How much should a law firm spend on marketing?

How much should a law firm spend on marketing in order to get results? Where should you start? And what on earth does a marketing spend cover?

Law firms can spend (on average) anywhere between 0.5-5% of their total yearly revenue on marketing. The common marketing costs include management of employees or agencies, tools and subscriptions as well as the media spend on adverts.

First let’s clarify what we mean by “results”.  This simply means a return on investment.

A return on investment means how many case-opens and paying clients you get from your marketing spend.  That’s right, marketing is about selling your services and getting you more paying clients.

Close your eyes and have a think...

How much do you think a small to medium sized business would spend on their marketing as a percentage of yearly revenue?

That was fun wasn't it... what was the answer?

In 13 years of working with businesses on their marketing, the average marketing spend has been anywhere between 0.5% and 5% of overall revenue. Though this varies dramatically by industry.

Retailers and startups are keener to spend more (remember this is just based on my experience of working in different sectors).

The latter often have funding or investment for marketing purposes and the former operate in a competitive industry, where a fast turn around of marketing campaigns is vital. 

Luckily for law firms, the buyers we are targeting are slightly less impulsive than the retail industry, though still have a very urgent need for your services in most cases.

What does a marketing spend mean? 

It's important to establish what marketing costs are and where you might spend the money.

To keep it simple, marketing spend falls into three areas:

So how much should your law firm spend on marketing?

I'm going to share with you some stats from some of the legal clients we work with. These should help you to get an indication of the results you might expect (I've given more detail about what each column means under the table). 

Results are taken as a monthly average in the UK and this table refers specifically to spend on adverts online. 

• Google Ads includes the Google search network, Google display network and Youtube
• Social media includes Facebook and Instagram
• Monthly cost is is the amount spend on the ads either per click or per 1000 people who saw them (CPM)
• Avg. Monthly CPM is the cost per 1000 people seeing an ad
• Avg. Monthly CPE is the cost per engagement, either a click, video view or interaction with a social media post
• Avg. Enquiry Cost is the total amount spent divided by the number of enquiries. Please note, in most cases telephone enquiries were not tracked so this figure is likely to be lower than the total number of enquiries when phone calls are also taken into consideration.

Find out how to get legal clients.

Deciding what to spend on ads

So from the data above you might expect that investing £250 per month in Google Ads as a starting point could result in anywhere between 5-13 relevant enquiries (depending on the service you are trying to promote and how well your ads campaign is put together.)

The beauty of digital marketing is that it is scalable (both up and down).

You can adjust budgets daily, hourly or as often as needed based on real-time data to enable you to get more results for your money.

So you can invest more in what is working - and make decisions on anything that is not performing. 

We recommend starting off with small spends when it comes to advertising channels and then increase them gradually as they work.

I always advise clients who have never tried Google Ads campaigns before to start off with at least £250 per month. Particularly as Google often offers new accounts free credit of up to £120 per month. Find out more here. 

After a month you should have a clear idea of how much you've spent, where you spent it and what your return on investment was.

Check out how to promote your law firm online for more detail on average timescales for results.

Your approach might look something like this:

This can cost anywhere between £3000 and £15,000 per month if employing someone directly. Or as little as £500 - £2000 if using an agency who know what they are doing. 

What should your law firm's marketing spend be?

The formula for deciding how much to spend on law firm marketing is actually quite straightforward.

Take any of your services, say for example personal injury.

Calculate what the average cost for an ideal personal injury case would bring to your law firm.

Then calculate what percentage of that ideal cost you would be prepared to spend on getting that client in the first place.

So for example if you're able to take 15% of a client's compensation award as your legal fee then you can quickly see how spending a fraction of that upfront on a marketing campaign to get that client in the first place was cost-effective.

Of course with services like civil litigation, it could be a year or two (at least) before you are paid for your work with that client - so you want to be aware of cashflow. 

Making sure you get a return on your marketing spend

Take the total cost of the management of your marketing department + the cost of any media and subscriptions and then divide that by the total number of enquiries that come in each month. 

This gives you the total cost per enquiry for your marketing spend.

You can then calculate what % of those enquiries lead to case opens. 

How to Create a Law Firm's Marketing Budget

Creating an effective marketing budget for your law firm involves several steps, but with a clear plan, it can set your firm on the path to attracting new business and retaining existing clients. Here’s a simple guide to get you started:

Step 1: Assess Your Firm's Financials

• Firm's Gross Revenue: Start by looking at your firm's gross revenue. Typically, legal firms allocate between 2% to 10% of their gross revenue to marketing efforts. This range can vary depending on your firm’s size and goals.

