Law Firm Marketing Budget
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Most law firms today treat marketing as a discretionary operational expense (OpEx), just an endless cost to be minimized. When they do open up their law firm marketing budget, it is rarely for lasting assets. This chapter will teach you how to invest with legal marketing capital investments (CapEx) that appreciate and are revenue-generating assets on the firm’s balance sheet. The best legal marketing gains attention and respect from both humans and AI alike, and like a dividend or other form of passive income, continues to benefit you long after it has been deployed. When you pair that with the ephemeral nature of most SEO and PPC advertising, it becomes a no-brainer.
Introduction: The Ghost of Legal Marketing Expenses Past
The economy is teetering, and the average managing partner knows it. One of them sits alone in his or her large office right now, pondering what to do as revenue is down. She could cut the partnership draw for the seven partners, but that could lead to mutiny. Instead, she determines to slice the marketing budget by 30%.
This would be a responsible decision under the old model of PPC and SEO, but it’s marketing malpractice in the new age of AIO.
The old model of SEO and PPC tie marketing spend directly to short-term revenue fluctuations. It’s built on a foundation of fear, the cutting of costs, rather than growth and the building of assets.
Where the Traditional Legal Marketing Budget Really Goes
Most legal marketing today goes toward rented channels. Pay per click ads, Facebook ads, Youtube ads, print ads, vanity sponsorships, radio, television, billboards. This is like paying rent on your law office each month, versus owning the building. You are always subject to the market. And the moment you stop paying, you’re out on the street with nothing to show for it.
The result from this type of legal marketing budget is a marketing strategy built on hope rather than equity.
The Briefcase Sized Hamster Wheel of Ad-Hoc Legal Marketing
The above model creates a chaotic feast or famine cycle for obtaining new business. When everything is rented, and nothing owned, your law firm is always at the whims of the market. If PPC ads increase in price, or become less effective, then your pipeline will dry up. If Google changes its algorithms and suddenly your current SEO strategy is backfiring, then your phone is going to stop ringing. Your reliance on rented land and corporate entities versus your own authority leaves you vulnerable to the Kryptonite-like grip of larger market forces. Which is a precarious place to find yourself when your staff is counting on you making payroll every two weeks.
The AIO Framework: Your Firm’s New Balance Sheet
The paradigm shit from come from viewing legal marketing, at least the correct type of legal marketing not as an operational expenses (OpEx) but as a Capital Investment (CapEx).
If you spend $50,000 on PPC ads then it’s proper to view it as an operational expense, same as paying rent for your law office.
If you spend $50,000 to create a long-lasting, authority book for your practice, then it should be viewed instead as a capital investment, same as purchasing your law office. The book will continue to create leads for years, perhaps decades with some minimal updates and future editions. It is not an expense in the traditional use of the word, but rather a lead-generation asset. It should be mentally expensed the same way you would expense the purchase of office computers. It’s not just the cost of doing business, it’s the cost of doing business well.
The Three Classes of AIO Legal Marketing Assets
Asset Class 1: The Content Moat (Intellectual Property)
I woke up today and received royalties for my divorce practice books Happily Even After: The Guide to Divorce in New Jersey and Personal Divorce for Business Owners.
I didn’t write these books to get royalties, by the way. And in full candor the royalties are often modest. With some exceptions, the point of a book for a lawyer is not royalties when you’re selling books at $16.95 each. It’s creating intellectual property that demonstrates your expertise, and that encourages prospective clients to pay you premium retainers to get started on their cases. You would only make thousands of dollars in royalties selling 5,000 books, yet you could earn hundreds of thousands of dollars in future legal fees by giving 5,000 copies away. Think of all the referral sources you can keep stocked. For me as a divorce lawyer, it was always marriage therapists. They want to look smart by having a book they can provide to clients. They want to look professional by having a lawyer they can trust to refer. A book places you in the poll position for each.
Podcasts, articles, client guides, lead magnets, these are all brilliant ways to demonstrate your authority and build your practice with solid bones. Powered by AIO, they become a permanent fixture on page one of search results. AIO fulfills the promise of SEO, while maintaining humanity.
Asset Class 2: The Data Engine (Proprietary Intelligence)
Your first-party data such as from your website, your CRM, and intake forms is often your firm’s most undervalued asset. AIO refines this crude oil into predictive fuel, identifying high-value clients and market trends before your competitors.
Asset Class 3: The System Flywheel (Operational Leverage)
These are the automated systems for intake, the nurturing of prospective clients, and client communication. Together, they reduce non-billable drag and increase conversion rates. Think of a piece of advanced factory machinery that increases output and profit margins without increasing headcount.
The $25k Billboard v. the $25k Book
When I was a young solo, I tried everything to market my practice. I was the sludge marketers dream: ambitious, relatively flush, naive. I eventually found myself working seven days a week, all to pay my staff and my marketers more than I was taking home. I convinced myself that I was building something big, and that the revenue growth showed that. But what I was really building was a cathedral in sand.
