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Law Firm Marketing Budget: How Much Do Lawyers Spend on Advertising?

updated
August 24, 2022
18 min
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Marketing

As a general rule, businesses are spending an average of 11.7% of their budgets on marketing. However, most law firms allocate much less than that. Of course, the precise amount can vary between one practice and another. There are also differences when looking at different practice areas.

For example, a practice that retains a steady stable of clients may not need to advertise its services very much. Conversely, an injury practice or criminal law firm may need to acquire new clients at a fairly constant pace. In that case, the overall investment in law firm digital marketing or paid advertising is going to be larger.

Marketing and Advertising: Is It the Same Thing?

You will often see the words marketing and advertising used together. This association makes sense. They are related to one another. However, they aren’t interchangeable.

It may help to think of marketing as a broader term that encompasses many activities and budget areas. Advertising is something that falls within this scope. Your marketing budget will cover these items that aren’t directly related to advertising:

It will also cover items that are very directly related to advertising:

Ultimately, when you talk about advertising spending, you are also talking about marketing spending. However, the reverse is not true.

How Much Do Lawyers Spend on Advertising? B2B vs. B2C Law Firms

The Deloitte CMO survey from 2018 shows that business-to-consumer (B2C) law firms spend the highest percentage of total revenue on marketing. Business-to-business (B2B) firms spend measurably less.

That’s understandable as personal injury firms and other B2C practices must spend that money to acquire customers. However, it may not be necessary to spend the 18% mentioned in the article. Instead, between 5% and 12% of revenue is reasonable for most firms.

How Much Do Lawyers Spend on Advertising? Practice Area Comparison

Here is a helpful breakdown of what lawyers are spending:

Estate Planning, Wills, and Family Lawyers

Attorneys who work in family law, estate planning, and real estate will often have a lower-than-average law firm marketing budget. Lawyers in these practice areas tend to depend on referrals rather than marketing their services to the public.

This arrangement makes it fairly clear that the average advertising percentage budget law firms should expect will vary depending on the biggest source of clients.

Personal Injury and Criminal Defense Lawyers

Law firms specializing in the practice areas of immigration law, personal injury, civil litigation, and criminal law often have a law firm budget for marketing exceeding 10%.

While referrals are a popular way for attorneys in these practice areas to acquire clients, these lawyers must also reach out to the public using various forms of marketing for law firms. Additionally, the marketing options available for attorneys in these practice areas tend to be more expensive than those in other niches.

Because of this disparity, client acquisition and cost per lead (CPL) tend to be higher than in other areas. There is also a level of competitiveness in these fields which means attorneys must invest more money in lead nurturing and conversion tasks.

Unsurprisingly, there are very successful personal injury firms that spend up to 20% of gross revenue on advertising and other marketing activities. Many find the return on investment (ROI) on this to be quite worthwhile.

Frequently, the goal is to achieve a high case volume. This volume will ideally lead to profitability while increasing the chance of landing a particularly high-value case that will generate significant profits for the practice.

Factors that Affect How Much You Should Spend on Advertising

Practice Area

Attorneys in different practice areas will spend different amounts of money on marketing. For example, personal injury law is known to be associated with significant marketing expenses.

Personal injury is a very competitive area of law. Attorneys in personal injury earn money by acquiring new clients. They also tend to use more expensive advertising mediums like radio and television.

The average advertising budget for a criminal defense attorney will be significantly less. However, it’s still pretty considerable. These attorneys do rely on paid advertising on different channels. 

Finally, estate planning attorneys won’t need much of a law firm advertising budget at all. This work is often based on recommendations and referrals. If an attorney in this niche spent a significant amount on advertising, they probably wouldn’t get a very good ROI.

Law Firm Profits

If you are creating a marketing budget and want to emulate some of the larger law firms, you should set your budget as a small percentage of your existing or predicted revenue for that financial period. So if your firm makes $100,000 in one quarter, and your marketing budget is 4% of gross revenue, that would be $4,000. 

That may not seem like much. In fact, it isn’t. This example demonstrates how creating a marketing budget simply isn’t a one size fits all process. A larger firm will have a much larger advertising spend even at a lower budget point. It can market more competitively while spending a lower percentage of revenue.

