Avoid These Mistakes Immediately for Your Law Firm’s Growth: A Comprehensive Guide

December 28, 2023
lawyer with megaphone

Why you need a law firm marketing budget before you create your marketing plan

I know a lot of attorneys that want billboards. Okay, that’s really wonderful. But do you know what that’s going to cost you? Do you have a budget for that? Your law firm marketing budget is going to determine how much to spend on marketing so you can acquire new clients.  That budget is a box I want you to work inside of. Don’t try to go outside of your box and spend more. Whatever that budget is, you want to stay inside of that budget spend on your law firm, don’t push that number of thinking,  “If I spend a little bit more more clients are going to come to me.” That is a fallacy in logical thinking, and it’s one that gets a lot of law firm owners in trouble.

By having a budget, you are essentially making sure that you are spending your money on the best kinds of marketing that you can afford, okay? Now, if you start feeling bad thinking your law firm budget isn’t as big as you want it to be, and blaming yourself for not generating enough revenue, I want you to understand something important.

Every single business has a marketing budget. Theirs maybe bigger than yours, but they still have a budget. Apple has a marketing budget. Google has a marketing budget, okay. Every good successful company has a marketing budget. And their goal is to stay inside of that budget. That same rule applies to you, my friend and law firm owner. You have a budget that you need to stay inside of.

And I don’t want you to go outside of that budget, because too often I see people going outside of that budget, and then guess what happens? They don’t pay themselves or they ask their employees to delay getting paid. Or worse. They start taking on bad clients (the ones who complain constantly, and suck your energy and your teams time).

law firm marketing budget at 10% of revenue

Things to avoid when it comes to your law firm spend on marketing strategies

You’ve figured out your law firm budget, you worked with your accountant, you work with your bookkeeper, you worked with your team, you worked with your partner, whoever it is, and they told you this is your law firm marketing budget.

Let’s talk about some of the mistakes that I see many law firm owners making when it comes to creating their marketing strategy.

image of a lawyer holding her head because she went over her marketing budget

Law firm marketing mistake #1: Don’t spend it all on one legal marketing strategy

Mistake number one that I don’t want you to make is I don’t want you to take your budget, whatever it is $100,000 $20,000 or even $1,000, whatever that magical number is: do not spend it on just one thing.

You would never do that in take all of your money go to Vegas and bet it all on black seven. That would be a huge mistake. Yet many lawyers end up doing that with their marketing budget.

You have a budget, you need to spend it on multiple things. Imagine this: your mom gives you $10 and you go and buy one thing, but then you look at your siblings, and they got seven little things. And now you want to play with their things, but you can’t because your mom yells at you because you had money and you spent it on your one thing.

I see this all the time, especially with people who want to invest in Facebook ads. For some reason, you all want to spend anywhere from $10,000 to $30,000 and give it over to Zuckerberg. Do you know what he’s doing with that money? He’s not spending it to help you get more clients. You don’t want to take all of your budget and spend it on one ad spend.

You want it to go across multiple marketing efforts, whatever those channels are for you. And remember, your marketing channels will depend on the type of law you practice. The marketing campaign for a personal injury law firm will be different from a family law firm versus an immigration law firm. An example of a smaller law firm marketing strategycould be: join a networking group, buy thank you gifts for referral partners, hire someone for content marketing like: social media marketing, email marketing, and maybe YouTube videos, as your balanced marketing strategy.

Whatever channels you invest in, please make sure you’re spending it on more than just digital marketing, because your target market may not be on digital channels. You may need to invest in traditional marketing outlets like magazines and sponsored live events. Let’s go to mistake number two that happen sometimes in a law firm’s marketing journey.

If you want more advice on marketing channels, you can reach out to your State or City Bar Association to see if there is a legal marketing association or chapter you could learn more from before diving in too deep.

image of computer and ppc

Law firm marketing mistake #2: Don’t ignore the data on your marketing strategies

I don’t want you to ignore the data when it comes to your marketing. Here’s what that basically means.

If you spend $2,000 a month on SEO, and you get zero clients, that is $0 revenue on marketing. You lost $2,000.  This is not successful marketing, and this is the data I want you to pay attention to.

For example, if you’ve hired an SEO team, and you’re not tracking the number of phone calls you’re getting, how will you know how many clients are coming to you from SEO? You need proper metrics from your SEO team and this is why it’s so important to hire the right SEO team. Yes, they can help you with customer acquisition marketing, but you need to make sure that you are getting an ROI from your marketing investment.

Basic rule of thumb here is: If you’re spending $2,000, you better be making at least $2,000.

As a bonus reminder please know that your marketing plan should bring in ideal clients for your law firm, or the best clients you want to work with. Because you could find less-than-ideal clients on your own, without paying for expensive marketing. Law firms that do have marketing ROI tracking do better and spend their money smarter. To do this, you cannot ignore the data that comes in from your marketing team. By the way, a good law firm management consultant will help you create a system so it is easy to track the revenue from your marketing spend.

What your law firms budget should be for marketing and your minimum marketing budget

All right, let’s get to the final point here. You’re probably wondering, Nermin, this is all great, but how much should I spend and invest in marketing for my law firm. There is a simple formula to determine your marketing budget. You should spend no more than 10% of your gross revenue on marketing.

