The first time you develop a documented marketing budget for your law firm should occur when you're building your marketing plan.
That being said, your marketing budget won't be static.
Most law firms determine their marketing budget on a yearly basis, but quarterly is okay if you're just getting started or undertaking new and unfamiliar initiatives.
For example, let's say you're tackling branding for the first time or a major website overhaul on a new platform—budgeting quarterly will give you enough flexibility to take action, evaluate progress, and adjust accordingly.
How Much Do Law Firms Spend on Marketing?
Our data shows law firms that spend at least $10,000 per month on a marketing budget get the best results. The Small Business Administration recommends spending 7-8% of your company revenue on marketing.
This is a reasonable amount for established firms that have little room for expansion and growth. For law firms looking to grow and capture more of their market, 10-12% of gross revenue is healthy at minimum.
The right amount to budget depends on the size of your total addressable market (TAM) though. Things like the type of law being practiced, location, number of employees, and growth goals are all things to consider.
For example, personal injury firms need to spend more than family law firms to grow due to the value their cases bring and the competition they create within the market.
Understanding Return on Investment (ROI) in Legal Marketing
When it comes to law firm marketing, understanding your return on investment (ROI) is crucial for maximizing the effectiveness of your budget. Simply put, ROI measures the profitability of your marketing efforts by comparing the revenue generated against the costs incurred. It allows you to identify which marketing channels and strategies deliver results and which ones might be draining your resources without yielding significant returns.
Calculate Your Marketing ROI
The first step in gauging your marketing ROI is to implement proper tracking mechanisms. For instance, if you invest in a pay-per-click (PPC) campaign, use specific tracking links or landing pages to monitor how many leads come from that particular effort. A simple formula to calculate ROI is:
ROI=(Revenue from Marketing−Marketing CostsMarketing Costs)×100ROI=(Marketing CostsRevenue from Marketing−Marketing Costs)×100
For example, if your law firm spends $10,000 on marketing and generates $50,000 in new business from those efforts, your ROI would be 400%. This kind of insight can help you make informed decisions about where to allocate your budget for maximum impact.
Analyze Different Marketing Channels
Not all marketing channels will yield the same results, and that’s perfectly normal. Each channel has its strengths and weaknesses, depending on your target audience and practice area. For instance, social media may excel in brand awareness but might not directly convert leads like a well-structured email campaign.
By analyzing the performance of various channels—whether it's SEO, paid ads, social media, or traditional marketing—you can adjust your spending accordingly. Don’t hesitate to pull back on channels that aren’t performing well and reallocate those funds to more effective methods.
Continuous Monitoring and Adjustment
Marketing is not a "set it and forget it" endeavor. Continuous monitoring is required to adapt to changing market conditions and consumer behavior. If you notice that a particular campaign is underperforming, don’t hesitate to pivot. This could involve tweaking your messaging, adjusting your target audience, or even testing different platforms.
Creating an effective legal marketing budget also involves setting clear, measurable goals. For example, if your objective is to increase client consultations by 20% over the next quarter, you need to outline specific strategies and budget accordingly. This not only provides a benchmark for success but also a clear framework for measuring your marketing ROI.
What Marketing Channels Should Law Firms Budget For?
The best marketing channels law firms should invest in are SEO, organic social, and paid search. SEO returns the highest ROI and the most sustainable long-term results for lawyers. Paid search (e.g., Google Ads) returns the quickest results and marginal ROI.
Good marketing channels should return a 5:1 ROI. Figuring out which channel is the best for your firm can take time to figure out if you're testing them out on your own.
You can ask your peers, but be specific with your questions. Most firms think they know what channels are working best based on a hunch rather than real data. Keep that in mind.
There are several options you can invest in:
- website design
- search engine optimization (SEO)
- content marketing
- paid advertising
- social media marketing
- traditional marketing/advertising
Website Design & Development
First, your website isn't really a marketing channel where you generate demand—it's a destination where you capture demand generated from marketing channels.
That being said, you should always start by investing in your website and factoring design and development costs into your marketing budget. If your website doesn't provide a good experience that helps potential clients convert, you'll lose a ton of case opportunities in what we call lead leakage.
In a 2020 ABA survey, nearly 87% of law firms reported having a website, but solo attorneys still lag behind, with only 59% using a website for marketing purposes.
Investing in a good website that is optimized to make you money isn't cheap. Many vendors just do design and development when what you really need is that, plus brand positioning, messaging development, copywriting, conversion rate optimization, and a seamless user experience.
If you just want a website that looks pretty and acts as a fancy billboard that people see but doesn't convince people to hire your firm, then a budget of $5,000–$25,000 is a good range.
Recommended Budget: $50,000–$100,000 for full design, audience research, positioning, messaging, copywriting, and development. Ongoing conversion rate optimization would typically be scoped separately.
Search Engine Optimization (SEO)
Budgeting for law firm SEO varies depending on the results you want to get. There are plenty of agencies that charge $2,500 to $5,000 per month for SEO.
You get what you pay for.
If you're in a hypercompetitive niche of law like personal injury, you should budget at least $10,000 per month for SEO if you want to get any meaningful results.
