Law Firm Marketing Budget: How Much Should You Spend?

Law firms are businesses and they need to spend money on marketing to attract new clients. The amount of money that a law firm spends on marketing will vary depending on a number of factors, such as the size of the firm, the type of law that the firm practices, and the geographic location of the firm. However, there are some general trends that can be observed when it comes to law firm marketing budgets.

According to the 2021 Legal Trends Report from Clio, a leading legal software company, 62% of consumers who are looking for a lawyer start their search online. This means that law firms need to have a strong online presence and invest in digital marketing efforts such as SEO, PPC advertising, and social media marketing.

In this article, we will discuss: 

• How much do lawyers spend on advertising
• How to create a law firm’s marketing budget
• The importance of law firm marketing ROI
• Common marketing budget mistakes

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 law firm budget will cover these items that aren't directly related to advertising:

• Client entertainment
• Law firm website design
• Maintaining a legal blog

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

• TV and radio ads
• Google Adwords campaigns
• Sponsoring community events

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 Marketing?

Lawyers in the US typically allocate a significant portion of their budget to advertising, recognizing its pivotal role in attracting clients. On average, law firms may spend around 2% to 5% of their gross revenue on marketing efforts.

For instance, according to a survey by the American Bar Association, solo practitioners often dedicate about 5-7% of their gross revenue to marketing, while larger firms might invest up to 10% or more.

This allocation covers various channels, including online marketing, traditional advertising, and networking events. Such investments are crucial for staying competitive, expanding clientele, and enhancing a law firm's overall visibility in a dynamic legal landscape.

How to Create a Law Firm's Marketing Budget

A well-crafted marketing budget is necessary for any legal firm that wants to achieve its business goals. This part of the article will walk you through creating a marketing budget for your law firm. So, what should you do to get returns out of your lawyer budgeting?

Step 1. Identify Law Firm Business Goals

Before you can create a marketing budget, you need to identify your law firm's business goals. These goals will shape your marketing strategy and determine the budget allocation for each marketing activity. Some common business goals for law firms include:

• Increasing revenue
• Expanding the client base
• Enhancing brand awareness
• Improving client retention rates
• Entering new markets or practice areas
• Generating leads and acquiring new clients

To set effective business goals, consider using the S.M.A.R.T. framework. This model ensures that your goals are Specific, Measurable, Attainable, Relevant, and Time-based. For example, a law firm's goal could be to increase lead generation by 15% within the next six months by implementing targeted digital marketing campaigns.

Step 2. Analyze Previous Marketing Budgets and Expenses

The analysis of your marketing budget gives a better understanding of how your marketing dollars have been spent in the past, what has worked, and what hasn't.

There are several ways to analyze your previous marketing expenses. 

1. Track the ROI of your past marketing efforts. Determine which marketing channels and tactics generated the most leads, conversions, and revenue. Break down your spending by individual marketing channels, such as paid advertising, social media marketing, and content marketing.
2. Evaluate the cost-effectiveness of various marketing activities. Identify which marketing initiatives provided the best results for the lowest cost.
3. Assess the alignment between past marketing efforts and your business goals. Ensure that your previous marketing strategies align with your current objectives.

You can use various tools like: 

• Accounting software or spreadsheet programs to track and categorize these expenses. 
• Google Analytics to track website traffic and online performance.
• Social media analytics tools to track engagement and performance on various social media platforms.

Step 3. Allocate the Budget Based on the Target Audience

Once you clearly understand your business goals and have analyzed past budgets for advertising, it's time to allocate your marketing budget based on your target audience. Consider your law firm's size, geography, target demographics, and practice area expertise.

A general rule of thumb is to allocate 2-5% of gross revenue towards marketing for small law firms, whereas medium and large firms may allocate 5-10% and 10-20%, respectively. Within this promotional budget, consider allocating a percentage for different marketing channels such as content creation, social media advertising, pay-per-click campaigns, and traditional advertising. 

Determine which marketing channels your target clients will use and engage with, such as social media platforms, search engines, or industry-specific websites. Furthermore, analyze the effectiveness of different marketing channels in reaching your target audience. 