When it comes to having a minimum budget for your law firm, you don’t need to apply the 10% rule. The 10% rule is a maximum spend amount. The minimum budget should be what is best for your law firm. I have worked with law firms that spend $0 on marketing, but they do spend time on relationships through networking groups and being on non-profit boards. It’s a question of how much you want to tradeoff between money and time. If you don’t want to spend money, then you will have to spend your time. If you don’t want to spend your time, then you will have to spend money.

How much should you spend if you have an average law firm? The 10% rule of legal marketing

Let me demonstrate the 10% rule with an example so you can better understand how much you should spend. Your marketing budget depends on your monthly gross revenue.

If your law firm, every month, makes $10,000 your law firm’s marketing budget is 10% of that, which is $1,000. Not $1,010, not $1,100, not $1,500. No, no, no, it is 10%, or $1,000 each month.

The marketing budget for a law firm that makes $3,000,000 each year, then that is a $300,000 yearly overall marketingbudget, or $25,000 each month. A $300,000 marketing budget is significant. That’s the salary of 2-3 associates combined, depending on the city the law firm is in. Now, this is not a typical law firm marketing budget, so please don’t assume that it is.

Large-sized law firms spend anywhere from hundreds of thousands to millions of dollars on marketing each year. They may not be doing social media, (can you imagine a big law partner dancing on TikTok for clients?), but they do spend by sponsoring events, hosting conferences, traveling for speaking engagements. Don’t get into a trap by comparing your marketing budget to another law firm’s budget.

You’re probably wondering what marketing agencies and what marketing methods am I going to be able to afford at $1,000 each month. And that this isn’t a realistic budget for paid advertising. You’re maybe convincing yourself to spend more than what is best for your firm. I know other consultants encourage firms to spend more, but this is not how I want my law firm clients to run their business. You can put money aside so you have a bigger marketing budget to increaseyour spend on certain marketing channels, but take your time here. There is no rush.

The creation of a budget means you will not be taken advantage of by marketing companies. Your budget should be the first thing that you calculate, before you start calling marketing agencies like SEO specialists, website developers, social media managers, etc.

That 10% needs to be 3% for SEO 2% for new website, 1% for client gifts, etc. Meaning, you will need to create a budgetto cover the cost of multiple marketing and advertising channels.

I have seen the 10% rule work for my clients who are law firms that make $200,000 each year to $20,000,000 each year. Law firms don’t need to spend beyond 10% of their monthly gross revenue. This rule works if you are a small to mid-size firm, a firm in New York, or a firm in a small city. This 10% rule is what you need to spend on marketing.

I believe that the average law firm overspends on their marketing budget and isn’t properly setting a realistic budget, but hoping that the money spent will bring in new business.

You are going to have moments where you want to spend 11% or 15% of your monthly revenue because someone. really convincing is telling you that have some magical marketing, but you need to spend 30% of your monthly revenue to get it. This person is a really good salesperson who’s trying to sell you air, basically.  Please don’t let them convince you on that.

I’m telling you this because a lot of law firm owners have come to me saying they spent more on marketing, and didn’t make any money. Stay strong. Remember your 10% budget.

lawyer with calculator

How much do law firms spend on Digital marketing and social media marketing?

In my experience, law firms tend to spend more than they should on digital and social media marketing, and smaller lawfirms tend to focus too heavily on those marketing channels.

Firms that spend more than 10% of their budget are hoping that they will get lucky with one big case, such as a personal injury law firm or an insurance defense law firm. They are banking on the volume of eyeballs that digital and social marketing channels will bring in, and hoping for the needle in the haystack that will be a large $1 million+ settlement. Personal injury law is typically an expensive type of law practice area to market for.

Remember, you can start building your budget so you can have a successful marketing campaign. But, if you are not a large law firm, you should keep your budget in mind.

Legal marketing is the start of your expenses. You will have several more expenses as a law firm owner and that’s why it’s important to have a budget for your legal marketing.

What should you do if you are a typical law firm, but your marketing spend is over budget?

As a law firm management consultant, I encourage firms to go through the following steps:

  1. Determine how much you’re spending on marketing right now. It helps to go through your bank statements for at least the previous 3 months. Oftentimes, we forget the little things we are paying for so we can market, e..g, Planoly, or Later, or another platform or service provider.

  2. Make a list of these expenses and put them into marketing buckets or categories, i.e., YouTube, Instagram, Local Magazine. For example, if a graphic designer charged you $300 for a print ad in a local magazine, that’s where you would put that expense.

  3. Look at your average monthly revenue for the previous 6 months. Not the previous year. You may have data skews this number. For instance, if you had a big case settle 10 months ago, this will make your 12 month revenue bigger than the last 6 moths. Then take that monthly revenue to determine your 10% budget for marketing.

  4. This will be start of your law firm’s new marketing budget, and you will stick to this budget.

  5. Then, go through and figure out which marketing channels you were spending money on in #2, and cancel those services. If you spent $900/month on a social media manager, and in the last 6 months you have almost no engagement (likes, comments, DMs), and no clients, then cancel that contract and service provider. You can always start it back, but focus on staying in your budget.