Step 2: Define Your Marketing Goals

• New Business vs. Existing Clients: Determine whether your primary goal is to attract new clients (acquisition marketing) or retain and engage existing clients. This will influence how you allocate your budget.
• Digital vs. Traditional Efforts: Decide how much to invest in digital marketing efforts like social media and search engine optimization versus traditional advertising methods.

Step 3: Research Industry Standards

• Benchmark Against Other Law Firms: Look at what other law firms in your area or practice are spending. This can provide a helpful benchmark as you plan your budget.
• Consult a Legal Marketing Budget Guide: These guides can offer detailed insights into typical expenses and effective strategies specific to the legal industry.

Step 4: Identify Key Marketing Activities

• Digital Marketing: Allocate funds for a high-quality website, SEO, and social media campaigns to enhance your online presence.
• Content Creation: Invest in creating valuable content such as blog posts, videos, and client testimonials to establish your expertise.
• Advertising: Plan for law firm advertising through Google Ads, social media ads, and possibly even local media outlets.
• Networking and Events: Include budget for attending or hosting industry events, which can be crucial for building relationships and gaining referrals.

Step 5: Monitor and Adjust

• Track Performance: Use tools like Google Analytics to monitor the effectiveness of your marketing campaigns. Keep an eye on metrics like website traffic, lead generation, and client acquisition.
• Stay Flexible: Be ready to adjust your budget based on what’s working and what isn’t. Marketing is an ongoing journey, and flexibility is key to success.

Sample Budget Breakdown

• Small Law Firm: A small law firm might start with a modest budget of £10,000 - £50,000 per year, focusing primarily on digital marketing efforts.
• Mid-Sized Firm: Mid-sized firms could allocate £50,000 - £150,000, incorporating a mix of digital and traditional marketing channels.
• Large Firm: Larger firms might invest £150,000 and above, using comprehensive strategies that cover multiple marketing activities.

By carefully planning and consistently reviewing your marketing budget, your law firm can navigate its marketing journey effectively, ensuring you attract new clients and nurture existing ones along the way.

Review Previous Marketing Budgets and Expenses

Before setting your new marketing budget, it’s crucial to review and analyse past marketing budgets and expenses. Begin by gathering data from your firm's previous marketing campaigns and assessing the return on investment (ROI) for each campaign. Look closely at which strategies and channels delivered the best results and which ones underperformed.

Financial Statements

• Detailed Breakdown: Ensure you have a detailed breakdown of past marketing expenditures. This should include all costs associated with digital marketing, traditional advertising, event sponsorships, content creation, and any other relevant activities.
• Categorise Expenses: Group your expenses into categories such as digital marketing, print advertising, events, and so on. This will help you spot trends and see where most of your budget has been allocated over time.

Campaign Performance

• Key Performance Indicators (KPIs): Identify the KPIs used to measure the success of each campaign. Common KPIs include cost per lead, conversion rate, new client acquisition cost, and overall ROI.
• Analyse Results: Compare the cost of each campaign with the results achieved. This analysis will help you understand which marketing activities are providing value and which ones may need to be reconsidered.

Areas for Improvement

• Underperforming Campaigns: Identify campaigns that did not meet expectations. Investigate why these campaigns underperformed and whether the issues were due to budget constraints, targeting, messaging, or other factors.
• Successful Strategies: Highlight strategies that exceeded expectations. Understanding what worked well can inform future marketing efforts and budget allocation.

Adjust

• Reallocate Resources: Based on your analysis, reallocate resources from underperforming areas to those that have proven to be more effective. This ensures that your budget is being used as efficiently as possible.
• Set Realistic Goals: Ensure that budget adjustments align with your firm’s current marketing goals and overall business objectives.

Monitoring and Reporting

• Regular Reviews: Schedule regular reviews of your marketing spending and campaign performance. This allows you to make necessary adjustments promptly.
• Transparent Reporting: Maintain transparent reporting procedures within your team to keep everyone informed about budget allocations and performance metrics.

By thoroughly reviewing past marketing budgets and expenses, your law firm can gain valuable insights that will shape a more effective and efficient marketing strategy moving forward. The objective is to maximise the impact of your marketing efforts while maintaining financial prudence.

