How to Strategically Manage Your Law Firm’s Marketing Budget Amid Uncertainty
Originally published by The Mid-Market Report on Oct. 5, 2020
As society finds its way among a transformed professional framework and upended business plans in a COVID-19 world, law firms must re-evaluate their plans for building intrinsic value. Strategic law firm marketing budgets create opportunities for growth that go beyond simply attaining the status quo to positioning law firms for long-term success.
CFOs, executive committees, and other law firm leaders confront the dilemma of how to promote their services at a time when personnel and technology are under heightened pressure to perform, while revenues and budgets are in flux.
Industry experts address fundamental issues and questions that executive committees need to tackle for their law firm marketing budgets.
“There’s not much point in talking about what the legal market is going to look like in 5, 10, or 15 years because everything is up for grabs now. There is so much uncertainty. We have an entirely new playing field,” said Jordan Furlong, a legal analyst, futurist, and Principal of Law21. “There’s a lot of data that we don’t have in front of us to be able to make accurate forecasts. It is an entirely new ballgame. A lot of us must reset our expectations, goals and priorities for what we’re going to do now, and in the months and years that are going to follow. Since there is so little data available, we have to focus on the essentials.”
“Strategically, managing the law firm’s budget amid uncertainty, such as a pandemic, means being willing to prioritize. In order to prioritize, you must understand your client’s needs and your firm’s services and operations,” said Rudy Aguilar, managing member of McGlinchey Stafford PLLC. “We learned a great deal from the Hurricane Katrina disaster in 2005 and then again from the economic downturn in 2008. We’ve taken that experience and applied it to the 2020 pandemic, prioritizing our budget, re-allocating investments, and working to ensure a solid future for the firm.”
Marketing Budget Hindsight in 2020
Business and law firm leaders alike feel an initial inclination to cut budgets associated with marketing amid a pandemic. History has revealed, however, that companies can achieve a long-lasting increase in business development and market share when they maintain their branding, marketing, and business development efforts and, in certain cases, adjust their messaging to meet clients in today’s market.
“If I was down to the last dollar of my marketing budget, I’d spend it on PR,” Microsoft co-founder Bill Gates has famously said.
Statistics show that law firm growth by headcount directly correlates to investment in marketing spend.
“There are many hidden costs to cutting a law firm’s marketing budget, even in an economic downturn,” said Jasmine Trillos-Decarie, Chief Client Officer of Lathrop GPM LLP. “They include everything from less thought leadership, media coverage and speaking opportunities, to out-of-date technologies and CRM systems. In addition, attorneys who rely on internal marketing and business development resources will easily be frustrated by the need to do it themselves, which takes away from the practice of law.”
During a Legalweek 2020 session, “Creating a Recession-Proof Legal Marketing Plan,” ALM Vice President (Legal Market Leader) Keith Edwards presented MediaRadar statistics identifying that the 25 fastest-growing firms’ averaged a $511,243 media spend in the four-year period from 2016 through 2019, averaging $127,810 annually. “Most high-growth firms keep investing in their brands,” he said. While Edwards’ point was made pre-pandemic, it still holds true in Q4 2020.
In building effective marketing budgets for the immediate term, it is essential to look back to previous economic downturns to learn from mistakes that stymied firm growth.
“One of the great lessons from the 2008-2009 recession is that too many short-term decisions impaired law firms’ abilities to thrive in the long term,” said Tim Corcoran, principal at Corcoran Consulting Group, LLC. “It’s important for law firm leaders to balance what they need to do to make sure that they’re open for business tomorrow and to survive this new way of working as a result of the pandemic. We also have to be ready to retool for the long-term.”
Part of long-term survival is understanding that we are forging a new path for law firms, one that does not necessarily mirror the one we followed before COVID-19.
“The magnitude of what’s going on now has proven that we won’t go back to the way it was. Several things will continue to stay changed. That can be very positive for individual lawyers, for the law firms they work with, for the clients they serve, for the court system, and for the marketplace as a whole,” Corcoran said.
Strategic budgeting questions law firms should be asking themselves are:
- Are we cutting costs in certain areas that can be reinvested?
