How much do high-growth law firms spend on marketing? According to Hinge Research data, high-growth law firms spend between 16.5% and 26.9% of gross revenue on marketing, while firms with flat or declining revenue average about 5%. The firms spending three times more as a percentage of revenue are also averaging roughly 40% profit margins. Firms that invest twice as much in marketing as their peers grow at four times the rate, and the higher case volume spreads fixed costs across more revenue, which improves the margin even with the larger marketing line item.
So Hinge Research did this study where they split law firms into two groups; firms that were growing and firms that were stagnant or declining. And when they compared the marketing budgets the difference wasn’t small. The firms that weren’t growing were spending about 5% of gross revenue on marketing, which is basically enough to keep the website running and renew some directory listings and not much else. The firms that were growing fastest were spending 16.5% to 26.9% of revenue, which on a $3 million firm is somewhere between $495,000 and $807,000 a year.
And the part that broke my assumption about marketing budgets is that the firms spending more weren’t less profitable; they were averaging around 40% profit margins. I spent a long time thinking of marketing as a cost you minimize and it turns out the data says the opposite, at least for the firms doing it right.
I wrote a broader piece on law firm marketing budgets by firm size that covers dollar ranges from solo to large firm. This post is about what those high-growth firms are actually doing with the money and why spending three times more produces better margins instead of worse, which I still think is the most counterintuitive thing in legal marketing.
Why Spending More Produces Better Margins Instead of Worse
How can law firms spend 25% on marketing and still be 40% profitable? When a firm invests in content that positions its attorneys as recognized authorities, potential clients trust them before the first call, shop around less, and accept higher fees. The marketing also attracts better-fit cases that generate more revenue per hour worked. And the volume of cases from consistent marketing spreads fixed costs like rent, staff, and software across more revenue. Those three effects combined mean higher spending creates better economics, not worse.
So the thing I couldn’t figure out for a while is why spending 25% on marketing doesn’t just eat the profit. And the answer is that the marketing changes what kind of cases walk through the door and how those cases close.
When someone finds your firm through an article you wrote about trucking accident liability and they’ve read maybe three of your posts before they pick up the phone, that’s a different conversation than when someone found you on page two of Google and they’re calling six other firms at the same time. The first person already trusts you, they’re less sensitive to fees, and they close faster.
Hinge calls this the “Visible Expert” effect and their data shows those attorneys are about 2.5 times more likely to be trusted by potential clients before the first meeting even happens, which means higher close rates and higher fees per case.
And then there’s the volume piece which is maybe simpler but just as important. A firm spending 5% has low case volume which means the rent and the staff salaries and the software subscriptions eat a bigger percentage of every dollar that comes in. A firm spending 20% has enough cases coming in that those same fixed costs get spread across way more revenue, and that’s what creates the margin even after the marketing cost per signed case is accounted for.
Who Actually Needs to Spend 16 to 27% and Who Doesn’t
Which law firms need to spend 16.5% to 26.9% of revenue on marketing? Three situations. Firms expanding into new geographic markets where they have no brand recognition and need to displace local incumbents. Personal injury, mass tort, and criminal defense firms in saturated urban markets where cost per click exceeds $200 and maintaining lead flow requires sustained high spend. And firms executing a deliberate two to three year plan to double revenue, where free cash flow is reinvested into acquisition to lock in dominant market position.
So this isn’t a universal number and I want to be honest about that. If you’re an established estate planning firm with a referral network that keeps the lights on and you’re not trying to double revenue, 5 to 8% is probably the right range and spending 20% would be a waste of money.
But there are three situations where the 16 to 27% range is the operating reality. The first is market entry; you open a new office and you think the marketing cost will be similar to your main office but it’s not because in the main office you have years of organic rankings and reviews and brand recognition and in the new market you have none of that. So the acquisition cost runs higher for the first 12 to 18 months while you build all that from scratch.
The second is PI and criminal defense in saturated metros where a single click on “truck accident lawyer” costs $200 or more and you need consistent volume to feed the staff. And the third is any firm that’s made the decision to grow aggressively over two or three years, where you’re basically reinvesting every dollar of free cash flow into buying market share before competitors figure out what you’re doing.
How They Keep the Cost Per Case From Getting Out of Control
How do firms spending 25% on marketing keep their cost per case reasonable? They mix cheap lead sources with expensive ones. A slip and fall case from SEO content might cost $400 to sign. A catastrophic trucking case from PPC might cost $5,000 to sign. Running both at the same time means the blended cost per signed case across the caseload stays profitable even though individual channels vary widely.
The CPSC benchmarks from the research show how wide the range is depending on case type. Motor vehicle accidents run $800 to $1,500 per signed case. Slip and fall sits at $400 to $800. Mass tort is $200 to $500 because it’s a volume play. And catastrophic injury or trucking cases run $3,000 to $10,000 or more, which sounds like a lot until you remember one trucking case can produce half a million in fees.
So the firms that do this well are mixing those together on purpose. They run SEO and educational content to produce the cheaper leads because organic traffic doesn’t cost anything per visitor once the content ranks, and the people finding you through articles are partly pre-qualified before they call. And they run PPC on the expensive keywords to catch the high-intent catastrophic cases where the case value justifies the acquisition cost.
The other piece is educational content at the top of the funnel which I think is the most underused thing in legal marketing. About 95% of people searching for legal information aren’t ready to hire today and they’re just researching. If you only target the 5% ready to buy, you’re competing in the most expensive space against every other firm.
If you capture some of that 95% with content and then retarget them later when they are ready, you’ve added a lead source that costs a fraction of what bottom-of-funnel PPC costs, which is how the blended number stays profitable even at 25% spend.
What the Returns Actually Look Like
What ROI do high-growth law firms get from their marketing spend? The Hinge data shows firms investing twice as much in marketing as their peers grow at four times the rate. The return is non-linear because marketing in competitive legal markets has a threshold effect: below a certain spending level the firm is invisible and the money produces nothing, and above that threshold each additional dollar displaces competitors and captures disproportionate lead share. The average high-growth firm in the dataset runs roughly 40% profit margins.
So the thing about legal marketing that I think most budget conversations miss is that the returns aren’t proportional to the spend in a straight line. Spending $5,000 a month in a competitive PI market is what I’d call below the noise floor, meaning you’re spending money but you’re not spending enough to actually show up where people are looking, so the money produces basically nothing and you conclude that marketing doesn’t work.
But a firm spending $30,000 a month in the same market might be in the top three positions on Google and capturing maybe 60% of the leads that the $5,000 firm can’t even see. And the difference between those two isn’t just six times the leads; it’s the difference between being in the auction at all and being invisible, which is why doubling the budget doesn’t just double the results, it can produce four times the growth according to the Hinge data.
And only about 18% of firms are tracking this properly with multi-touch attribution that connects the ad click to the signed case. The other 82% are making budget decisions based on partial data, which is part of why so many firms think PPC isn’t worth it when the real problem is they can’t see what the channel is actually producing and they’re spending below the threshold where it would produce anything anyway.
Want to see where your firm falls on the growth curve?
Send me your current revenue and marketing spend and I’ll benchmark it against the Hinge data and tell you whether you’re in the maintenance zone, the growth zone, or below the noise floor. And if you’re already spending at the right level and not seeing the returns, the problem is somewhere else and I’ll tell you where to look.
