I am the managing partner of a 12 attorney firm in Providence, Rhode Island. In our recent partner meetings we have been discussing ramping up marketing. How much should we be spending on marketing?
Studies that have been conducted indicate that law firms that provide services to business firms (B2B) spend approximately 2.4% of fee revenue on marketing. However, law firms that focus on individual consumers (retail law if you will) spend much more – 10%+ of fee revenues on marketing – especially if strong referral networks are not in place. I have several PI, SSDI, Elder Law and Estate Planning firm clients that are spending 10%+ of their fee revenue or greater on marketing. I have some extremely successful PI firm clients spending 20% of their revenue on marketing.
The amount of appropriate investment can depend upon referral networks in place. I have successful PI and Estate Planning firms that are spending very little on marketing, are getting all of their business from their referral networks, and spending next to nothing on marketing and advertising. (By referrals I am speaking about professional referrals not involving a referral fee and client referrals. If referral fees are involved they should be considered a marketing cost) So it depends upon your situation, the type of cases you are going after, etc.
Be careful of spending to be spending. Marketing expense scan be a deep hold that yields no return on investment. Insure that your marketing investments are targeted, well thought out, measured, and are working. Determine up from whether your goal is long term brand building or short term lead generation going in.
John W. Olmstead, MBA, Ph.D, CMC