Developing a Law Firm Marketing Budget

If you Google “How much should your law firm marketing budget be”  or similar questions I can tell you that you get “about 211 million” results.

Plus it is probably one of the most asked questions of marketing consultants.

I suspect the reason why it’s on everyone’s mind and why it’s so often searched is because there is no magic answer.

The task of setting the marketing budget is always a daunting challenge for lawyers because of the many ways to approach it. Percentage of gross revenue is one of the more favored methods of budgeting for many small businesses because it allows your spending to fluctuate as your revenue does.

However, to be as helpful as possible and apply this for law firms, I think what is more important than fixing on a percentage or figure is having and tracking a marketing budget.

Even if your initial number is inaccurate, it is much less important than getting the number exactly right because at least you have an amount.

This is because you can have the right budget but be spending it on the wrong things and this is certainly what I confront on a weekly basis consulting with law firms around the country.

Statistics from USA

A study by the Legal Marketing Association provides some benchmarks. Released in August 2006, the LMA 2005 Roles and Compensation Survey included 449 marketing professionals from law firms of all sizes. The results revealed that, on average, the marketing budget represents 2.6 percent of a firm’s gross receipts. This amount reflects an increase from 2.4 percent in the previous year’s study, a figure that had, in fact, remained unchanged for the preceding 10 years.

The greatest percentage of study respondents (29 percent) indicated that the marketing budget represents 1.6 to 2.0 percent of their firms’ gross revenue, which is about the mid-point in the percentages above.

Research away from Law Firms

More recently, in 2010 the Chief Marketing Officers (CMO) Council conducted a survey of its 6,000 chief marketing officer members to assess marketing and advertising spending across a wide range of industries. The survey results revealed that 58 percent of chief marketing officers spent less than 4 percent of gross revenue on marketing, 16 percent spent between 5 and 6 percent, 23 percent spent more than 6 percent, while 2 percent spent more than 20 percent.

This survey seems to suggest that if you set your spending level between 0 percent and 6 percent of gross revenue, you will be in good company that includes 74 percent of the CMO Council membership.

Some Percentage ‘Pointers’

  • For US businesses generally most experts recommend somewhere in the range of 2-8% of gross revenues.
  • For business generally McKinsey & Company is often quoted at 5%.
  • The U.S. Small Business Administration says small businesses (defined as having less than $5 million gross revenue) would shoot for at least 7-8%.
  • Some marketing experts advise that start-up and small businesses usually allocate between 2 and 3 percent of revenue for marketing and advertising, and up to 20 percent if you’re in a competitive industry
  • In the US, the industry specific figures for Law firms showed 1-4% of gross revenues.

Spending Variables

Naturally there is a limit to how much you can afford to spend regardless of what others are spending. I suggest that you let affordability guide your marketing spend. Then, recognize that certain internal and external factors may cause your spending to fluctuate.

Starting a business or introducing a new product requires more spending than spending on an on-going business. Or if the competition is fierce, you may have no choice but to increase your marketing spending.


It is a simple fact of business that marketing costs money. However, spending money on marketing is one thing; the art of spending the money wisely is another thing altogether.

What you really want to do is to create a budgeting process that matches your firm’s marketing goals.

About the author
Brian Hicks

Brian Hicks

Brian has more than twenty years’ experience in marketing and management across diverse industries including legal, real estate, tourism and technology. Brian lives in Sydney with his wife and two daughters.

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