It can be assumed that you’re looking to expand your law firm if you’re looking to find out how much lawyers spend on advertising.

If you own a law firm, there are two ways to manage it: 1) as a law practice or 2) as a business.

Referrals can work well if you’re happy running a law practice. However, if you’re looking for substantial income growth, you need to manage your law firm as a business and spend money on advertising.

Building a larger law firm requires money for advertising and money to expand your office, as well as salaries, overhead, and case expenses on an increasing number of cases.

There’s nothing wrong with having a law practice. I had a personal injury law practice for years because I loved being a personal injury lawyer. I loved making insurance companies pay their entire insurance policy, even when the liability wasn’t good and, sometimes, many times more than the entire insurance policy.

I got caught up in a game to keep me from boredom. The game was to see how much I could force an insurance company to pay, not how much money I could make.

All my life in school, the game was the same. How well could I do on tests without studying? I never studied or took notes in school, not even in law school. I didn’t even study for the bar exam.

But recently, I wanted more money. There’s a limit to how many cases one lawyer can handle. I took on a partner, but we both got too busy and were at that limit. We wanted to grow a business.

We didn’t want the overhead and stress of managing a large law office and were tired of working on cases. We had a better idea. We formed a partnership with a large personal injury law firm, then another large law firm, and three small law firms.

We send cases to five personal injury law firms because each law firm is better suited for certain types of cases. For instance, one law firm is particularly good for soft tissue car accident cases.

We spend money on advertising and send the leads to our partner law firms. They do all the work, pay the case expenses and overhead, and pay us 50% of the legal fee.

So, how much do lawyers spend on advertising, and how much do personal injury lawyers need to spend on advertising?

How Much Do We Spend on Personal Injury Advertising?

We were spending 8.5% of our current (not target) net revenue on advertising and then increased that amount to 17% to increase our caseload.

We get 50% of the legal fee, so that’s our net revenue. Keep reading to see why we get 50% of the fee. If we used a percentage of total legal fees, the percentage would be half.

I want to grow faster, so I plan to increase our advertising budget further. We can spend as much as we want on advertising and take on an unlimited number of cases without worrying about increasing overhead because we refer them out. Consequently, we just got a credit line to increase our advertising budget.

A few years ago, we used to spend $10,000 per year on marketing for motorcycle accidents, but since the pandemic, the only motorcycle magazine here closed, and most of the motorcycle events disappeared. Additionally, it required a lot of our time at motorcycle events. Our motorcycle marketing campaign was the most profitable marketing campaign ever.

Now, our entire ad budget is spent online with Google Ads because we’re in a large market where TV advertising is extremely expensive and covers four states. Read about our Google Ads campaign.

What Is Our Return on Investing From Personal Injury Advertising?

One of the things we like about Google Ads is that they are very predictable. The gross return on investment (ROI) when advertising 1-800-HURT-911® is $20 for every $1 spent on Google Ads. 1-800-HURT-911® is a significant factor in achieving such a high ROI.

Since we get 50% of the legal fee, our net return is $10 for every $1 spent with Google Ads.

How Much Do Lawyers Spend on Advertising?

A few years ago, I read that large corporate law firms typically spend 17% of gross revenue on advertising. When searching online now, I keep seeing the same statistic being quoted: large law firms spend 2-5%, and smaller law firms spend 5-10% of their gross revenue.

That number applies to all law firms, not just personal injury. However, considering the different types of advertising and marketing available today, it’s impossible to believe that large law firms spend only 2-5%.

Bill Hauser, CEO of SMBTeam, which provides growth services for law firms, says in the video below that the range is “between 18 to 40% that the firms that are crushing you and stealing all of your cases are spending on marketing.” (I believe that 18 to 40% is the percentage of gross revenue)

I recommend that personal injury law firms spend at least 8% to 18% of the target gross revenue on advertising. If your law firm is larger and can afford traditional media such as TV, radio, and billboards, as well as online advertising (PPC, social, etc.), I recommend 15-18% of the target gross revenue.

There are two ways to decrease ad spending while increasing revenue. One is to use a good advertising agency, and the other is to use a vanity phone number for lawyers. Tell your advertising agency to find a good vanity phone number for your law firm.

It’s important to know how to spend your advertising budget and not waste it. For instance, read, Should Lawyers Use Google Ads or SEO?

Some lawyers want to advertise on billboards first but see why advertising on billboards without TV or radio is a mistake for personal injury lawyers.