This option may not be viable for a smaller firm or one that is trying to gain a share of a competitive market. Such disparity is why it’s imperative to consider both your revenue and your business goals. For example, making a significant investment in marketing early on could really help to establish an up-and-coming law firm.

When you consider the average marketing budget, law firms spend comparatively little. If you look at small to medium-sized businesses across many verticals, other business areas may spend twice as much as law firms.

This disparity is due to law firms relying heavily on referrals — although even law firms that do lean towards paid marketing still spend less than similarly sized companies in other industries.

However, this doesn’t necessarily mean that your law firm should follow suit. If you have aggressive goals for your firm, then you may need to spend more and create an equally aggressive law firm business plan. In that case, spending more simply makes sense.

So don’t be afraid to stretch the bounds of your marketing budget. If you are willing to invest and combine that with a solid law firm marketing strategy, you could achieve an excellent return on your investment. If your early marketing spending helps you to earn more revenue, you may eventually be able to return to the standard law firm marketing budget model.

Law Company Authority

There is another reason that large, well-established law firms aren’t spending as much of their revenue on advertising or marketing as a whole. Simply put, people already know about these law firms. More importantly, clients actively seek out these firms' services. That’s usually not a factor when creating a budget for small law firm marketing.

Again, this isn’t just reflected in the legal sector. It’s true in other industries. When calculated as a percentage of revenue, newer, smaller firms are spending much more than larger firms that have more widespread recognition. Newer law firms aren’t just pursuing new clients —they are pursuing reputation, thought leadership, and name recognition.

This reality leads to another question. How do you decide whether your law practice has earned enough standing that you can spend a smaller percentage of your revenue on paid advertising or marketing?

First, think from the perspective of the average person who needs your services. Would yours be one of the first law firms they thought of?

Next, consider all of your other marketing assets. Is your web design solid? Do you have a strong law firm social media presence? Have you hired a professional to optimize your website for search? If you mostly answered yes to these questions, then you can say that your firm is fairly established.

What about the age of your law firm? There is usually a strong correlation between the age of a law firm and how established it is. However, that isn’t guaranteed.

A law practice could be decades old, but if the team in charge of marketing hasn’t taken steps to create an updated law firm website design or engaging social media presence, then that firm may not have a strong customer standing. However, a newer law office with an intense approach to advertising and marketing may quickly earn more name recognition.

If you are trying to answer the question, “how much should you spend on marketing for an older law firm?” remember that it is possible to have a strong presence and reputation among other attorneys and past clients, but not among potential clients. You can close that gap by investing in a law firm growth marketing strategy.

Law Firm Location

The location of your law firm absolutely impacts what percent of revenue should be spent on marketing. In fact, this detail isn’t often given the thought it deserves.

Think about it — if you are located in a city with many other law firms, you don’t want to risk being lost in the crowd. Instead, you will use marketing as a tool to stand out. If your practice is located in a small community, then you won't have to invest as much.

Your Competitors

There’s no need to ensure that you are outspending other law firms that compete with you for clients. However, it’s definitely helpful to do a bit of research into the marketing practices of those law offices.

You won’t learn exactly how much they spend but should get a fairly good idea. If it’s clear, for example, that a major competitor is investing significantly more in paid advertising, there’s a good chance that they will be earning more leads and clients. If that’s problematic for your firm, you may need to make some adjustments.

With that being said, a law firm may be able to do better with a small budget and an excellent marketing strategy than with a large budget and a poor strategy. You must also consider that your firm and competitors’ firms may be at different stages of marketing.

To take a balanced approach to marketing for law firms, analyze a few competitors, not just one. The idea is to ensure that your marketing is in line with other attorneys who are in the same area of practice.

For example, one competitor may be going all out with a brand-new website to the tune of $25,000. That’s going to significantly increase their percentage of revenue.

Let’s say they end up spending 15% of revenue. However, your other three competitors are all spending 7% on Google Ads, social media engagement, and influencer marketing. If you don’t need a new website, it makes more sense to match those firms than try to outspend the outlier that is doubling down with a new website.

The idea is to increase your competitive awareness and set benchmarks. Ultimately, you may not decide to spend the same amount or exceed what your competitors are spending. It’s possible that you may realize you can spend less and still remain competitive. However, you won’t know until you research.