Common Marketing Mistakes to Avoid

1. Overlooking Target Audience

One common mistake law firms make is not clearly defining their target audience. Without a well-defined target market, your marketing efforts may be misdirected, leading to wasted resources and lower engagement. Ensure you understand the demographics, needs, and preferences of your ideal clients. Tailor your marketing messages and campaigns to resonate with this audience for maximum impact.

2. Neglecting Online Presence

In today’s digital age, an outdated or non-existent online presence can significantly hamper your marketing efforts. Ensure your website is modern, user-friendly, and optimised for search engines (SEO). Regularly update your site with high-quality content that addresses common client concerns and highlights your expertise. Additionally, maintain active and professional profiles on social media platforms relevant to your practice.

3. Inconsistent Branding

Consistency in branding across all marketing channels is crucial for building recognition and trust. Inconsistent use of logos, colour schemes, and messaging can confuse potential clients and dilute your brand identity. Develop a comprehensive brand guide that outlines your firm’s visual and verbal identity, and ensure all marketing materials adhere to this guide.

4. Ignoring Data and Analytics

Failing to utilise data and analytics is another common mistake. Data-driven insights can guide your marketing strategy, helping you understand what works and what doesn’t. Use tools like Google Analytics to track website traffic, user behaviour, and conversion rates. Regularly review these metrics to adjust your campaigns and improve their effectiveness.

5. Underestimating the Power of Networking

Many law firms underestimate the value of networking and attending industry events. Building personal connections can lead to referrals and new business opportunities. Invest time and resources in attending conferences, legal forums, and local business events. Also, consider hosting your own events to establish your firm as a thought leader in your field.

Where to Allocate Law Firm Marketing Budget

Allocating your marketing budget wisely can make a big difference in attracting potential clients and growing your law firm. Here are five key strategies to consider:

Create a Law Firm Website

• Why It's Important: Your website is often the first point of contact with prospective clients. A professional, user-friendly site can significantly boost your firm's online presence.
• Budget Allocation: Invest in quality website development and design. Ensure it's mobile-friendly and optimized for conversions, like easy-to-find contact forms and clear calls to action.
• Who Should Do It: You might work with a specialized legal marketing agency or a dedicated web developer experienced in creating law firm websites.

Find out more about law firm website design.

Develop Paid Advertising Methods

• Why It's Important: Paid advertising, such as PPC advertising, can quickly drive targeted traffic to your law firm's website.
• Budget Allocation: Set aside a portion of your marketing dollars for digital advertising on platforms like Google Ads and social media advertising. This is particularly useful for personal injury law firms looking to attract potential clients.
• Who Should Do It: Whether you handle it in-house or hire a marketing agency, ensure you regularly monitor and adjust your campaigns for optimal performance.

Find out more about PPC marketing for lawyers.

Leverage Search Engine Optimization (SEO)

• Why It's Important: SEO for solicitors helps your website rank higher in search engine results, making it easier for potential clients to find you.
• Budget Allocation: Invest in ongoing SEO efforts, including keyword research, content optimization, and backlinking. This is crucial for maintaining a strong online presence over time.
• Who Should Do It: Consider hiring a legal marketing agency specializing in SEO to manage this complex and ever-evolving field.

Create Legal Content Marketing Strategies

• Why It's Important: Content marketing establishes your firm as an authority in the legal industry, attracting and engaging prospective clients.
• Budget Allocation: Allocate funds for creating high-quality blog posts, articles, videos, and infographics that address common legal questions and issues.
• Who Should Do It: You can manage this in-house if you have a skilled marketing team, or outsource to content specialists familiar with the legal sector.

Start an  Email Marketing Campaign

• Why It's Important: Email marketing is a cost-effective way to nurture relationships with existing clients and reach out to prospective clients.
• Budget Allocation: Invest in a good email marketing platform and create compelling, personalized email campaigns.
• Who Should Do It: This can be managed by your marketing department, or you can work with a marketing agency to craft and execute effective campaigns.

Balance the Budget

• For Smaller Law Firms: Focus on cost-effective strategies like SEO and content marketing. These efforts can provide long-term benefits without requiring a large initial investment.
• For Mid-Sized and Bigger Law Firms: A well-rounded approach that includes substantial investments in paid advertising and a sophisticated website can help dominate your market.

By strategically allocating your law firm marketing budget across these essential areas, you'll ensure that your marketing initiatives are both effective and sustainable, helping to attract potential clients and foster business development.

If you’d like help with your marketing strategy or understanding more about costs vs. results, get in touch and we can point you in the right direction. Contact us here.