Content Marketing
Content marketing and SEO work hand-in-hand and usually fit into your law firm marketing budget together as a result. Content marketing involves the development of written materials designed to help reach new leads in your target market.
Good content can:
- Help you rank for more keywords and get more traffic to
- Create natural link-building opportunities
- Help you convert more viewers of your website into new clients
Your content should always provide value to your target clients by answering their questions and explaining things clearly.
Recommended Content Marketing Budget: Most successful law firms spend at least $10,000 per month (as a part of SEO). Large firms dominating their markets are spending well over $75,000 per month to generate 8 and 9 figures of revenue per year.
Paid Advertising
Paid law firm advertising is not a new concept for most lawyers with an online presence. It includes Google Ads, both pay-per-click and pay-per-lead, as well as social media ads. These pay-to-play ads often charge you based on a bidding system.
With Google Ads, the highest bidder with the best quality score gets the top position. You pay when someone clicks your ad.
On many social platforms, you pay per impression—the number of times your ad is shown to users in a feed, during a YouTube video, etc.
Some lawyers get quick results with paid advertising, but the leads (and cases) dry up the moment you stop spending money on them.
Most firms using paid channels like Google Ads spend a minimum of $2,000 per month to reach audiences this way. Large successful firms have monthly digital ad budgets in the five and six figures.
Social Media Marketing
Social media platforms want users to stay on their platforms as long as possible. Investing in content that aligns with that goal will put you in good shape.
Cater your content to the platform. Video performs well across nearly every channel. TikTok and YouTube shorts are major opportunities currently (circa fall 2022).
You'll want to invest in hiring the right people who really understand social media and people, as well as someone who's good at editing videos. Expect to spend around $100K per year at a minimum for the right mix of talent.
Additionally, be prepared to invest your own time in providing the subject matter expertise needed for this type of content.
Traditional Marketing
Traditional marketing can still have a place in your law firm marketing budget, even if the primary focus is on digital marketing. Some traditional legal marketing strategies are very effective when they work alongside digital marketing efforts.
Traditional marketing might include things like:
- Speaking at industry conferences when many of your prospective clients are in attendance
- Attending local networking events
- Word of mouth
- Referrals
- Sponsoring community events
With traditional marketing methods, you often invest more time than money. Make sure you track this time.
How to Calculate a Law Firm Marketing Budget
To calculate a marketing budget for your law firm, you need to determine a few key figures or use industry benchmarks if you don't have enough data.
At a high level, your primary goal is to generate revenue from clients three times the amount it costs you to acquire them. If you can achieve that, you have a healthy business that you can viably grow.
The revenue you generate from a client is called lifetime value (LTV).
The amount it costs you to acquire a client is called customer acquisition cost (CAC).
As such, you want to aim for a minimum LTV:CAC ratio of 5:1. A lot of advice around the web recommends 3:1, but that's because it's talking about software companies backed by venture capital—not law firms footing the bill themselves.
Calculating LTV to CAC Ratio
It's easy enough to say your goal is a 5:1 LTV to CAC ratio. But you can't just tell your director of marketing that and expect them to know what to do.
You need to break it down by abstracting it back to terms they can understand.
LTV: To calculate LTV you just take the average amount your clients pay you multiplied by your gross margin divided by your churn rate.
Depending on what type of law firm you have, churn may not seem like it applies to you because you don't see yourself as having recurring revenue (e.g. personal injury law firms). If that's the case, then your churn rate is technically 100%.
CAC: Calculating CAC is where things get a bit messier. It's okay if you don't have every single number here; you can use estimates when first doing this to get a rough idea of where you're at.
To calculate CAC, you need to take the amount you spend on marketing and add it to the amount you spend on sales. You can call each of these Marketing CAC and Sales CAC, respectively.
Your Marketing CAC is the sum total you spend on salaries, agencies, tools, and ad spend. Some folks like to focus on things like cost per click or cost per conversion—these are vanity metrics for the most part.
Cost per click is how much you spend each time someone clicks on your ad. It doesn't tell you how much you spent to get that person to contact you—that's the cost per conversion.
The problem with cost per conversion with how most marketers (and agencies) calculate it is that it's not necessarily a revenue-generating conversion.
If you focus on those, you'll end up optimizing for the wrong things and find yourself with a low CPC but a ton of low-quality leads that waste you and your attorney's time.
The amount you spend on sales is typically comprised of two to three things depending on the type of firm you run.
For personal injury law firms, take the amount you spend following up with potential clients up to the point where they sign an agreement to hire your firm (both salaries and software) plus the amount of time you spend doing free consultations multiplied by your hourly rate.
If you have multiple people handling follow-ups and free consultations, take your cost for each of them and divide it by the number of employees/partners involved. Then take that quotient and divide it by the number of new clients you sign each month divided by the number of employees/partners involved.
Note: The same applies to firms that sign long-term retainers with the addition of anything you spend on business development, winning, and dining prospects.
With these numbers, you can now divide your LTV by your CAC. If your number is greater than 5, you have a healthy business that you can rely on to be profitable.
However, if your LTV: CAC ratio is greater than 7, you're probably not spending enough on marketing if growth is your goal.