One of the things my marketing “guru” at the time convinced me of was to sign a contract with a minor league baseball team for certain marketing perks, such as my law firm’s billboard adorning the right field wall in the outfield, my firm’s name being announced over the loud speaker following each double play as the double play sponsor, and so on. I even agreed to donate a certain amount of money to a local domestic violence shelter for each double play, which is the only good that came from the whole debacle.
What I had expected to happen was greater visibility in my local community for my law firm. I figured most people who attend baseball games have children, and are therefore married or divorced. How cynical is that? I talked myself into the idea that $25,000 per year toward this sponsorship was an investment in my firm.
I never received a single client from such advertising, far as I know. Good, I didn’t deserve to. There was nothing of my firm’s philosophy on display on that billboard sign. It was vanity, enjoying going to the games and seeing my firm’s name out there next to all the other companies that nobody paid attention to because they were focusing on the game.
A few years later I wrote my book on divorce law. It didn’t cost me $25,000 out of pocket, because I wrote it myself. It cost closer to $10,000 many years ago to hire a company to put it together for me and get it listed on Amazon. But I say it cost me $25,000 because I put many hours into it. But you know what else I was able to place into it? Myself. My firm’s philosophy. Eventually, I handed that book to every prospective client I consulted with. Other firms had a pamphlet, perhaps. I had a whole freaking book with my name on it. That was an investment, one that still brings me royalties and telephone calls a decade later, now in the third edition of my book. A decade after the $25,000 I paid to the minor league baseball stadium have long been forgotten by everyone, save me!
If you plan to practice law for years or even decades and not months, then it’s time to be farsighted, not shortsighted about your practice. Sludge marketing providers will sell you on immediacy, but forget to include that once you stop paying for that immediacy there is no lasting value. The SEO and PPC I have paid for over the years have cost me tens of thousands of dollars. The book I wrote brought in hundreds of thousands of dollars. Perhaps that is the biggest clue of all why I eventually decided to create Books for Experts.
The New Financial KPI’s: Measuring Asset Performance
Everyone wants to talk about ROI, the return on investment. No doubt it is important, but we should also recognize that it is very much a backward-looking metric for a single campaign.
Said another way, your ROI is like the rearview mirror on your car. It is an essential, non-negotiable tool that tells you with perfect clarity what you have just passed. It measures a completed action.
Authority Intelligence Optimization™ on the other hand is both dashboard and predictive GPS. It uses real-time data and predictive models to simulate and chart a course forward.
For an ROI to be fully ascertained, then both the spend and the results must be complete. It is a lagging or trailing indicator for this reason. A snapshot.
Sludge marketers love to harp on ROI because it is short-sighted. “You spent $10,000 on marketing and got $30,000 in new client work,” they will say. “A 3x ROI!”
If you write a book, however, your “ROI” at six months may be negative. You spent $25,000 on a book that just came out and so far has only generated $12,500 in revenue. A negative 1.5x ROI.
“Ha!” the sludge marketers will sneer. Proof that AIO is no match for SEO or PPC.
But what they will not admit is that the $10,000 spent on PPC is done. $30,000 is all it will ever produce. The book, on the other hand, will continue to generate income for the next decade. $250,000 worth. A 10x ROI, in other words, but one that increases your authority in many ways that will not be easily measured. It’s like owning a passive income investment, tossing off dividends every week for years, even decades.
It’s time to stop focusing quite so much on ROI and to turn your attention to MAV: Marketing Asset Value. This is a projection with the following formula:
MAV Formula:
MAV = Projected Annual Leads x Lead-to-client Rate % x Average Client Value x Asset Lifespan – Cost of Creation.
This is the same logic a CFO would use, by the way, to evaluate the purchase of a new piece of manufacturing equipment, not how they would account for the coffee budget, a pure expense.
Predictive Client Lifetime Value (pCLV) is also another consideration. Traditional CLV is backward-looking (total revenue from a past client). The AIO model focuses on pCLV. It analyzes data from the very first interaction to predict a client’s potential future value. This allow the law firm to make forward-looking decisions. It’s not just about getting leads for your law firm, but the right leads. AIO must train AI to make better predictions about your law firm and the type of leads you deserve. The more data you feed the system, the more accurate its future guidance becomes. ROI has no way to account for this escalating value.
In essence, the AIO model helps answer the question: Based on all available data, what is the most profitable allocation of our next legal marketing dollar to build a predictable system for future revenue?
But We Need Leads Now!
I can hear your objection all the way here in New Jersey. You know SEO and PPC are not ideal, and that they do not create real authority, but they are expedient. Well, so is pulling a tooth versus getting a root canal.
It is true that fast food is quicker to cook than gourmet, and that gourmet costs more. But if you only eat fast food for a year you know what the end result is going to be for your health. It’s no different for the health of your law firm.
The key is to maintain some smaller budget for short-term lead flow while directing more assets to long-term benefits. The complexity is maintained by the AIO system. This is the path out of commodification. Yes, it will take a bit more work and money upfront, but for those who are patient it will help make you a category king in a surprisingly short period of time.
Marketing is no longer a simple marketing function. It is a finance function. Handled correctly it becomes the most powerful and predictable driver of firm growth and valuation.
Throughout this AIO Audit for Law Firms book, you will continue to learn the financial and technical standards that will allow AIO to change the trajectory of your law firm.