office space. The lowest cost option is to work through one of many corporate office centers around the country that provide meeting space, phone service and mail collection. Such office services may benefit to some types of lawyers. Another option is to share office space with an existing firm or group of solo practitioners until the revenues and cash flow grows to a point where monthly rent would be 15% or less of the gross average monthly income.
- Incorporation of business is one of the primary steps in beginning practice. Specific rules are in place for states about various legal forms that a law firm can take. As a lawyer much money can be saved on the set-up of corporate firm by completing and filing the documents oneself.
- According to a census, most lawyers practicing for at least ten years will face a malpractice claim. This emphasizes on the need for a good malpractice policy when starting one’s own practice. Apart from malpractice insurance, a law firm needs to have a general business casualty and liability policy to protect the firm from injury on its premises, loss of property from flood, fire or other damage and even theft. The best way to control cost in this area is to check with the state bar to see if they sponsor a mutual insurance company and can offer discounts to members. Seeking out an agent and asking whether their company provides both malpractice and general business insurance and whether they offer a discounted package is also a good option.
- Money is the life blood of law practice, and it may decide the success and failure of a firm. Hiring an experienced law firm staffer with billing and accounting experience who can also handle phones and other administrative work and training this person on the use of the law practice management suiting the firm’s purchase is an excellent way to cut costs in accounting.
- Many modern clients prefer to pay legal fees by credit cards. In lieu of a merchant bank relationship “Pay Pal” could be used to process credit card and debit card transactions. Negotiating a discount on a combined checking, savings and merchant banking relationship with a single bank is also another way to cut costs.
- Law firms need to have well defined office policies and procedures for running the firm productively, hire competent people, and pay them. Consulting an HR professional or knowledgeable attorney and determining whether services can be traded or outsourced may help to cut costs.
- Excellent staffing is a primary aspect of law firm’s success. Law firm may be able to hire one person with enough skills, experience and credentials to handle all administrative and some research and other paralegal-type skills. Service of researchers, law clerks and contract attorneys on an hourly basis only when needed can be availed to reduce full-time staff.
- Buying a set of used statue or case reporters and taking over the subscription for updates is a very good way to cut library costs. Contacting Lexis or Westlaw and asking about product discounts for firms or solo practitioners would be helpful. Checking whether the state bar has a discount program for purchasing books or for online research is also an efficient lead in cutting the costs.
A plan-based budget will produce a more effective use of resources because it will be based on what the firm is trying to accomplish.