Keys to a Successful Marketing Strategy
In order to achieve success with your law firm marketing plan, a few things must happen.
First, you need to know your goals so that you can clearly measure your success (e.g., an LTV to CAC ratio greater than 5).
Second, you have to decide who your audience is. If you believe your audience is "everyone" or "anyone who gets hurt in an accident", you're going too broad and will face an uphill battle differentiating yourself from every other law firm barring those who are already at the top of their market.
Lastly, you need a clear plan for how you'll make the market aware that you exist and stay top of mind whenever they need your services.
Here are some great short-term goals to frame up in your marketing strategy:
- Create three high-quality, SEO-driven articles based on important keywords
- Create marketing messages for social media ads campaign
- Finalize logo refresh with new design
Longer-term goals, however, require the completion of multiple short-term goals. For example, your long-term goal might be to rank on page one of Google for five priority keywords.
Fine-Tuning Strategies with Analytics
In the legal industry, it’s no longer enough to throw money at ads and hope for the best; a strategic, analytical approach will empower your firm to make informed decisions, refine your marketing strategies, and ultimately drive better results.
Data analytics tools enable you to monitor the performance of your marketing efforts in real time. With access to comprehensive analytics, you can track various metrics such as website traffic, conversion rates, lead sources, and client engagement. This information acts as a treasure trove of insights that can help you determine which marketing initiatives are successful and which areas need improvement.
For example, if you notice that a specific PPC campaign is generating a high volume of clicks but a low conversion rate, it might be time to rethink your targeting parameters or the landing page design. On the other hand, if a blog post consistently drives traffic and engagement, you may want to enhance that strategy by promoting similar content or increasing your investment in keyword-targeted ads.
Once you have the data at your disposal, the next step is to fine-tune your marketing strategies. Here’s how to effectively use analytics to optimize your budget allocation:
Use the Right Tools
Invest in robust SEO and analytics tools such as Google Analytics, SEMrush, or HubSpot that provide detailed insights into your marketing performance. These platforms can analyze traffic sources, user behavior, and even the demographic characteristics of your audience. By taking advantage of these tools, you not only gain clarity on your marketing efforts but can also spot trends over time.
A/B Testing for Optimization
When deploying various marketing strategies, A/B testing is a powerful method to determine what resonates best with your audience. By running two versions of an ad or landing page, you can analyze which performs better based on your set KPIs. This approach allows you to allocate your budget toward strategies that yield the highest ROI.
Measure Long-term Impact
Sometimes, the effects of marketing efforts may not be immediately visible. Utilize tracking tools to measure the long-term impact of your campaigns, especially for content marketing efforts. Look at metrics like returning visitors and engagement levels over time to determine how well your content continues to drive awareness and retain existing clients.
Common Pitfalls in Creating a Law Firm Marketing Budget
Creating a marketing budget for your law firm can feel overwhelming, especially when you're trying to juggle various strategies and track potential returns. It's easy to fall into common traps that can undercut your marketing efforts and drain resources without delivering results. Here are some of the most frequent missteps in law firm marketing budgeting:
1. Neglecting to Set Clear Goals
One of the biggest pitfalls is failing to establish clear, measurable goals for your marketing efforts. Without defined objectives, you risk directing your budget toward tactics that may not align with your firm’s growth strategies. For example, if your goal is to increase client consultations by 30% over the next quarter, every dollar spent should be geared toward activities that contribute to that target.
2. Underestimating Digital Marketing Costs
Whether it’s pay-per-click ads, search engine optimization, or content creation, the expenses can add up quickly. Without a detailed understanding of these costs, you may find yourself unprepared to sustain your digital marketing efforts over the long term.
To avoid this pitfall, conduct thorough research on the costs of each digital channel. Break down your expenses and ensure you allocate your budget accordingly to cover ongoing efforts, not just short-term campaigns.
3. Focusing Solely on Immediate Results
Many law firms prioritize marketing tactics that promise quick returns, but this narrow focus can inhibit long-term success. While PPC advertising can deliver immediate traffic to your website, it’s not sustainable on its own. If your budget is exclusively tied up in short-term tactics, you may miss out on the broader benefits of content marketing, social media engagement, and relationship-building that can create lasting client relationships.
Instead of solely chasing short-term gains, aim for a diverse marketing strategy that encompasses both immediate-win tactics and long-term brand-building efforts.
4. Failing to Track and Analyze Performance
Without proper tracking and analysis, it’s challenging to understand the effectiveness of your marketing initiatives. Relying solely on anecdotal evidence of success can lead to misallocation of funds. Another common mistake is not using analytics tools to assess what is working and what isn’t.
Collect data from your marketing efforts regularly—monitor website traffic, lead conversions, and overall engagement. Analyzing performance will help you make data-driven decisions to reallocate your budget where it’s needed most.
Kickstart Your Digital Marketing Plan Now
There's a lot to think about including in your attorney marketing plan, but if you need some extra help figuring all of this out, we're here to help.
We're experts in law firm marketing and know how to help you and your firm grow.
Contact one of our experts if you have any questions on how we can help you generate more cases with a higher ROI than what you are getting from Google Ads.
