Welcome to Legal News Reach Season 2 Episode 4! Jennifer Schaller, Managing Director of the National Law Review, is joined by Beth Cuzzone, Global Practice Leader at Intapp. Together, they discuss the best budget strategies for legal marketing departments as businesses emerge from the pandemic with a new set of priorities and perspectives.
We’ve included a transcript of the conversation below, transcribed by artificial intelligence. The transcript has been lightly edited for clarity and readability.
This is Jennifer Schaller, and I’m the executive director of the National Law Review. We’ll speak with Beth Cuzzone, who is Intapp’s Global Practice Leader. Beth, can you tell us a bit about your background and what you do at Intapp?
Thanks for asking, Jennifer. I think this is an important question of table setting. So I recently joined Intapp in 2022. It’s a global technology company, and it partners with investors and advisors to help them run their businesses. And it basically follows these companies through their entire life cycle, whether it’s admissions or relationship management, transaction management, billing, marketing or risk, and so many other things. other operational functions. But my role, Intapp, is in the area of marketing and business development for these companies. So, as a Global Practice Leader, I’m responsible for working with a team of subject matter experts who help clients align their strategic priorities with our solutions. It was an interesting and challenging change, as I spent over 30 years of my career in the types of businesses Intapp now helps. So it was an interesting change, exciting and challenging at the same time. And I think it also gives me a unique perspective on what we’re going to dive into today.
Ok, wow, looks like a perfect match we have today. So let’s dig into it. We are talking about law firm budgets. So for this next budget cycle, for companies that are almost done, or are in the process of doing it, or about to wrap it up. What is different this year compared to previous years in law firm marketing and business development departments?
In a word, everything. If we step back and look at the simple formula that law firms have traditionally used when creating their budgets, there hasn’t been much of a secret sauce. In its simplest form, and I’m oversimplifying it for illustrative purposes, but in its simplest form law firms for years and years and years and year after year year, would consider their old budget and give him a raise in line with the company’s revenue growth for that year. And then the real work would start by saying, OK, we’re going to give ourselves a 2% or 3% raise, because we’ve increased our income by 8%. So we’re going to take some of that, and we’re going to increase what we did last year, and then they’ll reallocate that number. And so if my budget was $1,000 last year, and you know, now I’m going to increase it by 3%, it’s going to be $1,300. And now let me play around with the line items and see where we want to spend a little more, where we want to spend a little less. Considering the years we had until the 2023 budget season, we had 2020, when the pandemic hit, we had 2021, where we were still feeling the effects. And then in 2022, when people were trying to get back to some market normalcy of spending, you know, marketing, outreach, outreach, credibility, relationships, getting back to the office, that kind of stuff, the budgets are all over the place. So to answer your question, why is next year’s budget different? It’s because you don’t have last year’s budget that you can simply reset.
What’s interesting is that I think it’s actually going to give you an opportunity to revise the way you think about your budget and think a bit about very specific items. You know, I think one of the areas that people are going to spend a lot of time thinking about is digital marketing. And, you know, one question I had for you is, have you seen an increase in digital marketing spend from law firms, where we were before the pandemic, to the pandemic where people are heading ?
It’s kind of a layered question. I mean, over the last five years there’s obviously been a shift to digital. There are several different things happening in the broader digital advertising industry. Ad rates right now as a whole are pretty digitally suppressed. So it affects us a bit, just because the baseline is down. But if you’re in a specific niche, like the National Law Review, where you know, we have a lot of traffic and viewership, there’s always going to be a demand for that. What’s going to be super interesting to see is when the cookies disappear. People keep talking about it because it will make the content on the website much more relevant, instead of having retargeting ads and things like that. But the date keeps changing on this. So, you know, we’ll let you know when we find out. And when it comes to publishing, there’s been a sea change on that. There has always been a sort of pushback or somewhat stigma attached to paid publishing. But one small difference with that is that over time most marketing professionals, especially in the legal field, understand that there are costs involved in running a quality publication, if you will have analytics, if you want to have responsive staff that’s around to make edits, that you have to pay for that, and that, you know, if you don’t have money from subscriptions, if you’re a site Web without connection, it will be expensive. So there was a bit of a change. There is more receptivity. And I think maybe because the law firms themselves understand what it takes to publish, they’re a little more lenient and understand that we have costs too, if that makes sense.
It is quite logical. It is quite logical. And again, there’s no straight answer to some of these complicated questions we’re asking ourselves today about where people are spending and where it’s going versus where it was when we had this break at so many levels. And as you said, I also think the focus of marketing and business development departments and law firms is really starting to understand that looking at digital assets as a way to build brand awareness and credibility is going to be a leader in their budget.
Well, yes, especially since events have changed and gone. And a lot of sponsorships have changed. And given this pandemic ripple effect of live events versus sponsorship tables at events, which used to be part of legal marketing department expenses, what is increasingly becoming the norm for law firms, legal marketing department and business development expenses, has that changed? Is it a reassignment? How it works ?