For example, a personal injury law firm that targets millennials may focus more on digital advertising to reach a wider audience. In contrast, a specialized corporate law firm may benefit from targeted offline networking events and industry publications.

Law Firm Marketing Budget Example

Your marketing budget is the fuel that drives your marketing efforts. The amount you allocate determines the result of your law firm goals. So, you need to set a realistic budget. We will break down a few approaches on how much to budget for law firm marketing. 

— Percentage of Revenue Approach

The percentage of revenue approach involves allocating a certain percentage specifically for marketing activities. The percentage typically ranges from 2% to 5% for established firms and up to 10% for new or rapidly growing firms. These percentages may vary depending on your firm's size, growth stage, and objectives.

It's important to note that this approach should be based on your firm's net revenue, not gross revenue. Then, you allocate a percentage of this projected revenue toward marketing efforts. The allocated budget is often based on historical data and industry benchmarks. 

For example, if your medium-sized criminal defense law firm generates $1 million in annual revenue, you might allocate $50,000-$100,000 towards marketing.

— Research Competitors’ Marketing Strategies

Another way to determine how much to budget for attorney marketing is to research your competitors' spend on marketing. This gives you an estimate of their ad spend, the industry trends they are working with, their strategies, and potential areas for improvement. Some elements to research include the types of marketing channels they're using, the frequency and quality of their content, and their overall brand messaging. 

There are a few different ways to research your competitors' marketing spending. 

• Identify key competitors within your practice area and geographic region.
• Investigate their marketing efforts, such as their website, social media presence, advertising campaigns, and content marketing initiatives.
• Estimate their marketing spend based on industry benchmarks and any available data, such as public financial reports or marketing job postings.
• Use this information to gauge whether your marketing budget aligns with legal industry standards or if adjustments are needed.

You can use tools like SimilarWeb, Ahrefs, and SEMrush to conduct this research. These tools will allow you to see your competitors' website traffic, search rankings, and paid advertising efforts. You can also monitor their social media accounts and sign up for their email newsletters to understand their content strategy.

— Allocate Your Budget Based on Business Goals

Your law firm budgeting should be aligned with your law firm's business goals to ensure that your marketing investment directly supports your objectives. Different goals may require different marketing approaches and resource allocations. For example, if your goal is to increase brand awareness, you might allocate more budget towards social media and paid advertising. If your goal is to generate more leads, you might allocate more marketing costs toward email marketing and content creation. 

To allocate your digital marketing budget based on business goals:

• Review your law firm's business goals, such as increasing revenue, increasing client acquisition, or enhancing brand awareness.
• Determine which marketing channels and tactics will help you achieve these goals, considering factors such as target audience, market trends, and past marketing performance.
• Allocate your marketing budget across these channels and tactics, prioritizing those with the highest potential ROI and alignment with your objectives.

Where to Allocate Law Firm Marketing Budget

Every law firm needs a marketing budget, but not all law firm spend on marketing is done wisely. We will explore five strategies to help your law firm maximize its marketing budget and achieve impactful results.

Strategy 1: Create a Law Firm Website that Converts

Your law firm website is your online storefront. It's where potential clients will go to learn more about your firm, your services, and your team. That's why creating a website that is informative, engaging, and easy to use is so important.

Here are some important elements to incorporate into your law firm website:

• A clear and concise mission statement
• A well-written About Us page
• A list of your services and areas of expertise
• A blog that provides valuable content to your target audience
• A contact form
• Testimonials from past clients
• A strong call to action

Strategy 2: Develop Paid Advertising Methods

While organic efforts are vital, paid advertising can significantly boost your law firm's visibility. There are a number of different paid advertising methods available, but some of the most popular include:

• Social media advertising
• Display advertising
• Search engine marketing (SEM)

Social media advertising allows you to target potential clients on platforms like Facebook, Instagram, and LinkedIn based on their interests and demographics. Display ads utilize visual banners and can be placed on websites related to legal topics to attract potential clients. SEM allows you to target potential clients searching for keywords related to your law firm.

Strategy 3: Leverage Search Engine Optimization (SEO)

Search engine optimization (SEO) involves optimizing your website to rank higher in search engine results pages (SERPs). When potential clients search for keywords related to your law firm, you want your website to be one of the first results they see.

