Since the budget process is underway in many firms for 2010, I thought it was timely to talk about next year’s marketing budgets. Actually, I received a Google Alert last week about a post I did in the very first week I started blogging in January 2005. In re-reading that post, I decided to share it mainly because I wouldn’t change the gist of it, and newer readers may not have seen it:

January 12, 2005 Posted By Tom

Law Firm Marketing Budgets? You Want How Much?

A percentage of gross revenues is not what a marketing budget should be based on. The percentage approach – whether 1%, 2%, 4% or even more – was popular with a number of consultants and some in-house marketers for years. Comparisons to the accounting or architectural industries should not be used as the guide, as in “accounting firms spend X% of revenues on marketing, etc.” This approach is wrong on a couple of fronts.

It isn’t very original, and is the lazy person’s approach to budgeting for marketing. It doesn’t require any planning, which in turn means it is likely to be wasted and/or misdirected. I have been a proponent of zero-based budgeting, that requires thoughtful planning to arrive at what the firm, practice group or individual wants to undertake in order to reach the desired goals. Unfortunately, too many firms do not use such an approach.

If planning is done properly, which means it is goal oriented with specific measurable objectives, and action plans are designed to reach those goals and objectives, the budget can be relatively easy to arrive at and more likely to be approved…

[In that post I linked to an article by Kerry Randall, a consultant whose advice I very much admired, entitled “How Much Should I Invest in Marketing?,” but I cannot locate a live link to the article, and unfortunately Kerry passed away in 2005.]

Although I have preached about the need to increase not decrease marketing budgets on this blog over the past month or more, let’s be realistic – I say to myself – not every firm will follow that advice. Some have or will cut budgets no matter what. So, what’s a poor rainmaker suppose to do.

Try to do more with your shrinking budget dollars Michael Fleischner at The Marketing Blog tells us.

How, you may ask? A few things Fleischer suggests include:

  • Leverage your client contacts by asking about their other needs, and “pain points”(especially in the current economy);
  • Ask for referrals (it is amazing how few lawyers do this), and ask how you might help them with referrals;
  • Communicate often and oftener (work at getting more face time or “touch points” with clients and referral sources), and
  • Try “new marketing methods or ideas” (this one I might take issue with, and suggest that it’s better to stick with those business development things that have worked in the past IMHO, especially since money is tight).

These actions don’t have to cost a lot of money, and can be accomplished even if your marketing budget is limited.

In a post last month, I mentioned one Texas law firm that actually admitted it was increasing its budget for marketing, rather than decreasing it. Definitely not the trend, I can tell ya. But smart.

Now we hear about a number of firms in the Philadelphia area that will be refocusing, and possibly redirecting their business development efforts, but will not likely be cutting their marketing budgets either, according to an article that appears online in the New York Lawyer (free subscription required).

The comments of Stephen Madva, chairman of Montgomery McCracken Walker & Rhoads, particularly got my attention, and not just because my wife worked at the firm a few years back. What he had to say was that his firm is “absolutely not” going to cut back on marketing, and actually plans to increase it, according to the article.

He said “This is not the time, in my mind, to cut back on marketing…we have to stay top-of-mind with our clients and be out in the community and represent markets as much as possible.” He concluded, “This is not the time to hunker down, it’s time to get our visibility out there.”

Double “amen” to that!

The American Bar Association recently asked lawyers to predict the future. Over 14,300 lawyers responded, and yesterday the ABA issued an early summary of the survey results to those who had participated. Some results:

  • 19% of lawyers expect to lose their jobs,
  • 78% anticipate that "everyone" will be affected in some way by the recession,
  • 59% agreed that the profession will be "rocky for awhile," and
  • The majority held that the legal business won’t improve until 2010.

Based on these early results, it seems clear that it’s time to crank up your marketing going forward. The reasons are pretty straightforward:

  1. Take a look at my January 2005 post "Rainmakers Don’t Get Fired!," and
  2. “Plan to Crank up Marketing Budget in 2009. Huh?,” because many firms are likely to be cutting their budgets next year, and that means it is a great time to get out ahead of the competition.

So, now is the time to increase, not decrease the firm’s business development efforts.

Yep! While a number of large law firms are cutting lawyers and staff, it is no secret that budgets, including marketing budgets, are being trimmed for the coming year. Unfortunately that is shortsighted. In fact, it may reduce the amount of new business harvested in the coming year.

If business development is good for law firms in good times, spending dollars on marketing in a down economy makes even better sense. Why? Because while others are cutting back, there will be less marketing “noise” out in the marketplace and more chances to be noticed.

In an article in’s Small Firm Business that discusses the impact of the economy on marketing budgets, I was impressed with what the managing partner of a 108-lawyer Houston-based firm said:

“We’re expanding our marketing,” says Wayne A. Risoli (of Chamberlain, Hrdlicka, White, et al.). “We believe this is an appropriate time to let all Fortune 500 companies know that our rates are so good that we can handle your work for a very good value.”

So, it’s time to crank it up.  You need to let prospects know, as well as remind clients and referral sources, about your firm’s “good value.”

That is not to say that it isn’t important to scrutinize what your marketing dollars are being spent on.  A firm should focus on those business development activities that are likely to produce the best and quickest return on investment.