- Will we continue to have work-from-home opportunities that allow us to cut office space costs?
- Is a building lease coming up for renewal?
- Are there technology must-haves that enable us to remain competitive?
- Do we have the right talent in-house to support our attorneys’ business development needs?
Evaluating these and other questions with a critical eye toward a strategic marketing budget can allow a portion of those recovered funds to be re-allocated as part of the firm’s revenue to reinvigorate marketing, communications, and business development.
“When evaluating previous budget items, a budget cut is your friend, because it removes lower-value items that previously cost time and energy,” said Allen Fuqua, principal of Allen Fuqua Strategies, during a Legal Marketing Association (LMA) webinar, “Tackling the Marketing Department Budget Like a Pro.” In developing an effective marketing plan, he suggests first budgeting for the “most important, strategically aligned groups and activities,” which creates a key opportunity for the marketing department to best elevate its value to the firm.
“While courts were closed and the nation on lockdown, we focused on providing our clients with thoughtful and needed webinars that would answer their pressing questions during the pandemic,” said Aguilar. “Rather than cut our marketing activities, we doubled-down, making sure that our clients had access to all the information and counsel they needed to get through the pandemic.”
According to Aguilar, since January 2020, McGlinchey Stafford has:
- Launched a new website,
- Created a COVID-19 (Coronavirus) Resource Center addressing essential issues ranging from credit reporting and the Coronavirus Aid, Relief, and Economic Security Act (CARES) to employment law and Fair Credit Reporting Act (FCRA) enforcement, and
- Launched its podcast, more with mcglinchey.
Other ongoing investments focus on technology upgrades, diversity and inclusion training, and relationship development training for laterals.
Since traditional means of interacting with clients have been removed due to the pandemic, law firms must invest in business development, strategic marketing, and public relations. And they need to leverage those resources.
Identify and implement novel, varied, and creative ways to engage, inform, and interact with clients, both socially and substantively.
Ensure a consistent law firm presence in key industry and news outlets to stay top of mind with clients, prospects, and lateral hires.
Promote the work that you currently have and the types of matters you are handling so that clients and prospects experience your value proposition.
The time is now. Make the most of it.
Part II: Law firm Marketing Budgets – Planning with a Clean Slate
Originally published by The Mid-Market Report on Oct. 26, 2020
Too often, law firms approach the strategic budgeting process by making minor tweaks to the previous year’s budget. 2020 brings a crystal-clear opportunity to wipe the slate clean and start fresh.
Executive committees at firms should address both internal and external factors when strategizing these nine budget categories:
- Institutional expenses. Which are the non-negotiables for your firm’s historical budget, and should those items still be non-negotiable?
- Type of practice. Has the economic downturn changed your firm’s areas of focus, or has it created opportunities to enter practices previously not explored? The practice areas on which your firm focuses will dictate marketing spend on items such as advertising, programming and events, travel (or lack thereof), memberships, professional development, and public relations.
- Profitability. Based on the industry groups or practice areas your firm has identified as profitable within this changed environment, it is prudent to prioritize those services when allocating the marketing budget. This may be the time to consider which services or practice areas the firm should shed – or keep inactive – to allow funds to be more effectively spent.
- Geography. Where are your staff and clients located? Local or country-specific regulations will likely have materially changed the degree of impact of certain items in your marketing budget. If your firm focused on public-facing advertising, for example, decreased commuter traffic may render airport ads or billboards ineffective. Likewise, many firms formerly dedicated significant marketing budget resources to large-scale client conferences and events. Now, prohibitions on large in-person gatherings have forced firms to rethink how to recapture a similar audience. And while I remain optimistic, my gut says that in-person conferences won’t begin anytime soon, so be sure to consider the alternatives.
- Technology. The need for increased access to efficient and effective technologies during the pandemic was felt in all sectors, including legal services. A prioritization of marketing budgets may include various technologies. It is time to evaluate your practice management software, competitive intelligence technologies, CRM systems, marketing tech, cybersecurity technologies, and every other technology that affects client service. The industry has leapfrogged 10 years ahead of itself, just about catching up with other service industries, because of the pandemic. Keep the momentum going. Invest in tech.
