During boom times, most law firm marketing budgets turn into overgrown fields where sacred cows graze, growing fat and happy on a rich diet of unquestioned country club memberships, unexamined entertainment allowances and unlimited directory listings.
In today’s highly competitive business environment, there is better use for that money. “It is never easy going after sacred cows,” said Deborah McMurray, “but it must be done -- and the budget process is the way to do it. Intelligent reallocation of existing financial resources allows law firms to invest in their strategic marketing initiatives.”
McMurray is principal of Deborah McMurray Associates, www.deborahmcmurray.com. She is the creative mind behind Couch Money®, a law firm cost-recovery program and marketing-department budgeting system that helps firms find “lost” money under their “couch cushions” and reallocate their dollars more strategically.
“First, you must determine your firm’s strategic plan,” said McMurray. “Where is your firm headed and what will it take to get there? How will you know if you are successful? Then, take a look at your current budget numbers. Does each expense support your overall strategy in some way by getting you closer to your clients and prospects?
“Any expenditure that does not pass this test should be reallocated,” said McMurray. “This is not easy. Many of these expenses feed big egos – both personal and institutional. Budget control is like weight control – it’s easy to eat a lot and put on weight. It’s ten times harder to have to take it off again.”
McMurray has calculated that lawyers in firms waste at least $1,000 each – and in many cases twice that amount -- on non-strategic expenditures each year. “For a large firm, that adds up to a lot of money,” she said. “You could make significant progress towards a strategic goal if you invested that money in, for example, a positioning/branding initiative or business development training.”
One of the best places to find caches of law firm “couch money” is in individual lawyer spending accounts, which are often set at a percentage of a lawyer’s compensation and used for business development meals, entertainment and travel. “This category can easily account for half of a law firm’s marketing budget – a portion over which the marketing department has absolutely no control,” said McMurray.
“Now, anything that gets you face-to-face with clients and prospective clients is worthwhile if it advances the firm’s strategic agenda,” said McMurray, “but these expenses must be closely managed and measured.”
There are four benefits to tracking this kind of spending. “First, tracking allows you to flag individuals and groups who are over- or under-spending; second, it allows you to measure the cost of getting and keeping a client; third, it lets you compare what is spent on your best clients with what is spent on marginal clients; fourth, it helps you determine if this spending supports your firm’s strategic practice and industry group goals.”
McMurray offered this advice to the marketers in the room: “The better you understand law firm economics and marketing math, the closer you move to the power. Use this financial knowledge to compile a ‘lean and mean’ marketing budget – devoid of sacred cows -- that focuses lawyer and firm marketing on defined short- and long-term goals.”
Janet Ellen Raasch is an author/ghostwriter who works with lawyers and other market-savvy professional services providers to research and produce reader-friendly manuscripts that are suitable for publication as articles or books. She can be reached at (303) 399-5041 or email@example.com.