Nonetheless, it will be a hard sell at some firms. But, those firms that resist cutting back – in fact, increase their marketing budgets in those areas that will maximize ROI – will most likely reap a more bountiful harvest in 2009. 

Although we lawyers were taught in law school that we could do brain surgery – if only the light was right, please don’t utilize a surgical knife when scrutinizing your coming year’s marketing budget.

As many investment advisors (oh yeah, we were taught we could do that too in our sleep) are telling their clients, now is a time to buy not sell. Well, for firms that want to take advantage of their competition, now is the time to avoid major surgery or selling short when it comes to the marketing budget.

Unfortunately, too many firms look at marketing as an expense, rather than as an investment in the firm’s future. Having said that, the budgeting process, if not well underway in your firm, undoubtedly will begin as year-end approaches. Michelle Golden has a few posts dealing with marketing budgets that are worth looking at:

The important point is to not amputate marketing from your firm’s budget at a time when your competitors are; rather, invest in your firm’s future now and let them try to catch up later.

While some may be in denial, Warren Buffett writes in an Op-Ed piece in The New York Times (free registration required) that the “financial world is a mess”… but that he is now “buying American stocks.” He’s talking about his personal account (not his Bershire Hathaway holdings) which traditionally has been entirely in U.S. Government bonds.

His reason for buying stocks now is based on a "simple rule":


“Be fearful when others are greedy, and be greedy when others are fearful.”


That got me thinking. The same underlying principle could be applied to legal marketing; to wit:


When other law firms are cutting marketing budgets and staff because of economic fears, become greedy about making a meaningful impact in your marketplace by increasing your marketing and business development eforts. 


The time to make a difference is when others are folding their tents.


And Wayne’s advice from the same article: “I skate to where the puck is going to be, not to where it has been.”


Where does your firm want its marketing to be?

Well, “secrets” may be a bit strong, since what makes small to medium size law firms successful isn’t exactly rocket science. Prosperous smaller firms have very successful lawyers who never practiced in BigLaw, as well as those who did, but left because they no longer cared for the environment or life style in larger firms.

So, what are the “secrets” that make smaller firms thrive?

There are many reasons, of course, but one article on the benefits of small firm practices by Zack Needles with The Legal Intelligencer that appears on this month’s’s Small Firm Business gives us clues as to what five Pennsylvania firms attribute their success to:

  • Niche practice within boutique firm;
  • Attracting talent with strong capabilities, and focusing on “exceptional service and competitive rates;”
  • Focusing on maintaining a high profile as “best marketing technique;” and
  • Developing “personal marketing plans” with individual lawyer budgets and accountability.

Seems fairly straight forward, and worth taking a look at.

I’m not referring to keeping up with the Jones’ or with large firms for that matter. What I am referring to is whether your firm is keeping up with the needs of your marketplace in terms of marketing and business development. Times change and competition is increasing. Both should be taken into consideration when calculating what your budget should be for generating new business.

Thanks to Mark Beese for his recent post on his Leadership for Lawyers blog, that brought to my attention The BTI Consulting Group’s annual benchmark survey on marketing and business development strategies. The significance of Mark’s post, and obviously the survey, is the information relative to the “dramatic boosts” in AmLaw’s “Second Hundred” law firms’ budgets. They are “catching up” (percentage wise) with what the First Hundred are spending. Hmm, competition does have a price.

Important aspects of budgeting that the survey uncovered include:

  • 52.5% of marketing budgets was spent on salaries and business development (sales, face-to-face meetings, personal encounters, whatever you want to call it);
  • 30% of that goes to client relationship development (which I presume includes client feedback programs, increasing and improving client communications, etc.);
  • Budgets are consuming 2.1% to 2.6% of gross revenues; and
  • Mid-sized firms’ budgets are on the rise.

Moreover, the question is not only whether your firm is spending enough dollars on marketing and business development to keep up, but whether it is spending it on the right things?

You are late, if you haven’t already budgeted for marketing and business development for 2008. Most large law firms start their budgeting process in early fall for the following calendar year. 

Of course, there are firms that still do not prepare a formal marketing budget at all, so anything I say here would be a waste of time for those firms. Unfortunately, for some firms, budgeting is still done on the “Gee, can I take my client to lunch today on the firm?” basis. Planning ahead, ain’t part of the program.

For the others, (those not opposed to budgeting, but possibly have been procrastinating) there is some guidance from Michelle Golden of Golden Practices that may prove helpful in deciding as the new year approaches as to “What’s in a (your) Plan?”

I not only like her simple spreadsheet, I particularly like her focus and the priority order in which she lists her budget categories (with my usual editorial comments):

  • Existing Clients – (clearly, this is the most critical area in which to budget dollars. As Michelle points out, this is the most important area to focus, but “usually, little is allocated in this area”);
  • Influential People/Referral Sources – (likewise, very important, since the vast majority of new work comes from clients and referrals);
  • New Business – (more long-term, so put less business development money in this category);
  • Marketing Infrastructure –  (the “bottomless pit” indeed, and should only be financed to the extent it supports the categories above); and
  • Research & Development – (in the sense that a firm needs to constantly assess its position in the market and that of its competitors – to be honest, I don’t see this as a high priority for many firms, so don’t get hung up here).

Take a look and see if there isn’t some helpful stuff for your budgeting process.

Thanks to Dan Hull for the lead to Michelle’s post.