There are a number of things you can do to improve your website's SEO, such as:

• Keyword research: Identify relevant terms and phrases potential clients may use when searching for legal services. Incorporate these keywords into your website's meta tags, headers, and content, ensuring a natural, user-friendly experience.
• On-page SEO: Optimize the content on your website, including headings, meta descriptions, and keyword usage.
• Off-page SEO: Optimize the factors outside of your website, such as link building and social media engagement.
• Local SEO: Optimize your website and law firm content to appear in local search results, such as "lawyers near me" or "lawyers in [Chicago]."

Strategy 4: Create Lawyer Content Marketing Strategies

Content marketing is a great way to build your law firm's online presence and attract new clients. It involves creating and sharing valuable and informative content to attract and engage your target audience, ultimately driving leads and conversions.

The types of content you can create for your law firm are: 

1. Blog posts: These posts can cover various legal topics, answer frequently asked questions, or discuss recent legal developments. Additionally, blogs should be optimized with relevant keywords to enhance search engine visibility.
2. Case studies: They provide tangible proof of the firm's capabilities and can help potential clients gain confidence in choosing their services. These in-depth narratives can highlight the firm's problem-solving abilities, the legal strategies employed, and the positive outcomes achieved for clients.
3. Whitepapers and E-Books: These should focus on specific legal topics, provide valuable insights and analysis, and offer practical advice to readers. 
4. Video content: Videos can include client testimonials, Q&A sessions with attorneys, tutorials on legal processes, or even live-streamed events. Video content adds a personal touch, improves brand recognition, and increases the chances of sharing content on social media platforms.

Strategy 5: Start an Attorney Email Marketing Campaign

Email marketing is an effective way to nurture leads and maintain relationships with existing clients, driving repeat business and referrals. Email marketing should be considered when allocating the law firm's digital marketing budget, including the following ideas.

1. Newsletter campaigns: The newsletter should include relevant legal updates, industry news, important dates, and insights on legal issues. 
2. Personalized email automation: These sequences can be triggered based on various actions, such as signing up for a newsletter or downloading a resource. Personalization through the use of recipients' names and segmented content helps improve engagement and increase the chances of conversion.
3. Event invitations and RSVPs: Email campaigns can be used to invite existing and potential clients to events such as webinars, workshops, or seminars. Sending well-designed invitations and tracking RSVPs through email allows for effective event management and follow-up communications.
4. Drip campaigns: These can provide additional information, case studies, client testimonials, or exclusive offers to move potential clients closer to conversion. 

Tips to utilize email marketing successfully:

• Build a segmented email list by collecting contact information from website visitors, clients, and other sources.
• Craft compelling, personalized email campaigns encouraging engagement and conversions, such as newsletters, promotional offers, or event invitations.
• Monitor and analyze key email marketing metrics, such as open rates, click-through rates, and conversions, to optimize your campaigns for success.

How To Calculate Law Firm Marketing ROI?

Law firm marketing ROI (Return on Investment) is a crucial metric for assessing the effectiveness of marketing efforts in generating revenue. Calculating marketing ROI involves comparing the gains from marketing activities to the costs incurred. The formula for calculating ROI is:

In the context of law firm marketing, the "Gain from Investment" includes the revenue generated directly attributable to marketing efforts. This can be challenging to measure precisely in the legal industry, given the complexity of client acquisition and the often long duration of client relationships.

The "Cost of Investment" encompasses all expenses related to marketing initiatives. This includes advertising costs, website development, content creation, and any other expenses incurred to promote the law firm.

Understanding the specifics of how each marketing channel contributes to client acquisition and revenue is essential for an accurate ROI calculation. For example, tracking leads from online campaigns, monitoring website analytics, and analyzing the conversion rates of different marketing channels contribute to a more comprehensive assessment.

Regularly evaluating the marketing ROI helps law firms make informed decisions about resource allocation. If a particular channel demonstrates a high ROI, it may warrant increased investment, while underperforming channels may need reevaluation or adjustment.

Additionally, law firms can enhance their marketing ROI by implementing strategies that optimize client acquisition costs, improve conversion rates, and foster long-term client relationships. By consistently measuring and refining marketing ROI, law firms can ensure that their marketing strategies align with their business goals and contribute positively to overall growth and success.

