Preparing Your Law Firm for Uncertain Economic Times

Preparing Your Law Firm for Uncertain Economic Times

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Throughout history, there have been up and down business cycles – great economic expansions, depression and recessions, times of war, great change, and uncertainty.  For a recent perspective on business, cycles click here.

During times of economic uncertainty or impending economic uncertainty businesses — including law firms and legal tech companies – naturally have a first instinct tendency to believe that their best action is to decrease their marketing budget as a way to reduce expenses.  It may feel like a marketing budget reduction or delaying a website refresh is the right move, but many businesses have learned the hard way that it is exactly the wrong action to take – that in the end, it will actually lower your firm’s profit margin and be a revenue setback when economic expansion inevitably happens again.  In fact, in a Millward Brown study, 60 percent of the businesses that decided to cut their marketing budget during the Great Recession saw their “brand use” decrease by 24 percent and their “brand image” decrease by 28 percent.  Furthermore, according to Kantar brands that decrease or stop their marketing to save costs will see a 39% reduction in brand awareness and it will delay their recovery from an economic downturn.

 

Businesses that view marketing as an “investment” and go against the grain to increase their marketing budget during uncertain economic times have gained new customers, increased their revenue and profit margin, and emerged stronger while other companies gave in to their initial instinct at the first sign of an economic downturn.  For example, during the 2007-2009 recession – the Great Recession – Amazon increased its profits by 68% by increasing its marketing budget and launching two very successful product offerings, the Kindle and its B2B cloud service AWS.

 

The same concept as the Amazon example applies to law firms and legal tech companies.  If during uncertain economic times you choose to increase your marketing budget or at least maintain the same marketing budget, and you choose to go forward with adding additional attorneys or specialties to your firm, you will put your firm at an advantage over the many other law firms that give in to their first instinct to cut budgets.

 

Overall, law firms should budget between 2% and 10% of gross revenue for marketing and advertising, and in the case of personal injury firms, the most successful firms budget up to 20% of gross revenue for marketing and advertising.  As a general rule of thumb- Large firms should budget 2-5% of fee-based gross revenue for marketing and advertising.  Smaller law firms generally should budget 5-10% of gross revenue for marketing and advertising.

 

An economic downturn also means new opportunities for your law firm.  You should consider shifting focus or expanding into areas of law that are “recession-proof” or can present new revenue streams for your firm when purchasing slows down, bills increase, credit tightens, people lose jobs, etc.  Examples include bankruptcy law, foreclosure law, criminal law, family law, civil law, labor and employment law, wills and trusts, small business law, and intellectual property law.

Here are some tips to prepare your law firm and maximize your marketing budget during uncertain economic times:

 

  1. Focus on efficiency in your sales funnel (awareness phase, consideration phase, conversions)
  2. Explore CRM software solutions that can help automate your intake process and marketing functions to gain better efficiency. Choose a solution that can easily integrate with your current practice management solution.  Some of the most popular legal-specific CRM solutions include:

 

Note: ONE400 is a Clio integration partner and also a Lawmatics integration partner.

 

  1. Explore new legal tech solutions that can introduce more efficiency and cost savings to your law firm. Examples include legal research solutions like Casetext or Ross, e-discovery solutions such as Exterro, Relativity, or Logikcull for example, AI remote deposition solutions like DepoDirect, document management solutions like Filevine, MyCase, or Smokeball, contract analysis and drafting solutions such as Loio, Donna Legal, or Kira, and similar solutions.  And, to securely store client files using blockchain technology to ensure compliance with American Bar Association Rule 1.6 law firms should also consider equipping their attorneys with file security solutions like AXEL Go.
  2. Consider contracting with an expert legal marketing consulting company, like ONE400 for example, that can save your firm time and aggravation while maximizing your marketing budget due to their expertise and negotiation experience. The consultant’s services can include: building a more effective marketing strategy, managing your firm’s marketing, social media, and public relations campaigns, creating lead generation products unique to your firm, consulting to create a new legal subscription plan, and creating or refreshing your firm’s website, and more.
  3. Seek out a business development consultant to audit your firm’s sales process and make recommendations for improvement of your intake process and close rate. For example, ONE400 also provides that service.

Also, here are some additional steps your law firm can take to prepare and thrive during an economic downturn so that your firm comes out stronger and thrives when the business cycle returns to economic expansion again:

1.  Re-engage with your firm’s existing clients.

  1. Grow your audience and build your firm’s thought leadership position and SEO authority by writing more Blogs and posting frequently on platforms like LinkedIn.
  2. Implement a referral marketing program focused on two areas: existing and former client referrals and referrals from other attorneys.
  3. Make a concerted effort to ask for Google and social media reviews from all of your clients, even if they did not engage with you. It’s all about the “client experience” in today’s business climate, especially when there is an economic downturn.  According to online review statistics consolidator Review42, 78% of people trust online reviews as much as a recommendation from a friend or a family member, and almost half (49%) think the quantity of reviews matters.
    5.  Research and know your law firm’s competitors well.  Do a SWOT analysis to determine the “differentiators” for your firm and include them in all of your firm’s marketing messaging.
  4. Attend more business networking events and join lead exchange groups.
  5. Go big, or go home as they say. Be bold and go after large case opportunities that you wouldn’t normally pursue.
  6. Focus on training and development of your team, especially how to get engagements for intake staff and attorneys that are speaking with new prospective clients.
  7. Implement a client satisfaction program to ensure that you keep current clients fully pleased with your firm. An easy and effective way of measuring client satisfaction is the Net Promoter Score (NPS) consisting of a simple question: How likely are you to refer our law firm to your family and friends on a 0-10 scale?

 

An economic downturn is a perfect time to grow your practice and increase margins to provide an even more solid foundation for long-term growth when the inevitable business cycle returns to economic expansion – and it will.  The moves you make today will have a direct impact on your firm’s future.  Be certain you make the right decision at what could be a pivotal moment in time for your law firm when an economic downturn appears to be looming.

If you want additional guidance or help with your law firm’s marketing, website, or growth consulting, talk with an expert at ONE400 today.

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About the author

Jeffrey Kraft is a seasoned marketing, business development, and agency operations executive with over 30 years of experience. During his career, Jeffrey has consulted law firms and tech companies of all sizes on the development of effective marketing, business development, network development, and revenue growth strategies. In addition, Jeffrey is an award-winning journalist and seasoned media veteran with extensive experience developing effective public relations and media relations strategies for law firms, pharmaceutical companies, professional sports teams, and others., he is also President of ONE400.

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