Budgeting is challenging at the best of times, but in the shadow of a potential recession, prioritizing your legal marketing budgets can be even more difficult.
Headlines that are eerily similar to those from 2009 have been appearing in legal trades and blogs over the past six months more frequently and with more urgency: “The Coming Downturn,” “The Law Firm Recession Could Cost 10,000 Lawyers Their Jobs” and my personal favorite headline “How to Get Ready for the Big, Scary Recession.” Every lawyer and legal marketer with more than 10 years into their careers have lived through this before. It’s no surprise to any of us that some of the early advice to prepare your firm for a recession is to tighten the budget, rethink the expenditures, renegotiate contracts, and look closely at the staff to see where cuts can be made.
While we might like to believe that firms learned their lessons from the prior recession about cutting marketing expenses too close to the bone, it is worth reminding ourselves that dips in billables and collections will concern even the most intrepid of law firm management. Rethinking and cutting expenses is a natural first step in any industry during a downtown.
However, many law firms cut all of the fat (and some of the bone!) out of the budget in 2009 and some law firm marketing functions never recovered a sustainable level of staffing or enough budget for the expectations placed upon it. But the truth is that rationalization of expenditures and a good budget process can be an effective tool to help a firm and the marketing function, even if there’s no fat to be cut. Be assured, even if that argument buys you some time, the marketing expenditures will get a second look as soon as billables dip. Rather than waiting for a top-down pronouncement of across-the-board cuts (or more cuts, depending upon your firm), take advantage of the potential recession to engage in some helpful proactive budgeting exercises now. These processes will help you make the case later for what should be at the top of the list for elimination from the 2020 budget. It can also help you argue for additional expenditures, especially when offset by an offering of items for elimination.
The best and most effective way to help your firm is to begin by articulating the key strategic objectives and to determine what efforts and expenditures need to be made to achieve those objectives. This can help you create a clean-slate to budgeting, and help you more easily eliminate those expenditures and projects that don’t support your key strategic objectives. The following are two typical examples of recession-driven strategic objectives as well as the expenditures that may be tied to them:
1. Retaining Current Clients and Current Work:
Begin with a discussion about the firm’s strategy to endure the recession. A natural first assumption is that you don’t want to lose the business and clients you already have and you don’t want to lower your current rates. The best way to do that is by protecting your client relationships. Every other firm, including yours, will be looking to expand the number of clients in order to make up for the shortfall of work that each client is able to give them during a recession. That means that your clients are primary targets for your competition. One of your key objectives must be to do everything you can to protect your current client relationships, hold onto the work they can give you, and provide value beyond the hourly rate. The best way to do this is to talk to your clients. Or rather, even better, listen to your clients. Formal client interviews or conversations (whether conducted by an outside consultant, the senior partner of the firm, or the marketing team), is a critical component to finding out how their reality has changed and how your firm can help. Other client-specific activities, such as creating client extranets, or spending time and resources on improving client teams, client-specific events and CLE will naturally fall under this strategic objective. Also, this is an occasion to refine—and shorten!—your client alerts. They’re facing new challenges. What do you have to say that they can find helpful? While the development, production and distribution of firm newsletters and alerts may seem as if they are not directly tied to this objective, make a more direct correlation by demonstrating more client or industry-specific emphasis through timely short tailored communications.
Include budgeting for client-team coordinators, and apportion a percentage of the cost of writers, editors and production and technology to support those efforts, under this strategic objective.
2. Emphasizing Counter-cyclical Practices:
Every firm more than 10 years old has practices that performed better and were busier during the last recession. Generally, litigation and bankruptcy fall into this category. There are also those likely to remain steady through a recession (e.g. labor & employment, environmental law, e-discovery) because the services they offer have become critical to your clients. While capital markets and M&A practices often slow considerably during a recession, the clients that typically hire you for that work, may throw off enough other work to help you through difficult times. This only holds true if those clients know about and believe in those other practices that can service their other needs.
Therefore it would be wise to build a strategic objective around enhancing the profile of those additional capabilities and accomplishments, concurrently to your current clients as well as to the world at large. White papers, conferences, website enhancements can all be tied to this specific objective. Expenditures might include CRM and eNewsletter marketing software, such as HubSpot, that allow for tracking and measurement which are absolute musts during a time when marketing results may be—indeed will be—questioned. And, of course, your budget needs to protect the people who run those programs and analyze the data.