Clients' Financial State

You should be building some of your law firm budget around your current and target clients. 

Let’s say your clients are spending $5,000 on your services on average. However, most don’t return to do business with your law firm due to the nature of your practice. That doesn’t create a very high customer value. You will need to adjust your spending to align with that. 

Now, imagine that most clients spend double that and contract your services a few more times over a five-year period. That’s a much higher customer value. This setup gives you more financial breathing room to invest more in marketing.

There’s another reason to invest more in marketing when it comes to high-value clients. If your goal is to earn new clients who are currently at other law firms, you will have to double down on your marketing outreach.

It’s much harder to convince a client to change law firms than to acquire one who doesn’t have that relationship established. You will need to spend more on earning and nurturing those leads.

Law Firm Marketing Team Presence

Finally, you must consider where your marketing strategy is now and what infrastructure you have in place. If you haven’t been actively engaging in marketing for law firms, you probably haven’t developed any internal resources. This reality is going to influence your marketing budget.

Team presence is something that is most likely going to be impacted by the size of your law firm. Larger law firms are more likely to have a dedicated marketing team than smaller firms. However, there has been growth in this area in practices of every size. It’s clear that attorneys are recognizing the importance of digital marketing for growth and client acquisition.

Regardless of your firm's size, you will need to consider your current marketing infrastructure when you determine your marketing budget. You may need to increase your law firm’s marketing budget so that you can acquire tools, resources, and expertise to build that infrastructure.

This approach doesn’t mean that you have to hire marketing staff. In fact, that may not make sense for most law firms. Instead, your practice may be better served by working with an experienced legal marketing agency. While this will cost money, you will likely save on time and overhead by taking this route.

If you have already hired a digital marketing team or have other marketing infrastructure, that will be one less thing to consider in your law firm’s marketing budget.

Calculating Your Law Firm Marketing Budget

Let’s say that you decide to take a very minimalistic approach to marketing and limit your marketing budget to just 3% of your firm’s revenue. This figure can be adjusted depending on the various factors mentioned above.

Start by looking at each and determining where your firm is. Once you have done this, you can create goals and develop a realistic budget that helps you achieve those objectives.

Attorney lead generation is probably the most common goal in digital marketing for law practices. If you decide to pursue this goal to obtain more clients, you can create a personalized marketing budget for your law firm.

This chart shows what a fictional law firm might take into consideration when determining how much to spend and whether a budget increase is necessary:

calculating law firm marketing budget

Looking at the table above, you can apply the specifics of your own situation. Imagine that your law firm is in a very large city. Your practice is mostly B2C. Both of these factors indicate that you have a significant amount of competition.

In that case, you will want to significantly increase your marketing budget from the bare minimum mentioned above. On the other hand, a B2B firm in a smaller city may see results with just a minor increase over what other law firms spend on marketing.

The important takeaway is to create a thoughtful legal marketing budget. This budget should be based on research and an understanding of your goals. Don’t simply adopt a budget number because you find a statistic in a blog or in Google search results.

Is There a Way to Limit Law Firm Marketing Budget Expenses?

If you want to reduce your lawyer advertising and digital marketing expenses, there are several areas to explore. However, you will have to investigate how you are currently acquiring new clients. This analysis includes looking into the various advertising and marketing channels you are employing at every stage of the sales funnel.

Your Level of Personal Involvement

How much time do you plan to spend either being directly involved in law firm marketing activities or managing your firm’s marketing? This target can make a big difference in the results you experience.

For example, an intellectual property attorney may decide to invest a significant percentage of gross revenue into paid advertising. If they are able to form partnerships with legal marketing experts, they will likely see increased leads.

Now, think about the same intellectual property lawyer. However, in this case, they invest more of their own time and presence in marketing their law firm. They appear in lawyer videos, hold question and answer sessions, and maybe book some time on a local radio show to discuss an important legal issue.

Additionally, they network with other lawyers in other practice areas. This networking doesn’t just lead to additional referral sources — it also creates opportunities for curating content and guest-blogging.

All of these hands-on efforts can reduce the cost per lead. However, that must be considered in balance with the amount of time the lawyer spends on marketing instead of serving clients. 

