Marketing spending rebounds post-recession and online promotion now creates a flow of lucrative new matters for business firms
December 9, 2014
Legal marketing spending has rebounded to pre-recession levels according to our new national survey of local and regional business law firms.
Another key finding in the survey in which we sought to determine what marketing tactics work best and which are in decline in addition to spending patterns: law practices must effectively embrace digital promotion or they will miss being considered for desirable cases they are qualified to handle. For some firms, those cases developed online are the single largest matters firms report developing this year.
On average firms reported having spent 3.4 percent of their annual collected fees on marketing and business development activities in 2013. Our 2014 National Marketing Effectiveness Survey included responses from 117 local and regional law firms and was completed this fall. All responding firms practiced corporate, transactional and defense litigation and the average size firm had 37 lawyers.
Coming out of the recession in 2012, firms had reported cutting spending to just 2.3 percent of annual fee volume on marketing. That was down from 3.4 percent in our 2010 survey, 2010 being the highest percentage spent on marketing we’d ever recorded.
The drop in 2012 was the first spending decline recorded by Alyn-Weiss since we started conducting our bi-annual survey of local and regional corporate, transactional and defense firms in 1990. In our initial 1990 survey firms reported spending just 1.45 percent of annual fees on marketing. Firms had gradually increased their marketing spending, even during the dot-com crash, until the Great Recession.
Our analysis of the latest survey results confirms that law firms which do not employ blogging, LinkedIn, effective websites, e-alerts, online rankings and ratings directories are simply missing out on desirable work.
The data concomitantly reaffirms that you can still be successful running a firm based solely on the traditional relationship tactics relied upon by firms for decades– the word-of-mouth promotional model that includes seminars, client entertainment, trade and community group presence. However, the data makes it equally clear that some work firms are receiving comes completely as a result of online rankings, online client reviews, LinkedIn, blogging and a firm’s website. In fact, many of our clients report the single largest case they have right now has come from digital promotion. And, in the Midwest those cases all involve inheritance litigation, a development we predicted and trend we advise all firms in states with aging populations carefully consider.
In other words, the traditional law firm word-of-mouth marketing model has competition, or a companion, the online model. Employing a combination of the two is the most effective way to market a law practice, the survey reveals.
It bears repeating: for years we have said the practice of law has always been a personal relationship business and will always be a personal relationship business. The data now reveals highly profitable cases and files come to firms whose new clients identify and fully vet them online absent a personal recommendation or relationship with your friend, colleague or other lawyer.
That firms can develop clients fully absent a referral or prior personal or professional relationship is a shift unsurprising to younger lawyers with whom we have reviewed the survey results. Millennials we coach understand this communication model works for a portion of the market, but it remains a leap of faith for many mid-career and senior practitioners.
A firm’s website, after a law diploma, is a lawyer’s most critical career defining document the data shows. It’s the single most effective tactic firms employ according to the survey. Asked what tactics have brought worked to their firm directly and by referral over the past 18-24 months, 70 percent of the 117 firms in the survey said their website generated new matters.
The next most effective tactic was seminars/presentations which 51 percent of firms reported brought in cases, followed by law firm networks for 46 percent, trade and community groups 42 percent and entertainment for 31 percent of firms. Right behind those tactics came search engine optimization (coding of pages to ensure proper indexing), emailed alerts and newsletters, LinkedIn and blogging as being most effective.
The overall firm spending percentages do not include the cost of outside marketing consultants or in-house marketers. We ask firms specifically exclude marketing personnel, agency and consulting fees because they vary so much from city to city compared to other “out-of-pocket” marketing expenses.
We surveyed firms of less than 100 lawyers because Alyn-Weiss needs to know what works and doesn’t when it writes marketing plans, develops training and coaches lawyers at the firms they represent, those being firms competing directly with the AMLaw 250. Other questions asked in the survey include how firms govern their marketing programs, how effective firms find their marketing overall, what tactics firms expect to spend more or less time and money on in the coming year and if firms ask lawyers to record time spent on personal business development.
We present the survey results and their analysis at bar association and law firm network meetings and as a webinar to law firm marketing committees and management retreats. Call or email us for added detail.