Sharpspring noted in their report (see 4. below), “Spending more, however, does not automatically mean you will see more revenue. It all depends on how you spend the money.”

How Much Can Lawyers Earn From Personal Injury Advertising?

If you do not use a vanity number in your advertising, you should earn a gross return on investment of $10 for every $1 spent.

We have an advantage by advertising with 1-800-HURT-911®, which earns us $20 for every $1 spent on advertising. You can see how it gives us a better ROI with Google Ads. If available in your market, you can also use 1-800-HURT-911® to your advantage. Read more about 1-800-HURT-911® and email or call Phil Franckel.

How Much Do Lawyers Spend With Google Ads?

Google Ads is interesting because:

• Lawyers can spend as much as with TV or as little as $5,000 per month and possibly less.
• Lawyers with very large ad budgets do not have an advantage over lawyers with much smaller advertising budgets.

As this Reddit thread by Google Ad managers shows some larger personal injury law firms spend as much as $100,000 per month on Google Ads.

We started with a Google Ads budget of $4,000 but have since increased it substantially because our conversion rate is insane, and our ROI is $20 for every $1 spent on Google Ads. See how we get such a high ROI with Google Ads.

Andrew Stickel, CMO at SMBTeam, recommends in this video that lawyers spend $10,000 or more per month but they have made it work with lawyers spending $3,000, $4,000, or $5,000 per month.

How Much Should Lawyers Spend With Online Advertising vs. TV, Radio & Billboards?

There are always new avenues for advertising media to appear, and it’s rare that any disappear. The only advertising media that almost disappeared is the printed Yellow Pages, although they are just about completely gone (I still receive a local Yellow Pages book at my home, and lawyers are still advertising there).

The increasing number of advertising options means your advertising budget needs to grow because large competitors will spend their advertising dollars everywhere.

Even traditional media expands to new avenues. Besides broadcast TV (network TV), which works best for personal injury lawyers, and cable TV, there are streaming channels and videos on YouTube and everywhere.

Static billboards are still popular, but digital billboards are now on streets, highways, and everywhere else. Digital billboards are in taxis, Uber car wrap advertising, gas pumps (soon EV chargers), and even in bathrooms.

Static billboards like the ones on this train are the most expensive form of advertising and the least likely to produce results for lawyers.

Where you should spend the money from your advertising budget depends on many factors.

Many lawyers think TV advertising is too competitive and may choose Google Ads to avoid the competition, but that’s not why we use Google Ads. Competition increases advertising results.

We currently use Google Ads exclusively because we’re in the largest market, where traditional media is very expensive and reaches a larger geographic area than we want. Google Ads is more affordable, extremely predictable, and works well for personal injury.

Facebook works well for legal fields like divorce, where people need to see your branding over time because they don’t wake up in the morning and think it’s a good day to get divorced.

People injured in an accident usually need a lawyer immediately and will use Google Ads as the Yellow Pages.

The type of law you practice, the market you’re in, the amount of money you want to spend, and many other factors will affect your decision about where to spend your advertising budget.

The one thing to remember is that advertising works better when you use multiple advertising media types for cross-branding. The more people see you in different places, the better your advertising will work.

How Much Do Other Businesses Spend on Advertising?

Sharpspring, marketing automation and CRM platform by Constant Contact
reported, in Agency Perspectives – Issue 19, the following conclusions from their study:

1. “…the most successful B2C software companies on average dedicate 15 percent of revenue to marketing.”
2. “However, our study showed that when companies fall below 5 percent, they experience slow growth or no growth at all.”
3. “…for every dollar you put into your marketing budget, you will see a return of $10 in revenue…”
4. “Spending more, however, does not automatically mean you will see more revenue. It all depends on how you spend the money.”
5. “Let me reiterate: Sales is not marketing. If your marketing budget includes sales, and it stands at 10 percent, your actual marketing budget is more likely around 3 percent.”
6. “No matter how much you spend on the right tools and services, if you put little or no strategic thought into your marketing and just emulate what your competitors are doing, you’ll see minimal ROI.”

How Much Do Law Firms Spend on Marketing?

I differentiate marketing and advertising. However, there are many definitions of marketing and advertising. For example, see how much lawyers can spend on a marketing campaign for motorcycle accident cases.

You may also be interested in reading, How Can Lawyers Advertise When Lawyer Advertising Is So Competitive?

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