33% of law firms are increasing their Marketing and Business Development (MBD) budgets. This is 3 times more firms than last year—making this the largest number of firms increasing their MBD spending in 9 years. This increased investment in MBD may just give these firms an unprecedented edge in 2019.
New money means new programs or beefing up old ones. These CMOs put the following programs at the top of their to-do list:
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Client feedback
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Client service
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Industry programs
On average, these lucky CMOs will have 5.13% more to invest in MBD than they did in 2018.
Which Firms Will Be at a Disadvantage?
Fully 64% of law firms are keeping their budgets the same as last year—again, as measured by percent of revenue. Firms experiencing bottom-line growth will throw more actual dollars at MBD, but not as much as the firms increasing the percent of revenue committed to MBD. The firms with no growth will be facing the same budgets as last year.
Small Increases Go a Long Way
Overall, the typical law firm (the largest 500 firms) are targeting 2.76% of their revenue for marketing and business development in 2019—up from 2.63% this year. The Am Law 100 is targeting 2.67% of revenue, while the Am Law 101-200 targets 2.71%. Law firms outside the Am Law 200 are planning to spend 2.86% of their revenue on MBD. The differences are woefully small to sound meaningful—but, can be the difference between 1 and 5 full time BD equivalents, funding a new client team, or creating one more industry group. All of which are proven to drive new business.
Why Increased Budgets Will Bring the Biggest Returns Ever
Clients are moving a giant chunk of their legal budget back to outside counsel for the second year in a row in Litigation—we will see the same increases across most legal spending when we release our BTI Practice Outlook 2019 next week. This increase in spending is a gift. The law firms able to capture this new spending put themselves in a position to reap the benefits for years.
In addition to increasing their spending, clients are making big decisions about which law firms to use and how to reduce their rosters. This means much more business for the law firms able to snag a spot on clients’ shrinking roster of legal providers. The amount of new client spending dwarfs the increases firms are making to their MBD budgets—making a compelling argument to boost those MBD budgets for 2019. One-third of law firms have already figured this out.
There’s still time to rethink your firm’s budget.
MBR
*Based on in-depth interviews BTI conducted with more than 136 law firm marketing leaders between July 13, 2018 and November 5, 2018.