GETTING THEMOST FROM YOUR MARKETING BUDGET: Eight tips to ensure your firm's money is spent Well and in alignment with strategic goals.

Author:Stock, Adam
Position:Cover story
 
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TI reported in 2015 that law firms spend about 2.6 percent of firm revenues on marketing and business development. There is no magic number for any law firm's marketing budget. However, management consultancies have expressed that law firms should spend between 2 percent and 5 percent of gross revenue on legal marketing. Whether you're at the low end of that scale or the high end, it's not how much money, but rather how the money is spent that will make the difference at the end of the fiscal year. The most important guiding factor is showing that the firm's money is spent well and in alignment with its goals.

What each firm spends ultimately depends on multiple factors, including geographic location (of an individual office or multiple offices), the firm size, the practice areas and management's expectation of growth in one, some or all practice areas.

Ideally, the budget would grow year over year, but because law firm budgets do not change by very much, effective budgeting is about aligning marketing spending with the firm's goals. So, for instance, if the firm's goal is to focus on raising visibility of a practice area via a public relations (PR) and advertising campaign, then the budget will show more money in those categories. This usually means that less important areas must be reduced.

Tip #1: Think of yourself as a steward of the firm's money.

Budget or Projection--or Both?

A budget is a financial plan that is structured to detail projections on incomes and expenses on both a long-term and a short-term basis. A projection is a forecast of future revenues and expenses. Typically, a projection will account for internal or historical data and will include a prediction of external market factors.

Most law firms rely on a combination of both budgeting and projection to determine what their spend on marketing and business development will be for a fiscal year.

Whether we're talking about a budget or a projection, or a combination thereof, what is important is optimizing the money the marketing department has to spend in a given fiscal year.

What Is Included--Expenses or Expenses and Headcount?

Generally, the marketing department budget only includes what is spent. This means that you can often hire people, rather than external resources, to solve a problem (even though an external resource may be more cost effective for the firm).

In some firms, however, the salaries and related overhead (e.g., insurance, professional development) of marketing staff and contract employees are included in the marketing budget.

Tip #2: Understand how your firm views expenses vs. headcount to get the most from your budget.

Make vs. Buy

A make-or-buy decision is choosing between using an internal resource and using an external provider. In a make-or-buy decision, the most important factors to consider are the associated costs of production and whether an employee has the capacity to produce at required levels. Additionally, a budget item approval limit can mean that it is expedient to outsource projects rather than doing them internally...

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