Best Practice: How much should a bankruptcy firm spend on marketing?

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the sole owner of a debtor bankruptcy practice. I have one other attorney and three staff members. Last year we spent $50,000 of advertising. Our fees collected were $550,000 and Net Income was around $160,000. Are we spending too much?

A. You are spending 9% of fee revenue. I believe that in a consumer practice such as personal injury and debtor bankruptcy you have to spend around 10% of fee revenue to get the business you need to sustain the practice. I have some practices spending 19% of revenue.

So, I don't think you are necessarily spending too much if the advertising is working for you. You have to constantly measure the ROI on your advertising and fine tune it when needed.

Also, insure that the business is actually coming from the advertising - in other words don't advertise to get business you would have had anyway or in a market that you have saturated and more advertising will not yield any additional business.

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John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.