Also, while it’s good for attorneys to have an active presence in marketing and advertising, it’s important to be strategic about things. For example, it’s worth an attorney spending time creating thought leadership content to build authority and reputation.

However, most lawyers don’t understand the complexities of paid advertising campaigns on social media or through Google. Attempts to lower costs or maintain more control over marketing processes by maintaining a high level of personal involvement could lead to lackluster results or even mistakes that need to be fixed. 

The solution is often to work with a marketing agency that specializes in pay-per-click (PPC) services for lawyers. When law firms spend money on legal marketing services, they can focus on using the skills they have while letting professionals handle strategy and technical details.

For example, marketing professionals can take on tasks such as search engine optimization management, campaign monitoring, and analytics. Firm attorneys can contribute by appearing in some advertising videos or creating legal content to share on social media.

This partnership allows all involved to work to their skills and ensures that attorneys have more time to focus on practicing law than attempting to run marketing campaigns.

Marketing Channels You Use

There are several online and offline marketing channels you can choose for your legal marketing efforts. However, these should be selected and configured in a way that allows you to collect data and measure performance accurately.

When law firms spend money on advertising and marketing that allows them to track ROI, they are more likely to achieve better outcomes. Look to these metrics to track your marketing campaigns:

  • Cost per lead (CPL) or per acquisition
  • Lead quality and quantity
  • Lead consistency

Here’s a detailed breakdown of each metric and how it can impact what you spend on marketing.

Cost Per Lead

Every channel you select should offer a way for you to measure how much it costs you to acquire new leads. By doing this, you can avoid getting lost in all of the minutiae of running campaigns on that channel.

Instead, you can simply focus on the cost of earning new clients. You should ascertain this understanding when selecting any PPC channel to print advertising.

Quantity And Quality of leads

In addition to measuring cost per lead, you should also track the number of leads each channel creates for your practice every month. It’s even more important to track the average case value for each lead you receive.

At first glance, a channel that has a low cost per lead may seem as if it’s the most valuable to your firm. In reality, that may not be true. Imagine that you can only convert 20% of those leads. That could call into question the overall value of that channel for your marketing efforts.

However, that doesn’t mean you should write that channel off. Instead, consider whether it’s aiding your firm with client acquisition, whether the case values are acceptable, and the amount of effort you are putting in. A channel doesn’t need to be a top performer to be valuable to your law firm.

Next, you should consider whether it’s the channel itself that is underperforming or if you simply need a better strategy. Are you investing in paid ads? If so, your messaging needs to be absolutely on point. If your focus is organic search, then consider the keywords you are using. Are they paying off for you?

Lead Consistency

You want to be able to measure the consistency of the leads you obtain from various marketing channels.

Imagine that you identify a shortcut home from work. According to Waze, it saves you 30 minutes one-way. The only problem is there’s always road construction on that route. You frequently have to reroute your driving anyway. That just adds frustration and more time.

You will experience something similar with some legal marketing channels. A channel may perform exceptionally well but inconsistently. If that happens, the times when that source underperforms could be canceling out any benefits.

Worse, it’s easy to get caught up in attempting to achieve the exceptional outcomes you initially experienced — so much so that you fail to recognize that it’s time to let that channel go. There’s also the possibility of a sunk cost fallacy developing if you’ve invested time in money in a channel that just isn’t reliable.

Law Firm Marketing Budgets that Put Your Money to Work

Determining what you should spend on marketing is undoubtedly complex. You have to consider many different factors, including your firm’s current presence, what marketing infrastructure you have available, the type of law you practice, and your goals. Even the location of your firm matters. 

If time and money are an issue, you must also look for opportunities to reduce your legal marketing costs. While you do this, you have to keep an eye on CPL and other metrics. All of these things are happening while you are also doing the job of providing quality legal services to your clients.

You aren't alone if you decide that your best legal marketing strategy is to hire a high-performance law firm digital marketing agency — an agency like Grow Law Firm. Many law firm owners find that investing in digital marketing assistance is absolutely worthwhile.

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    Sasha Berson is a legal marketing expert

    Sasha serves as Managing Partner for Grow Law Firm, a Chicago-based digital marketing agency focused solely on specialized growth strategies for attorneys and their practices.

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