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 unfamilar 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 marketing 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 at minimum is healthy.
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 in and the competition that creates within the market.
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 for lawyers returns the highest ROI with the most sustainable long-term results. 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 and not 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 off, 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. 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.
Nearly 87% of law firms reported they had a website in a 2020 ABA survey, but solo attorneys still lag behind with only 59% of solo attorneys 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 and SEO work hand-in-hand and usually fit into your 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 actual clients
The content you create should always provide value to your target clients by answering their questions and explaining things clearly.
Recommended Content Marketing Budget: Minimum of $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 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. When someone clicks your ad, you pay.
On many social platforms, you pay per impression—how many times your ad gets shown to them 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 platform as long as possible. Invest in content that aligns with that goal and you'll be 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 does still have a place in an attorney's marketing budget even if the primary focus is on digital marketing. Some traditional law firm marketing strategies are very effective when they work alongside digital marketing campaigns.
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
- Sponsoring community events
In many cases, you're investing more time than you are money with traditional marketing methods. Make sure you track this time.
Developing a Law Firm Marketing Budget
To calculate a marketing budget for your law firm you need to sit down and figure out a few key figures or use industry benchmarks if you don't have enough data to draw on.
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 to get an LTV:CAC ratio of 5:1 minimum. A lot of advice around the web recommends 3:1 but that's because they're 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 that to your director of marketing and expect them to know what to do.
You need to break it down in 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 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 wining 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.
Have Clear Marketing Goals
In order to achieve success with your law firm marketing plan, a few things must happen.
First, you need to know what your goals are 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're going to make the market aware that you exist and stay top of mind whenever the time comes that 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.
Kickstart Your Digital Marketing Plan Now
There's a lot to think about including in your attorney marketing plan, but if you find you need some extra help when it comes to 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.