That’s an excellent question. So typically – I heard someone say once, law firms are like snowflakes, everyone is different. And I know when I look at industry stats that talk about swings in spending, it has to do with, you know, the percentage of law firm revenue, which ranges from 2% or 3% to 18 , 19, 20% . And the reason they have this swing is because in some marketing and business development department budgets they include staff while others don’t, okay, or in some marketing and development budgets commercial, everything is marketing, whether it’s for the HR department, or the legal recruitment, or the firm, and others. They are each very separate departments and separate budgets. So there is a huge dispersion in the industry. But I think for most businesses, we’re going to find that there’s this budget target of 3.5 or 4% to 8% revenue. And that’s kind of where people settle. There are outliers on both sides. And curiously, there are often surprises. I find that sometimes some of the small and medium businesses have higher percentage budgets. But I think it’s because they can’t take advantage of the scales of economy that big business can. If you look at your budget, and we can talk a bit about that, you know, in 2020 when the pandemic started, all discretionary budget positions were cut from law firms, whether it was in marketing and business development or not . So it was like, “Unless we’re contractually obligated to pay something, we take it off the table.” And now companies have the opportunity to rebuild it. And again, this approach and this budgeting exercise gétisation are a real opportunity for these companies to say: “What did we not ask ourselves? Or, “What didn’t we do that we wanted to?” What’s not in our budget? What should be or what are the opportunities in terms of places or people or technology or intersections that we haven’t tried before? So I think there are some t pipe issues happening, too.
Yes, I think it’s just helpful to know that legal marketers or even law firm administrators, or management know how to ask about legal marketing budgets, that there’s a range if wide, but the wide range prompts people to ask the question, “What’s in this figure and what’s not?” I’ve never really broken it down this well before. So thank you for taking the time to point that out. Because it’s not spelled out in a lot of different places. Many people will appreciate this.
When talking about law firm marketing budgets, what is the difference between acquisition marketing and retention marketing and budgeting? Should law firms devote more resources to one or the other? Or is it some kind of mixture?
That’s a very leading-edge question you’re asking there. Because I think law firms basically had two kinds of buckets, if you will: they saw it as building awareness and building credibility, or building relationships, it was one of two . And so they had things around brand awareness and credibility, we talked about that a little earlier, you know, it’s that one-to-many, website, you know, content, newsletters, big events, that sort of thing. And then relationships are kind of one-on-one. It’s spending time going out and sitting down with a potential client to learn something, or having an entertainment budget, or doing small roundtables with thought leadership, or sitting down with different decision makers at a client site. particular so that you stay close to them. And it was everywhere. And the change that I’m starting to see happening is that law firms are starting to break down their budgets exactly like you said: acquisition marketing, which is “How do we get us new customers?” versus retention marketing, which is, “how do we retain and grow the customers we have, or the brands we have, or the relationships we have?” And in doing so, they are also starting to do account-based marketing. And they’re able to set their budgets and say, “We’re going to spend 70, 60, or 80 percent of our budget on our existing relationships, because we know it costs six to eight times as much money, resources, people budget to get a new customer rather than to retain and grow an existing customer. So when you look at the scale of acquisition versus retention, retention is going to get that bigger budget. And then the acquisition sition is going to have a smaller wallet share of the overall budget. But in this big budget, you’re going to start this retention budget, you’re going to start to see that it’s kind of broken down by account-based marketing, as a result of that acco unit-based budgeting. Again, it’s a bit around the corner. And I think that’s what companies are going to have to deal with over the next five years to be able to measure exactly their return on objectives or return on investment and where their money is actually being spent. Because they’re going to tie it to very specific goals and very specific strategies, if you will.
Okay, so what would be some of the areas where there would be an overlap, like between acquisition and retention marketing, would that fall under the digital realm? Or would it be where?
This is a perfect example, please look at what we are talking about as a Venn diagram, on the right you have your acquisition, you have your retention and then there is where they overlap. Digital assets are a perfect example that falls into both. It helps you in the market. And it helps you find your next great connections, clients, and referral sources. And those are the same assets that you can use to add value and stay close to some of your existing relationships, places where they start to drift apart a bit, again, it’s really per account or per customer, customer-based marketing versus account-based marketing. And so you could have a company where you say, we’re going to spend a lot of our travel and entertainment budget to go to each of their offices and get junior executive training. For us to align with the next generation of decision makers, and that’s how we want to spend our money, our time, our budget, our resources and our people on this particular client this year, sort of. Again, it all depends on the strategy. And it also depends a bit on the company.
Yeah, would that vary by practice group, or just, if you had a firm that was, you know, purely intellectual property law-based, would there be differences in the ratio or the mix or the network ?