Other examples of strategic-driven objectives may include a key lateral partner integration, the launch of a new practice, or development of a joint offering with an investment bank or consulting firm. Another may also be expanding the client base in a specific sector, which may require additional business development support in the form of staff and tools. Whatever the strategic objective is, the more closely you can tie the expenditure to the objective, the more likely it will be approved and protected.
While many firms will, in theory, support the notion of a strategic-driven budget, there are zero lawyers or practice groups that will believe that they have no place on the priority list. Even those that understand they will need to have their budgets reduced, will expect (rightly so) some level of marketing support and expenditure.
One of the most effective ways I’ve found to help get those lawyers to engage in a meaningful discussion about priority expenditures is to take them through an exercise which consists of five simple steps:
- Meet with them with a list of their marketing expenditures in the prior year.
- Ask them what they would enhance or add to list of activities or projects if there were an opportunity to increase the budget by 10%.
- Using the new list of activities that includes the imaginary additional 10%, then ask them what they would cut from the budget if there were a management mandate to cut 15-20% across the board on marketing budgets.
- Compare with them, together, your own suggested answers to those questions.
- Have a meaningful dialog about what could be dropped and, if there’s room for it in the budget, replaced by the new activities/projects they thought of during the “expansion” part of the exercise.
While this exercise may still result in some activities or projects being eliminated in the budget, it often helps practices really prioritize and brainstorm about what they can be doing differently, and what’s really important to accomplish. It’s a lot easier for lawyers and practices to accept a cut in services, if they’ve helped to select what stays.
This exercise should be undertaken even with the counter-cyclical practices to ensure that they are not simply spending time and money on the same old activities simply because they lacked imagination.
To the extent that you have a practice that continues to hold onto the notion that the really expensive event which does not generate any benefit for the firm is still worthy of undertaking, then it’s time to get the CFO, Executive Director or Chairperson involved. It will be helpful to you to demonstrate that you tried to cut the less helpful items from the budget in a proactive manner and will give more credence to your argument to defend some of the other activities and projects.
Recession Marketing Mix Budgeting
Even with a keener focus on strategic-driven goals and higher priority practices, there’s still a lot of nuts and bolts marketing activities that any firm will undertake. In order to make the most out of a smaller budget, try to find the alternative processes and projects that will help you accomplish your goals with less. This might mean shifting your marketing mix and rethinking staffing for certain tasks.
During a down economy, sometimes the most valuable and abundant resource law firms have is their time. Take advantage of the recession by shifting your marketing mix to reflect activities and tactics that are more time-intensive, yet also deliver on results.
1. Update your website content:
Websites are never-ending projects; there’s always something more that can be done to improve the site. But rather than focusing on updating the technology, why not focus on rewriting the content to emphasize the messages that are more resonant in a tougher economy? While practice leaders are often not the most interesting writers, they could at least provide some direction on content that a good writer can then develop into compelling new prose. Additionally, lawyers with time can write more updates, blog posts, or create podcasts to improve the website content. This content can then be further advanced through mailings to contacts, and serving up on other platforms (see number 2 below).
2. Encourage online networking:
Networking online is similar to its offline counterpart, except often less time-consuming, easier to manage and with further reach. Whether lawyers choose to contribute to blogs and forums, or have an active voice on LinkedIn or Twitter, make sure that they are focused on the right audiences within those communities. Suggest that associates help to develop this content as well. It’s a great training tool for them and makes it more likely partners will produce something if they only have to edit it, rather than draft from scratch. Online networking is an inexpensive budget line item compared to many others, and provides enormous value if embraced properly.
3. Clean up those mailing lists:
They are never truly clean and perfect, since people move every day – especially during a recession when they may get laid off. But the work put into cleaning up the lists, and getting every administrative assistant at the firm to help lawyers reach out to all of their contacts, has massive secondary benefits that often outweigh the primary ones. This could be the great outreach project you’ve always dreamed your lawyers should engage in.
These are a few of many low-cost activities and budgeting strategies that could provide immediate and long-term benefits to the health of your law firm as you navigate turbulent economic waters. The most important thing to remember is that it is called a cycle for a reason – the market will eventually come back. With a little advance planning and realistic, pragmatic approaches, it could turn a difficult time into an opportunity for your firm to grow and thrive.
Yolanda Cartusciello, is a guest author and led the marketing teams at Debevoise & Plimpton and Cleary Gottlieb. She is currently a partner at PP&C Consulting.