ALMResearchBlog

More on Business Development

Tom Kane has another good post, More on Business Development in a Recession, on his Legal Marketing Blog, which focuses on “adjusting the four “P’s” (Product, Place, Promotion, Price) of marketing as one way to develop business in these troubled times.”

Speaking of which, our third Business Development Practices Survey Report is now available in the ALM Research Store. For those not familiar with this survey, ALM Research has been tracking the role of business development in law firms since 2005—budgets, staffing, compensation for business development managers, strategies used, and the overall organizational structure of the business development effort. While it is still housed within the marketing department in most firms, the largest of firms (those at the top of the Am Law 100, the Global 100, and the NLJ 250) now see business development as a separate function from the firm’s marketing efforts. Read more about it here.

Surveys: Business Development and Marketing

The ALM Research Survey Report of the 2007 Law Firm Business Development Practices Survey is at the printers and ready for orders. Note that participants will be receiving a free Executive Summary, their own benchmarking information compared to overall results and Tier 1/Tier 2 Firm results, as well as a 20% discount on the full report. You can place your order by clicking here or by contacting Chuck Lowry, the Director of Client Relations.

In the meantime, Suzanne Lowe, author of the Expertise Marketing Blog, is conducting another one-minute survey for her upcoming book. The title of this survey is "How well do Marketing and Business Development work with other operations, like Finance, IT, HR, Legal and more?" You can access the survey site by clicking here.

And Larry Bodine of the Law Marketing Blog has a report of his own survey of how law firms spend their marketing dollars. Bodine says, among other things, that a preponderance of law firms spend 2% of their gross revenues on marketing. We found a similar result in our own survey, which covered budgets and staffing for both business development and marketing efforts, and compensation paid to the senior-most professional who headed these two efforts.

Survey: Corporate Counsel Costs Up 7 Percent

According to this report in The National Law Journal of a new survey from Altman Weil and LexisNexis Martindale-Hubbell, corporate law department internal spending climbed by 7 percent while outside spending edged up by 1.4 percent at American companies with more than $5 billion in revenue. The increase translates to costs of $346,497 per lawyer, driven chiefly by an average 19.2 percent bump in lawyer compensation and benefits. Outside expenditures now average $616,519 per lawyer, ranging from above $1 million in the chemical manufacturing industry to $251,405 per lawyer in the insurance industry. The survey data, collected from 144 companies in the spring, reflects fiscal year 2006 spending.

In-House Law Departments: Salaries, Spending

According to Altman Weil’s  2007 Law Department Compensation Benchmarking Survey, total compensation for in-house lawyers in management jumped 8% to 14% this year, and 4.5% to 23% for non-management lawyers. A report of the survey appeared in the National Law Journal. For chief legal officers, salaries rose 5.8% to a median $300,000 in 2007, while bonus dollars spiked 43% to $157,400. Division general counsel collected a 10.2% salary increase for a median of $232,000, plus a median $104,600 bonus. The survey includes data from 343 law departments with 8,148 lawyers and 72 one-lawyer departments.

Another recent NLJ article (In-house costs outpace outside counsel spending) reported on Hildebrandt International’s 2007 Law Department Survey and said that corporate legal spending increased 6% over the past year, with increases in internal spending (8%) outpacing external expenditures (3%). Total cash compensation for in-house attorneys, including salaries and bonus, climbed 10% last year, compared with 7.5% during the previous year, according to Hildebrandt’s study, which included 202 companies employing an average of 4.2 lawyers. They also surveyed companies' U.S. and international operations, and found that the median company has global revenue of $10 billion, spends nearly $30 million on legal matters and staff and has a U.S. law department with almost 30 layers and 60 staffers. The median company also shells out 58% of its U.S. legal spending on outside counsel and 40% on inside legal costs. Chief Legal Officer's total cash compensation rose $50,000 to nearly $900,000, with the median total at $800,000. General counsel's average cash compensation spiked 19% to $700,000.

Law Firm Marketing: Mergers Fuel Rise in Budgets

A recent article in The Recorder by Zusha Elinson, Competition Fuels Marketing Budgets has garnered a lot of attention in the blogosphere. According to Elinson, growth in expenses for marketing at top law firms in the last year was much greater than the growth in profits and revenues, impressive as those financials have been. The article focused on the results of a new survey by Boston-based BTI Consulting Group, which polled about 60 percent of Am Law 200 firms.

 

According to the survey results, Am Law 100 firms spent about $14,000 per attorney and $56,000 per equity partner on marketing last year. Marketing staff salaries ate up the largest portion of the budgets, with most big firms bulking up their staff significantly last year. Similar trends were found within the Second Hundred Am Law firms (those ranked 101 to 200), but with slight differences. Smaller firms place more emphasis on individual clients, while the top 100 firms look at the markets more broadly. One sign of this is that the smaller firms spent more money on business development than on marketing salaries and advertising campaigns.

 

In the 2006 Law Firm Business Development Practices Survey, conducted and published last year by ALM Research and Brand Research, similar differences were found between the larger and smaller firms, though the population for the “Bus Dev” survey was slightly different: 54% were “Tier 1,” firms that appear on Am Law 200, Global 100, and/or NLJ 250 lists, while the other 46% were “Tier 2” firms averaging 122 lawyers and $200 to $499 million in revenue. Some of the key findings in the 2006 survey, which is still available via ALM Research Online, included the fact that, for the second year in a row, the majority reported that CMOs or marketing directors had key responsibility for business developing, including planning budgets and strategy; budgets for marketing and business development ($3 million to $4.99 million for Tier 1 firms; $500,000 to $999,000 for Tier 2 firms) had grown substantially from the previous year, as did staff; and, as in the previous year respondents indicated that, on average, about two-thirds of the budget was directed to developing new business with existing clients, while about one-third was devoted to developing new clients.