New Study Finds High-Growth Law Firms Invest 3X More Budget in Marketing - Find Out How Now

By LexisNexis InterAction+

High-growth law firms, achieving at least 20% compound annual growth over three years engaged in a specific business strategy for their law practice.

The ninth edition of the Hinge^® Research Institute’s annual High Growth Study, which LexisNexis® InterAction+™ is pleased to sponsor, found that “high growth” firms (those that achieve at least 20% compound annual growth over a three-year period) spent 16.5% of their firm revenue on marketing budgets, as compared to 5% of revenue on marketing that was spent by firms that experienced no growth.

Moreover, the Hinge Research study found that high-growth firms employ much larger marketing teams (19% of FTEs are marketing staff) compared to no-growth firms (11% of FTEs in marketing).

These are just some of the notable findings from a benchmarking study that helps law firms see and adapt to changing conditions in the marketplace.

“A fog of uncertainty has clouded the legal marketplace for the past few years, and it hasn’t quite lifted yet,” reads the introduction to the study report. “But rays of light have begun to pierce the gloom, illuminating a cautious optimism. Growth across the industry is starting to pick up again after two consecutive years of decline.”

The Hinge Research study identified four major overall industry trends for legal marketing in 2024: 

Growth is accelerating again

After two years of decelerating growth rates, law firm revenue growth ticked up last year, from 8% in 2023 to 8.6% for 2024. Hinge researchers speculate this could reflect a stabilization in the legal services marketplace after years of volatility.

Automation and AI are firms’ top challenges

Automation and Artificial Intelligence were identified as a top challenge by 43.5% of law firms, a spike of more than three times from the 14.1% who cited it in the previous year. Other top challenges identified were increased competition from new firms (42.4%), a shortage of top talent (35.3%) and unpredictability in the marketplace (31.8%).

Spending on marketing continues to slide

The percentage of law firm revenue dedicated to marketing (excluding compensation) declined for the fourth consecutive year, sliding from 16.7% last year to 12.5% for 2024, returning most firms to pre-COVID levels. Interestingly, as noted above, the percentage of revenue spent on marketing by high growth firms was triple that of their no growth peer firms.

Law firms generate fewer digital leads than most professional services firms

Law firms generated 25.2% of their new business leads from digital sources last year, which places them far below other expertise-based firms. Consulting firms (32.3%), technology firms (32%), government contracting firms (26%) and accounting firms (25.3%) all generated a higher percentage of digital leads; only architecture and engineering firms (19.6%) ranked lower in the study.

Examining High-Growth Law Firms

The Hinge Research study is unique in that, beyond its industry-wide benchmarking data collection, it focuses specifically on examining the best-performing high-growth law firms and comparing them to their slower-growing peers. This helps law firm leaders learn what the top performers do differently and what appears to give them an advantage in the marketplace.

The study found that high-growth firms grew at a median rate that was 3.5 times faster than the average law firm in the industry last year. The data reveals four key areas in which high-growth firms demonstrated advantages over their peers:

1. Marketing and Business Development
2. Strategy
3. Talent
4. Technology

All of these areas are mission-critical, but marketing and business development is a specific discipline that is most closely associated with firms experiencing the most positive growth year-over-year.

“The data doesn’t tell us whether high growth firms hire talent with more mature skills, train their marketers better, or both — but it does reveal a correlation between higher marketing skills and performance,” says the Hinge Research report. “Take steps to ensure your marketing team is not only aware of the latest marketing tools, techniques, and strategies but also actively learning and putting new skills into practice.”

Among these latest tools is a new generation of client relationship management (CRM) software offerings that drive law firm revenues and business performance. CRM applications surface crucial intelligence derived from relationship data, which helps law firms make better business decisions and build stronger relationships with clients.

InterAction+  is a new cloud-based CRM solution at the leading edge of the industry. The software accelerates business growth in law firms of all sizes with the only legal CRM platform that utilizes relationship intelligence and reveals new business opportunities for a competitive advantage.

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