Marketing Budgets per Attorney Jump Nearly 11%

Upward Arrow Shutterstock 767447155.png

Budgets may not be going up as a percentage of revenue, but per capita spending is. CMOs have been both clever and skilled in managing their budgets. Overall, increases in revenue are slightly outpacing increases in attorney headcount. Most CMOs have been able to keep their budgets untouched. This means the Marketing and Business Development (MBD) Budget per Attorney increases—in effect, resulting in an increase on a per capita basis. This is the most reliable indicator of MBD spend. 

The average law firm spent $18.9 thousand per attorney on MBD in 2017, up from $17 thousand in 2016. But, spending is no longer the main story. As legal marketing budgets as a percent of revenue converge around the 2.6% mark across firms—how the money gets spent has more impact.

CMOs continue to adjust budgets to drive revenue. Legal marketing tactics and strategies can now drive success—giving CMOs and marketing departments more visibility, more impact, and more voice. This is what many CMOs have been waiting for.


Bullets Point Image.PNG

(Based on BTI research conducted between June 2017 and December 2017. BTI conducted more than 160 independent, individual interviews with leading legal marketing executives at a range of law firms from Am Law 30 to Am Law 200.)

Law Firms to Add Big to Marketing Budgets in 2018—Here’s How to Get Yours

Coins in Jars-01.png

13% of law firm CMOs are trying to hide their smiles. They snagged big increases in their budgets—just over $1 million per firm.* Their goal is simple—keeping clients, growing clients, and getting new ones. Their success in justifying their new budgets comes from emphasizing the risk of not spending the money. They made the elusive risk of opportunity cost real by:

  • Presenting a detailed year-over-year growth analysis of each major client going back 3 to 5 years, highlighting the clients where revenue is static or has slipped. These CMOs calculated the lost revenue as a percent of total revenue, and a few estimated lost profits. Each CMO analyzed at least 50 clients and some more than 100.
  • Calculating total new business developed per partner and per attorney over time. These CMOs were careful not to track names but wanted to show their firm was either becoming more or less productive in developing business.
  • Using strategically designed client feedback to uncover how often the firm is considered (or more importantly not considered) for new work—using the outcome to estimate new business sitting on the table—and the cost of not winning the work.
  • Surveying firm partners asking them to assess their own business development prowess and probing for the obstacles preventing improvement. In almost every case you end up with low self-evaluation of skills and many obstacles to success. This is your business development training outline and justification—especially when you present your results in conjunction with the client retention and business development productivity in the bullets above.

The Real Secret to Adding Big

The budget gains are based on way more than good analysis alone. The CMOs have been working on their efforts for 2 years or more. They sought out advice and counsel from friendly partners and were evangelists for their cause—able to preach at every available moment without crossing the line to being a pain. They lobbied hard within the firm. And, these CMOs presented the needs in digestible chunks which all fit neatly into a strategic framework when put together.

The budget increasing CMOs jumped all over their firm’s strategic planning process. They made their voice heard so it could not be ignored—trying to own as much of the process as possible—even if it meant working outside the process and feeding their thoughts and data to key partners.

What’s Happening to the Rest of the Marketing and Business Development Budgets

Overall, the legal marketing budget outlook is stable and continues a very slow path forward. The typical law firm will spend 2.53% of firm revenue on marketing and business development up from 2.5% of revenue in 2017. This is an almost stunning contrast to the law firms making the big investments.

The pace of change is slow. But as long as a measurable number of firms change their approach to investing in business development—everyone else has to worry. And the firms boosting their budgets have to execute while the race for clients throttles up a little bit more.


*This new research is based on more than 159 in-depth interviews with law firm marketing leaders conducted from May 1, 2017 to October 20, 2017.

Client Development: The Key to Dramatic Growth

This week The Mad Clientist discusses building your budget by separating out client-specific activities vs. broader initiatives to dramatically increase growth.

You can view the video below, or on YouTube directly here:

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

Reallocating Your Marketing and Business Development Budget

The Mad Clientist discusses ways your firm can keep up with Big Law marketing and business development budgets in today's Mad Clientist Minute.

And don't miss an extended discussion of law firm marketing and business development budgets, client service tactics, and our annual overview of today's market in BTI's Market Outlook and Client Service Review 2017 this Thursday, January 12.

You can view the video below, or on YouTube directly here:

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

Does It Have a Budget?

There is one critical factor your big new initiative needs to be successful. 