- Industry focus. Examine the industries in which your most important clients operate. Which unique challenges or opportunities relating to the pandemic are affecting their operations and revenues? For example, advising health care and life sciences companies focused on COVID-19 treatments and coronavirus vaccine development can create business opportunities for your firm. Focus marketing funds on those industries that will provide a return on your investment and decrease your marketing spend in those industries that may not recover anytime soon – especially if those industries are not innovative.
- Firm size. Firm size often correlates with firm marketing budget. Small firms especially must make every dollar count; the teams responsible for creating and approving a strategic marketing budget need to work cohesively to create the biggest impact.
- Talent recruitment. There is a swelling market for professional talent, a consequence of many firms furloughing and laying off employees. If possible, now is the time to invest in recruitment marketing, which includes everything from diversity, inclusion, and anti-racism training, as well as initiatives to website updates and reputation management of sites like Glassdoor, Indeed and Fishbowl.
- Marketing department salaries. Determine whether related salaries will be included within the marketing budget. Most mid-size firms are large enough to support a dedicated marketing team. While whole marketing budgets generally range from 2.5% to 4% of total firm revenue, including salaries should push the percentage to the higher end. Regarding percentages, 2.5% will, at best, maintain corporate image standards, allow for some meaningful client interactions post COVID-19, and cover some strategic business development efforts.
Building a Foundation From the Ground Up
Effective budget processes incorporate practice group leaders, firm leadership, and the marketing team into the planning process.
Your first step in harnessing the value intrinsic in your firm’s marketing budget is to create a solid foundation on which to build. In this and other ways, creating an effective firm budget is like building a new house. It is an exciting time that requires financing, strategic thinking, careful planning, and follow-through. It requires time, attention, and measurable objectives.
When you decide to build a house, you first must determine how much money you will spend. This requires evaluating your income, expenses, and future needs, while allowing for the unexpected. Once you know your budget, you determine where you want to live and whether that piece of land will support the house you wish to build. You then engage the right contractors and engineers to test the soil, draw up the plans, get the permits, and so on.
The specifics like framing materials, exterior parameters, plumbing, and heating need to be determined. You do all of this and more before you ever decide on the interior details, such as color, trim, lighting, floors, and window treatments. This is no different than creating a strategic firm budget that allows you to determine measurable outcomes, also known as your desired future state.
Today is the ideal time to think about “what the ideal destination will look like for us when the pandemic is over,” said Jordan Furlong, a legal analyst, futurist, and Principal of Law21. “Then, as the fire starts to be put out and things are smoldering less, you start thinking about how we start getting to that point. How do we choose that destination? Deal with the fires as they take place. Now is also the time to picture who, where, and what you want to be when this is all over.”
Just like building a home, keep two things in mind: first, the end result such as being quoted in the press or growing revenue. You cannot get there without first undergoing strategic planning. Second, like real property, a law firm’s marketing is an investment, not an expense.
Originally published by The Mid-Market Report on Jan. 11, 2021.
Evolving client demands and economic circumstances can create space in the law firm marketing budgets to explore untapped opportunity.
“Everything in law is based in precedent, but business is forward-looking – smart law firms know this and apply data to their strategy. Every firm’s a little bit different, but it could be an opportunity to grow intelligently in certain pockets where they will be able to facilitate growth down the road as well,” said Patrick Fuller, the vice president and general manager of ALM Intelligence. “Whether it is getting talent at a reduced cost or moving into markets where maybe it was not quite on your radar before, there are opportunities for growth.”
Often, law firms create budgetary opportunity by considering and including line items that may be unique to their culture, geography, or practice area. Some of these items may include:
- Automation technology
- Business development training
- Charitable giving and pro bono projects
- Client requests
- Coaching of individual attorneys
- Diversity, inclusion and anti-racism initiatives
- Gamification initiatives
- Internal events
- Summer associate programs
Create a plan for more targeted advertising, rather than traditional print advertising or unfocused advertising. Take the opportunity to strategically revamp any marketing activity your team would be required to present to get a business case approved for an expense, such as re-allocating funds for sponsorship and partnerships that rely on in-person gatherings.
