I need to set a marketing budget
The partners’ meeting wants a number, and the only numbers on offer are last year’s plus a bit, a percentage someone read about, or whatever the agency proposed. None of them is a budget; they are guesses with a decimal point. This page sets out the way to arrive at a figure from the firm’s own fees and targets, how to split it, and how to defend it when a quarter goes badly.
A marketing budget is a statement about how many files the firm wants that it does not currently have, and what each one is worth. Start there and the number falls out. Start with a percentage and the number is arbitrary, and everyone in the room knows it.
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The three ways firms set a budget
Only one of them produces a figure anyone can defend, and it is the one that takes an afternoon rather than a minute.
Whatever was spent last year, plus or minus a feeling. It assumes last year’s figure was right, which nobody checked, and it has no connection to what the firm wants to happen this year.
It survives because it avoids an argument. It also guarantees that the firm’s marketing is sized to history rather than to intent.
A guess that remembersTwo, five, eight per cent of fee income, depending on which survey the partner read. The Law Society’s benchmarking and the various legal sector surveys give ranges, and the ranges are so wide that any figure can be justified.
Useful as a sanity check after the real calculation: if the answer comes out at fifteen per cent, something in the assumptions is off. Useless as the calculation itself.
A sanity check, not a methodHow many more files, in which matters, at what fee, and what share of that fee the firm will spend to win one. Multiply, and the budget is the result. It can be shown to the partners line by line, and when a quarter is bad the conversation is about which assumption was wrong rather than about whether marketing is worth it.
It takes an afternoon, the fee data from the practice management system, and one decision the partners have to make.
The methodThe calculation, step by step
Do it per practice area, because a conveyancing file and a contested probate file have nothing in common except the word “file”. Add the practice areas up at the end.
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Decide how many more files you want
Not “more”. A number, per practice area, per year, that the fee earners could actually handle. If the employment team is already at capacity, more employment enquiries are a cost, not a gain, and the budget should go elsewhere or to recruitment. This is the step the partners own and the one most budgets skip.
For instanceEmployment is doing 15 files a month and has capacity for 20. The target is 5 more a month, 60 a year. -
Take the average fee from the real data
The practice management system knows the average billed fee per matter type for the last two years. Use that, not the headline fixed fee and not the partner’s recollection. Where fees vary widely, as in litigation, use the median and note the spread.
For instanceEmployment matters billed an average of £2,400 over the last 24 months. The 60 extra files are worth £144,000. -
Decide what share of a fee you will spend to win it
This is the partners’ one real decision, and it should be made once and written down. A firm with healthy margins and a growth plan might spend a quarter of the fee to win the file; a firm protecting profit might say a tenth. For a practice area with repeat work or referrals attached, such as private client, the lifetime value justifies more. Below ten per cent, the marketing cannot do much; above thirty, the margin is gone.
For instanceThe partners settle on 20%. The firm will spend up to £480 to win an employment file. -
Multiply, and that is the budget
Extra files multiplied by the affordable cost per file. That figure is the practice area’s annual marketing budget, and it carries its own success test: the marketing is working if it produces the files at or under the cost per file, whatever the spend. Repeat for each practice area the firm wants to grow, and add them.
For instance60 files at £480 is £28,800 for the year for employment. Conveyancing and private client get their own calculation. -
Add the things that are not a practice area
Some costs serve the whole firm rather than a practice area: the website’s maintenance and hosting, the brand, the measurement, the reviews process, the firm’s own name in search. These are the foundations the practice area budgets stand on, and they are usually a fixed sum per year rather than a share of files. Put them in as a separate line so they are not raided when a practice area’s quarter goes badly.
For instanceWebsite, measurement, brand and reviews: a fixed sum per year, agreed separately. It does not move with the practice area numbers. -
Sanity check against turnover, then stop
Add everything up and divide by the firm’s fee income. For most firms growing deliberately, it lands between three and eight per cent. If it is under two, the file targets are probably too timid to notice; if it is over twelve, the targets or the share of fee need another look. The percentage is a check on the arithmetic, not a substitute for it.
For instanceAll practice areas plus foundations come to 5.1% of fee income. Nobody in the meeting needs a survey to defend it.
A budget set from the files the firm wants can be judged. A budget set from a percentage can only be argued about, and it will be, every year, by whoever had the worst quarter.
How to split it
The split depends on how clients find a solicitor for each matter and on how established the firm already is in search. The table is a starting point for a firm with a sound website and a searched-for practice area; the notes say when to move the weight.