You can view the video below, or on YouTube directly here:

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

Are Midsize Firms Giving Up on Marketing?

Budgeting season is in the air. Law firm marketing leaders are working hard to turn their marketing dreams into budget realities. CMOs are pulling together their best arguments to get what they want, and in some cases, have been fighting for years to get. Here is some ammunition to help.

The Largest Law Firms Add

The largest 30 law firms are adding to their marketing and business development budgets in 2016.* The biggest firms are spending 2.2% in 2016, up from 1.9% in 2015. To take a broader view, the largest 100 law firms are adding to their marketing budgets. Law firms in the Am Law 31 to 100 increased MBD budgets to 2.43% of fee revenue this year from 2.3% in 2015. Bigger law is making bigger budgets—however minimal the additions.

Midsize Firms Take Away

It’s a different story when we get to the second 100 largest law firms. The marketing and business development budgets at these midsize firms dropped as a percent of total fee revenue. The decrease is small—but a decrease of any size in a brutal market is like tying one hand behind your back and stepping in the ring. The shrinking MBD budgets at law firms outside the Am Law 100 make the increases at the largest 30 firms seem enormous.

Law firms 101 to 200 in size cut their budgets to 2.54% of revenue now from 2.8% in 2015. Law firms outside the largest 200 law firms dropped to 2.71% from 3.1%.

Small Changes in Budget Mean Immense Changes in Strategic Intent

The largest law firms are becoming more aggressive in pursuing clients. At the same time they have made their MBD budgets bigger. Midsize firms may be spending their money shrewdly, but the evidence suggests large law is focusing more energy on core business development than the mid-sized firms. And the large firms are winning more work.

The shift in strategy and spending compels every law firm to at least match if not exceed their competitors. Cutting back in the face of competitors who are increasing their funding and winning more work is rarely a winning approach. The pressure is on for any firm outside the largest 30—and especially outside the top 100—to increase funding and focus on those activities which protect and grow clients first, and attract strategically targeted clients second. The reach for new, unknown clients is third.

Law firms still have time to adjust their marketing and business development budgets for 2017. So many law firms know they are operating in a predator’s paradise—the law firms who take business from others will win. The 2016 budgets suggest the MBD budgets are detached from the idea of taking business. No firm has ever gained share without investing in (meaning adding to) their MBD budget. The biggest law firms have figured this out and gain advantage the longer other law firms wait. 

The time and place is here. The market is ripe with opportunity below the surface (which you can see more of in our upcoming BTI Practice Outlook 2017 being released on October 18, 2016). As of now, law firms have 2 choices—increase funding or reallocate the budget to focus on clients and targeted clients. Those who don’t act risk their market share and their options. It is well known recovering a lost client costs 2 to 8 times the cost of keeping a client. Seems like a better way to save money. 


*Based on in-depth interviews BTI conducted with more than 150 law firm marketing leaders between June 2016 and September 2016.

The Hidden Opportunities In A Shrinking Market

See exactly how clients are spending their budgets—and where their dollars are really going in the latest Mad Clientist Minute.

You can view the video below, or on YouTube directly here:

We’ll be releasing videos here on The Mad Clientist blog every Tuesday. Subscribe today (in the box at the upper right of your screen) and be sure you don't miss a single one.

Don’t Be the Only Firm Underfunding Marketing and Business Development

In 2005, the legal market was growing at over 10% a year—almost raining business. 2015 growth is just over 1%—yet law firms continue to spend the same relative amount of money to protect and acquire clients.

Law firms currently spend 2.6% of firm revenue on marketing and business development.* This is less than half of what other large B2B professional service firms spend: 5.6%. More importantly—in 2005 law firms allocated 2.3% of revenue. In effect, marketing and business development is no more of a priority today than it was 10 years ago. Yes—the absolute dollars have gone up—but proportionally it is virtually identical to 2005.

The choice to stay within the traditional law firm spending bandwidth limits you to doing what everyone else does. This choice also limits you to what you have previously done. You can gain some advantage by redirecting the existing budget towards client-centric activities. But, you are robbing Peter to pay Paul. You have to sacrifice some aspect of MBD to grow and protect clients. Law firms have no room to play serious offense or launch new—or multiple—strategically designed initiatives proven to feed off each other.

Last Year Is Always the Benchmark

It’s easy to understand how marketing and business development budgets never changed. Budgets are compared to and built from last year’s budget. Last year is always the benchmark. Locking into increases over what we did before keeps everyone mired in last year’s thinking and ignores the future.