If we have learned anything in this pandemic, it is to expect the unexpected—and budget accordingly.
During a recent LMA webinar, Ryan Pasquali, the chief marketing officer at Brooks Kushman P.C., re-iterated the imperative for clear communication from start to finish. Throughout the process, he said, “Continue to communicate your mission and objectives. It is easier to sell unplanned expenses or ask for an increase as leaders are aware of the progress being made.”
Burr and Forman LLP chief strategy and business development officer Clinton Gary emphasized the importance to maintain limited reserves for flexibility. “Combine budget and planning to improve coherence, execution, and collaboration, but being nimble means that the marketing department does not play the role of policy police,” he said.
Defining Metrics for Every Dollar to Boost Budget Defensibility
Develop a culture of meticulous expenditure tracking to get the most value out of every marketing dollar invested.
“You need to know what makes up your budget. Excel is your friend on this,” said Michael Blachly, chief marketing officer at Gray Reed & McGraw, during LMA’s “Tackling the Marketing Department Budget Like a Pro.” He said, “Firm leadership needs to ensure there are policies and gatekeepers in place to avoid anyone and everyone charging expenses to the marketing budget.”
Tracking metrics and return on investment allows law firms and legal marketers to defend their law firm marketing budgets. “The stronger you are in this area the less likely partners will be critical of your budget,” Blachly said.
Also, keep detailed records of your spending to determine what percentage of each expenditure, if any, may be deductible as a business expense for tax purposes.
Common marketing spends and their federal tax deductibility, adapted from LMA’s “Tackling the Marketing Department Budget Like a Pro” include:
- Client events with an education focus: 100% deductible, excluding food-related expenses, which are 50% deductible
- Client events with a social focus: Non-deductible, excluding food-related expenses, which are 50% deductible
- Meals with clients: 50% deductible
- Client gifts: 100% deductible up to $25 per gift, per year
- Non-meal-related client entertainment, including sporting events, fishing and hunting outings, and theater or concert tickets: Non-deductible
- Full-staff law firm parties: 100% deductible if at least half of attendees are not highly compensated in the preceding year under IRS guidelines (earned $125,000 or less in 2019, increasing to $130,000 or less in 2020)
- Lawyer-only events: Non-deductible, excluding 50% of food-related expenses, if at least half of the attendees earned more than $125,000 in 2019 (increasing to $130,000 for 2020).
- Event sponsorship, including galas and golf tournaments: 100% deductible, excluding registration fees
You Have to Spend Money to Make Money
Law firms, large and mid-size alike, expect clients to consolidate firms in an economic downturn. Additionally, clients will seek new fee structures, bring more work in-house, and expect more for less.
“Investing in marketing and client service during a downturn serves to stabilize and possibly increase firm revenue,” said Jasmine Trillos-Decarie, Chief Client officer of Lathrop GPM LLP. “Most other industries don’t cut the budgets that feed their revenue, even in a downturn. Instead, they focus on ensuring that dollars spent are aligned with clients and customer retention, acquisition, and growth.”
Law firm leaders should ask:
- What is our desired future state?
- What do we need to do to accomplish our desired future state?
- What are the leading indicators and lagging indicators?
- How can we showcase our agility and ability to pivot to meet client needs and master business challenges?
- How do our clients perceive value as it relates to our services?
- Are we communicating our value to existing and prospective clients via our marketing efforts?
Stepping back from marketing means you will be absent from the business conversation, perhaps causing clients to think the firm “froze” in the face of the crisis, thereby allowing prospective new hires and experienced peers to look elsewhere.
It is all about perception, which is nine-tenths of the truth. Ask how you want your law firm to be perceived now and in the future. Let that guide your marketing budget decisions.
Gina Rubel is called on by corporate and law firm leaders for high-stakes public relations, crisis planning, and incident response support, including high profile litigation media relations. As the CEO of Furia Rubel Communications, Inc., she leads the agency to support professional service firms with integrated marketing, public relations, strategic planning, and content marketing. Contact her at Gina@FuriaRubel.com or @GinaRubel.