Brownstein Hyatt's Lisa Simon
LAW FIRMS
As firms cut marketing, others see opportunity
Strategy to pull in new clients as rivals pull back.
December 8, 2008
Laid-off attorneys, swank holiday parties and blockbuster associate bonuses already are casualties of the sputtering economy. It appears that law firm marketing budgets may be next.
Law firms typically maintain their marketing costs year to year, or make minor adjustments, but the dim financial prospects for 2009 mean firms are eyeing more drastic changes as they finalize their annual budgets.
For some firms, that means cutting marketing department budgets as a cost-saving measure. But other firms plan to maintain or increase the amount they spend on marketing in 2009 in an attempt to add clients and bolster their brand while their competitors pull back.
It remains to be seen how many firms land in each camp, but it's clear that cutting marketing budgets will be a more popular option than it has been in recent years.
'Wait and see'
A survey released in November of marketing departments at 313 law firms found that more than one-third anticipate their 2009 budgets will decrease. Of those anticipating cuts, the average expected reduction from 2008 spending is 11%, according to the survey conducted by the Legal Marketing Association.
"There are definitely cuts happening, but we're also seeing a wait-and-see attitude at some firms," said Lisa Simon, president of the Legal Marketing Association.
Law firms spend an average of 1.7% of their revenue on marketing, according to Altman Weil's 2008 Survey of Law Firm Economics. That average is maintained across both large and small firms, though plaintiffs' and personal injury firms tend to spend significantly more — between 4% and 6% of revenue — said Altman Weil principal Charles Maddock.
Many firms are taking longer than usual to determine their marketing strategies and spending plans for the coming year, primarily because they want to see how the legal market is shaping up as 2009 approaches, said Ross Fishman, a marketing consultant who works with small to midsize law firms.
Fishman estimates that about 25% of small and midsize firms will choose to decrease their marketing budgets next year, while another 20% will opt to boost marketing spending. The remaining firms will likely keep spending at 2008 levels, he said.
Budget discussions are still taking place at Seattle-based Davis Wright Tremaine, but marketing and businesses development director Mark Usellis said that he anticipates a 2009 marketing budget that is on par with what the firm spent in 2008. Still, he's looking to spend money in the most effective ways possible.
"I'm going to do hardly any advertising in the first half of the year, and I'm bringing all P.R. activities in-house," said Usellis, adding that the firm has contracted with outside public relations firms in the past. "I won't be attending any conferences or out-of-town roundtables."
Some firms see opportunity in the down economy. Frost Brown Todd, which has its largest offices in Cincinnati and Louisville, Ky., is looking to build more of a national reputation in 2009, said chief marketing officer Eric Dewey.
In addition to speaking with existing clients to assess their needs, the firm has planned an integrated marketing push for 2009 involving advertising, events and client seminars. But Dewey acknowledged that legal services might be a hard sell right now.
"Legal marketing is tough to begin with," Dewey said. "When you have the challenges that clients are facing today, it gets even more difficult."
There are indications that law firms already have taken steps to cut spending on marketing. On average, law firms spent less on marketing and client development in the third quarter of 2008 than they did during the same period in 2007, according to the West Peer Monitor Index, which measures several different legal market conditions.
Maddock of Altman Weil, who focuses on marketing issues, said law firms traditionally have viewed marketing as more expendable than other firm departments. He said he's not surprised that marketing departments are seeing funding slashed, since attorneys often focus on immediate results instead of long-term growth.
"Unfortunately, with most law firms, lawyers are so reactive that marketing is always the first to go," Maddock said. "In many cases, firms are cutting marketing budgets. We're seeing a lot of people being let go."
Simon said the Legal Marketing Association does not track the number of marketing positions that have been eliminated, but anecdotal evidence indicates that cutbacks are on the rise.
Maddock said firms largely adhered to a rule of employing one marketing person for every 40 attorneys in the past, but are now moving toward one marketing employee per as many as 60 attorneys.
Most Popular Headlines
- Top ABA staffers exit amid reorganization
- Daschle departing Alston for DLA Piper
- Unanimous 7th Circuit finds mezuzah removal worth a lawsuit
- Employers unsure about medical marijuana
- Obama shakes up counsel's office
- The 2009 NLJ 250
- New approaches to law firm recruitment
- Hasan case to test military justice system
- 'He had the ability to do anything'
- No quiet time for new justice