| Where it goes | Year one | Year three | Why, and when to change it |
|---|---|---|---|
| Paid search | 40 to 50% | 15 to 25% | Buys files while organic search is being built, and tells the firm which matters convert. Falls as organic rises; stays high for matters where the firm will never rank organically. |
| Organic search and content | 25 to 35% | 40 to 50% | Matter pages, guides, local presence, the technical work. Slow to pay, then the cheapest files the firm will ever win. The share grows because the return does. |
| Website | 10 to 20% | 5 to 10% | Higher in a year that includes a rebuild; otherwise maintenance, speed, and the conversion work that makes every other line more efficient. |
| Reviews, referrers, email | 5 to 10% | 10 to 15% | Cheap and underused. The reviews process, keeping in touch with past clients and referrers, the occasional event. Grows as the client base does. |
| Brand and social | 0 to 10% | 5 to 10% | Partner visibility and LinkedIn for commercial work; otherwise modest. Higher for relationship-led practice areas, where this and referrers carry most of the weight. |
| Measurement | 5% | 5% | Call tracking, analytics, the monthly report. Never cut it; it is what tells you whether the rest is working. |
| Held back | 10% | 10% | Unallocated until the first quarter’s numbers show where the return is. The reserve is what makes the budget adjustable without a partners’ meeting. |
Defending it when a quarter goes badly
Every marketing budget faces the same moment: a bad quarter, a partner who never liked the spend, and a proposal to cut it. The budget survives that moment only if it was set the way described above, because then the question is specific. Which assumption was wrong: the number of files, the fee, the cost per file, or the time it would take?
If the files came in at the cost per file but fewer than planned, the channel is working and the target was ambitious; adjust the target. If the files cost more than planned, look at which channel and why, and move the reserve. If organic search has not paid after a quarter, nothing is wrong yet; it was never going to. If nothing can be answered because nobody connected enquiries to files, that is the finding, and the first spend of the next quarter is measurement.
What should not happen is the whole budget cut by a third across every line. It punishes the channels that were working for the sins of the one that was not, and it throws away the compounding that organic search and reviews had started. Cut the line that failed, hold the lines that paid, and bring the measurement to the next meeting.
- Files
- Won versus planned, per practice area
- Cost per file
- Actual versus affordable, per channel
- Clock
- Which channels are inside their payback period and which are overdue
- Reserve
- Where the held-back 10% goes next quarter
- Capacity
- Whether the fee earners can still take the files the budget is buying
- Decision
- One line changed, written down, reviewed next quarter
Three budgets that are not the usual one
The method above assumes a firm that wants steady growth in matters it already does. Three common situations change the arithmetic.
- Problem
- No data on what a file costs to win, so the cost per file is a guess
- Approach
- Set the budget for two quarters from the method above, weighted to paid search and measurement, and treat the first six months as buying the data. Reset the budget at month six with real numbers.
- Watch for
- Judging the first quarter as if it were the third. The start page in this section covers the first year.
- Problem
- The site’s authority is damaged and the foundations need rebuilding before any channel pays normally
- Approach
- A one-off foundations budget for the clean-up and rebuild, separate from the practice area budgets, with paid search carrying the files until organic recovers.
- Watch for
- Spending on content while the site that hosts it is still penalised. Order matters.
- Problem
- Forty per cent of files come from one source that could stop tomorrow, so the budget is really an insurance policy
- Approach
- Set the file target at the number the firm would need to replace a third of that source, and build the channels that would replace it, even though the files are not needed yet.
- Watch for
- Partners cutting the budget because “we’re busy”. The referrals page in this section is about this situation.
- ✕Fee earner time; it is real, and it should be planned, but it is not cash
- ✕Recruitment to handle the files the marketing wins
- ✕Enquiry handling: the people who answer the phone
- ✕Compliance review of marketing content, which the COLP will want
- ✓All four should be in the plan beside the budget, so the files have somewhere to go
Questions partners ask about the budget
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What do law firms typically spend?
Surveys of UK firms put marketing anywhere from under two to over ten per cent of fee income, with most established high street and regional firms between two and five and growth-focused firms higher. The spread is the point: the typical figure tells you what other firms decided, not what yours should.
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Should the agency fee come out of the same budget?
Yes, all of it: media, fees, tools, content, everything. A budget that separates “agency” from “marketing” makes the cost per file impossible to calculate, and the cost per file is the only number that makes the budget defensible.
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Can we set it monthly and adjust?
Set it annually, spend it monthly, review it quarterly. Monthly budgets get cut in the first bad month, before any channel has had time to work. The quarterly review with the held-back reserve gives the adjustability without the panic.
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What is the minimum that is worth spending?
Enough to build and measure one channel properly for a searched-for practice area, which for most firms means a figure in the low thousands a month rather than hundreds. Below that, the money buys activity without enough of it to produce a result, and the firm concludes marketing does not work.
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How do we budget for a website rebuild?
As a one-off capital item outside the annual method, with a life of four to six years, and with the practice area budgets continuing alongside it. A rebuild funded by cutting the marketing that feeds it launches to an empty room.
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Will you help us build the figures?
Yes. Bring the fee data by matter type and a view on capacity; we will work the calculation with you, suggest the share-of-fee range for each practice area, and produce the one-page version the partners can approve. It is usually a two-hour conversation and a spreadsheet.
Work the numbers with us
Send the average fee by matter type and how many more files each team could take. We will come back with the calculation done for each practice area, a proposed split, and the single page the partners’ meeting needs.
- Fee data by matter type and a view on capacity, from whoever runs the practice management system.
- A two-hour working session, in person or on a call.
- A one-page budget with the assumptions written down, ready for the partners.