Great law firms are made up of great lawyers: litigators, negotiators, business advisors, drafters. But being a great lawyer doesn’t make one great at EVERYTHING in business that can fall outside the traditional legal sphere. In my experience, most lawyers lack the expertise (and more importantly the time to acquire the expertise) to navigate the increasingly important and increasingly complicated world of legal marketing.
In today’s difficult legal market, a law firm needs a high-quality legal marketing campaign to stay ahead of the competition, or even to stay above water. That requires a legal marketing director, and many top firms have turned to hiring an in-house legal marketing director to manage the firm’s marketing needs in traditional media and, increasingly, in the rapidly changing world of social media.
But finding and hiring a legal marketing director is a complicated process that takes a firm’s lawyers outside their area of expertise and adds a new employee that might have a bit of trouble fitting into the typical law firm environment. To make matters worse, a good legal marketing director commands around a $100,000 salary including benefits, which, as I discuss below, actually costs the firm a significantly higher amount. That being said, let’s examine why a law firm should consider outsourcing its legal marketing needs, which could significantly reduce the cost of effective marketing from $100,000 plus to $12,000 to $24,000 a year.
To some, “outsourcing” is a questionable term, but, in fact, many industries are turning to outsourcing to survive and law firms have already turned to outsourcing in areas such as document review, legal research, drafting, and editing and proofreading. In today’s outsourcing economy 35% of American workers receive 1099s rather than W-2s.
Law firms are most familiar with outsourcing in the context of actual legal work as opposed to ancillary services. As purchasers of legal services have become much more cognizant of and concerned about the costs of legal services in the last decade or so, law firms have learned that clients are unwilling to pay $350 or more for basic legal services that can be outsourced. Clients are still willing to pay for the high-level legal expertise that top-flight legal firms provide, but expect cost-conscious outsourcing of more routine work. More and more, clients and purchasers of legal services are demanding a “lean” law firm.
Law firms need to take the same approach to their own internal expenditures, and the cost of their legal marketing is a perfect example. If we start with the premise that every firm needs to market itself, and, thus, needs someone to direct that marketing, every firm needs to decide between in-house and outsourced marketing. An outsourced legal marketing expert can not only do the job better but can do so with far less cost. And the costs are not just financial. How does a non-lawyer legal marketing director fit in with the law firm’s culture? Is he or she going to face a steep learning curve to understand the firm’s culture? Even though a media expert, does he or she have any knowledge of legal issues or today’s legal environment? These issues are easily addressed when electing to utilize outsourced legal marketing help; only those with exactly the necessary mix of skills and experience are hired.
As noted, the average salary of an in-house legal marketing director is $100,000, but let’s look at why the actual cost is significantly higher.
The firm’s Social Security contribution is 6.2% of the employee’s salary up to $128,400 and the employee pays 6.2%. In the case of an independent contractor or consultant the firm utilizing him or her pays zero. Medicare works in a similar fashion; where there is an employer/employee relationship the employee pays 1.45% and the employer pays a matching 1.45%. Again, in a consulting relationship the firm pays zero. State unemployment insurance is difficult to calculate because every state is different, but a recent study conducted by CNN determined an average rate of $478 per year, which assumes an average of 2.8% on a cap of $16,488. But percentages can be higher than that, for example Pennsylvania’s 15%. Most businesses with less than 200 employees covered all or part of their employees’ health care costs, and this can be the single biggest cost employers face. A Kaiser Family Foundation study determined that the average firm contributes $10,119 to an employee’s family coverage. A single employee is a relative bargain at $4,740. That would average out to about 10% of a $100,000 per year employee’s salary. Employees have also come to expect employers to match some portion of their 401(k) plans. Of course, any such contribution is discretionary, but in a competitive labor market one study pegged the average at 2.5% of the employee’s salary. These costs add up to 22.95% or $22,950 added to an employee’s $100,000 salary.
That leaves out a lot of other costs, such as the costs associated with an employee search, training costs (if needed), an office and office equipment including a computer, a portion of a secretary’s time, and on and on, possibly even including a parking space. An outsourced vendor incurs none of these costs.
Thus, an in-house legal marketing consultant can cost $122,950 or more and may well face a steep learning curve when learning to fit into a law firm’s environment. By contrast a law firm can contract with a highly qualified outsourced vendor, at cost of $12,000 to $24,000 a year and not have to address any of the issues of firm culture that a new internal hire might face.
If you have questions about law firm marketing outsourcing, email me directly at meranda@denverlegalmarketing.com