Importance of Measuring Marketing ROI for Law Firms

As a business owner or marketer, you may have heard the term ROI, or return on investment, thrown around a lot. But what exactly is ROI, and why is it important to measure it? In simple terms, ROI measures the profitability of an investment, which in the case of marketing, means measuring the return on your marketing spend.

— Tools for Tracking Marketing Campaigns and Metrics

There are a variety of tools available for tracking marketing campaigns and metrics, ranging from simple spreadsheets to more advanced analytics platforms. Some popular tools include Google Analytics, which can track website traffic and behavior, and social media analytics tools like Hootsuite, which can track engagement and audience demographics across various social media platforms. In addition, email marketing platforms like Mailchimp or Constant Contact can track open rates and click-through rates for email campaigns.

— Understanding ROI to Make Informed Budget Decision

Be sure to calculate the ROI of each marketing channel; you should evaluate which channels generate the most money and manage your attorney marketing budget accordingly. For example, if your paid search campaigns have a higher ROI than your social media campaigns, you may want to shift more of your marketing costs toward paid search.

In addition, understanding ROI can help you set realistic goals for your marketing campaigns and track progress toward those goals. By setting specific targets for ROI, you can measure the success of your campaigns and make adjustments as needed to achieve your desired ROI.

— Strategies for Optimizing Marketing Spending

Businesses can identify which campaigns are underperforming or not generating sufficient returns with detailed ROI data. Through this data, marketers can pinpoint specific areas of improvement, such as:

• Targeting different audience segments.
• Modifying messaging.
• Refining conversion processes.
• Reallocating resources from poorly performing campaigns to more successful ones.

One strategy for optimizing marketing spending is to focus on high-value customers. You may improve your return on investment and increase sales for your company by discovering and focusing on customers with high customer lifetime value (CLV). 

Another strategy is to invest in marketing automation tools, which can help streamline your marketing processes and improve efficiency.

Common Attorney Marketing Budget Mistakes

There are several common mistakes that businesses make when creating their overall marketing budget, which can lead to wasted resources, missed opportunities, and suboptimal results.

1. Not setting clear goals: One of the most common mistakes is not setting clear and specific marketing goals. Without clear objectives, knowing how much to spend, where to allocate resources, and how to measure success is difficult.
2. Allocating too little budget: Some law firms make the mistake of underestimating the importance of marketing and allocate a minimal budget for it. This often leads to limited reach, compromised campaign quality, and ultimately ineffective results.
3. Allocating too much budget without a strategy: On the flip side, other law firms allocate a significant portion of their budget to marketing without a clear strategy or plan. This can result in wasted funds on activities not aligning with the target audience or business goals.
4. Ignoring tracking and measurement: Most law firms fail to track and measure the effectiveness of their marketing campaigns. Without analyzing data and metrics, it becomes difficult to understand which strategies are working and what needs improvement.
5. Over-reliance on one or a few tactics: Putting all the budget into one or a few law firm marketing tactics may limit the campaign's overall reach and potential effectiveness. A diverse mix of marketing channels can help to engage different segments of the target audience and mitigate the risk of relying solely on one approach.
6. Neglecting the long-term perspective: Some law practices focus only on short-term marketing tactics and fail to invest in long-term strategies that build brand loyalty and customer retention. Balancing between short-term objectives and long-term brand building is crucial for sustainable success.

Law Firm Marketing Budgets that Put Your Money to Work

Your marketing budget should be a living document you review and adjust regularly. As your business goals change, so too will your marketing needs. Incorporate the strategies mentioned in this article to put your attorney marketing money to work. Don't be afraid to try new things and see what works for your law firm.

Your team can implement many of these strategies, but they take time, which could be spent on other legal matters- including billable hours. If time is an issue, consider looking for opportunities to lighten the load. That includes hiring a high-performance digital marketing agency like Grow Law Firm. Grow Law Firm offers full legal marketing services—web design, SEO, and PPC management—to improve law firm marketing efforts, drive sales, increase lead generation, and enhance ROI.

Frequently Asked Questions about Law Firm Marketing Budget