Few law firms have sat down during strategic planning and asked—what will it take to gain new clients and grow the major clients we have? How much will it cost and what will we get? The answers to these questions would redefine the marketing and business development budget and create an enormous of amount of sustainable long-term business—and leave other law firms far behind in the race to create the largest stable of the best clients.

Try a One-Time Experiment

Start to change slowly, or try a one-time experiment. Create a one-time temporary budget built around new marketing and business development activities not currently in the budget—but sure to attract new clients. Some suggestions:

  • Original white papers
  • Industry-focused SWAT teams
  • Client education programs designed specifically for each of the firm’s top clients
  • Large-scale client feedback covering 40% to 60% of firm revenue
  • Working groups for clients to meet in person

Your success in using these tools to attract new business creates sustainable life for new approaches to the market, and spending more suited to low-growth markets. These pilot programs are a specified investment where all can assess the return—exactly the kind of data which encourages law firm leaders to throw more money at the firm’s marketing and business development to adapt to today’s market.


*Based on in-depth interviews BTI conducted with 135 law firm marketing leaders.

Help Your Clients Deliver $9M in Value Right Now

Chief Legal Officers generated $9 million in value in the face of the largest legal budgets seen in 15 years. New approaches to managing outside counsel, settling litigation, alternative fees, focusing on compliance, pushing budgets on law firms and providing more support to business units is paying dividends. And don’t forget, corporate counsel have moved more than $1 billion in house in the last year. The changes are paying off big time.

More Value with Bigger Budgets

Corporate legal budgets are at a 15-year high as measured in dollars spent. But, the average large company managed to reduce spending to .38% from .45% of revenue over the past two years. This means as companies grew larger the percentage spent actually declined. Chief legal officers were able to support more business with $9 million less.

Read More

2 Law Firms Get 50% of the Budget—45 Fight for the Rest

The typical large corporation is working with 47 different law firms at any given point in time. The average middle market company works with 8. Meaning, law firms compete with somewhere between 7 and 46 firms every day at a single client. Your competitors want to grow by at least 5% with client budgets growing at 1.9%—the battle for the primary spots are somewhere between intense and brutal.  

Only 2 law firms earn primary status with clients. For law firms looking to grow, being a primary provider has broad implications:

  1. These 2 primary firms capture between 40%-50% of the client’s legal budget—leaving the others to slug it out for the rest
  2. Becoming a primary provider gives you access to 3 to 5 times the fees you currently bill

9 firms are in a secondary position with clients. These firms...

Read More

Law Firms Build Serious Marketing and Biz Dev Muscle

Lip service is over. Law firms are building marketing and business development muscle to drive market gains—and partners show their support by voting with their wallets.

Law firms steadily boosted their investment in marketing and business development since 2010. Budgets at the 100 largest firms experienced a compound annual growth rate (CAGR) of 6.4% (translating into nearly $3 million, per firm)—closely rivaled by gains of 5.8%, or $1.3 million, in marketing and business development at a typical firm in the second 100 (101-200) firms.

Where are savvy law firms putting their money? The enormous pressure to drive growth, boost client retention and outpace competitors drives dollars away from generalized initiatives like generic events, PR and traditional advertising. The largest growth in 2013 marketing spending was in targeted business development outreaches:

  • The largest 100 firms nearly doubled their spending on client and market research—indicating a focused approach to identifying, and meeting, client and market needs
  • The second 100 largest firms see the greatest boost in business development investments—growing this budget area by nearly 10%
  • Firms outside the 200 largest are directing more dollars to training initiatives—ensuring partners are prepared to turn every opportunity into business and better client service

Money is likely to continue to flow in this direction as partners link client retention, financial gains and new business to these targeted marketing and business development tactics. 


Learn how to build your marketing muscle & more on Jan 16 at BTI's Market Outlook & Client Service Review Webinar.

Corporate Counsel Shift $5.8 Billion In-House

Unlike Ben Bernanke, corporate legal departments are taking dollars out of the system. Corporate counsel shifted $5.8 billion from their outside counsel budget to internal spending—the equivalent of keeping 2 Latham & Watkins’ in-house. The shift drives a paltry projected 2013 growth of 1.8% in outside counsel spending instead of a 5.1% compound growth rate had corporate counsel spent the money on outside law firms.

Corporate counsel’s top goal is to wring more value from their scarce legal dollars. Shifting money in-house from law firms...

Read More