That’s an excellent question. So there are companies and also areas of practice where there are streams of rents, if you will, that’s true. There’s just a continuous, “We represent this particular financial institution on all these kinds of loans. And, you know, we do 5, 10, 15 a year for them. Imagine if you were actually a litigator and you represented financial institutions where you didn’t know how much you were going to have in a year or if you weren’t going to have any for two years and how they think of you and they call us when it comes to the business or they don’t call us when it comes to the business, so again you have to look at the business, its strategy, the cadence of these open-ended questions, the cadence of the when they are asked to help customers, then try to align your budget and the activities in your budget around those same goals. Does that make sense?
Yes it does. A lot of what you break down is really helpful because people are throwing numbers around, but they don’t go into the details of what makes the numbers go up or down, like your example depending on whether the law firm includes or not the expense for HR, or including marketing department salaries, should make a big difference. And no one really says that. So it was very useful.
What kinds of trends do you see… there’s this nuance that’s happening now Jennifer, where there was a ‘back then’ period where all the law firms ran one-page ads in some of the larger business-to-business publications and journals, or like yours, very, very niche, industry-specific news channels. And it was “we want to be on top” with whoever the reader is, whether it’s our peers, whether it’s our competition, whether it’s a referral source, whether it’s a potential customer, whether it’s someone across the table, and over time that awareness campaign started to turn into a content campaign. And I’d be really interested to see how law firms maintain that notoriety in the market? What do you see?
A big change from print, and what really changed – COVID was kind of terrible for the world, but in many ways good for law firms and legal publishing. Because there were so many rapid developments of a legal, administrative or regulatory nature, there was just a lot of content to write about and a lot of people looking for that content. So there was inherently a lot of traffic generated by COVID and all the changes that came with it. Now that that’s leveled off a bit, what we see from law firms is when they do their informative writings, get together, talk about cases that have happened and why it’s important for a particular industry , or new regulations that are on the horizon, what’s a bit different is that they’re starting to impose—not impose, but convey—their personality a bit more. We’re seeing more content coming in where it talks about people’s journey through the legal profession, how they balance working from home or transitioning out of working from home a bit more with the content. So before there were very few. I mean, there were. It’s pretty prevalent now where we’ll see a lot of law firms just having entire blogs and podcasts and a whole kind of vertical dedicated to life balance and people’s career paths and things like that, which is a bit different from what we’ve seen before. I think it’s a good opportunity for law firms to sort out their competitive differences just by letting people know who they are because ultimately with law firms they’re buying the person, their knowledge and his experience. And that’s kind of a more forward-thinking way of doing it than what’s been done in the past.
You know, it’s so interesting to hear you say that. I don’t think I really put such a good point on it until you just mentioned it. All law firms do the same thing. For the most part, a GP practice does the same thing as the next GP practice, you know, an IP shop does the same thing as the next IP. But how you do it, who you do it with, and the culture is what sets you apart. And you’re right, as I think a bit about the types of information that I see, whether it’s the types of information or the personality that people write with, it really gives companies a way to showcase their culture and who they are and their differentiator versus all looking like really smart law firms.
That’s it and I think it’s a bit of recruitment too. I mean, the whole world has had quite a bit of turnover. Law firms have always had more turnover than other industries. So we would have stuff coming up where people interview their summer associates. And they do it on many levels. I think it plays for people who might be interested in how a person got a summer associate position at an Am law firm, but also, you know, it’s a big hug for that person , and it shows in a recruiting sense that this law firm really cares about people at all levels of the organization. We wouldn’t have seen this 10 years ago, so it’s definitely different.
Alright, let’s get to the fun part: budgeting tips! You’ve been budgeting for years, you’ve worked with an organization that helps law firms balance competing things for their consideration and figure out what’s probably the best bet for the firm. Do you have any tips to share with our readers, or today’s readers and listeners, regarding law firm budgets, what to include and what not to push away?
Yes, I think there are a few best practices that law firm marketing and business development departments want to think about when negotiating their budgets with firm management or setting them up. We talked a bit about the fact that historically companies have used the previous year and the budget figure is a benchmark. Ironically, in 2022, law firm marketing and business development budgets have increased by more than 100%. And again, it’s because in 2020, and 2021, they were decimated, that was where there was the most discretion in the budget, there were things like they weren’t going to do sponsorships, they weren’t going to be hosting webinars, they weren’t going to be traveling to see clients or things – like take everything away. So when we started moving towards this “let’s get back to business in 2022” normality, with a softer, softer, softer approach, they had to increase their budgets by more than 100%. So the first thing I would say is don’t prepare your 2023 budget based on your 2022 budget, because you’re going to show that there’s already been a 100% increase, and there will probably be very little room for manoeuvre. I would also remove 2020 and 2021. So I think one of my tips or best practices is to use 2019 as a baseline, not 2021 or 22. For the reasons we just discussed.
The other thing, you just mentioned in the way you posed the question, is that there’s a very complex ecosystem in law firms, and the marketing and business development budget is one of many competing priorities. And I think understanding that budgeting is a long-term game, not a game you win every year. And so what I’m trying to say is to get a bird’s-eye view of where the company is, what it’s trying to accomplish, some of its major goals for the year or the next couple of years, to look left and look right at what the budgets of other operational departments are going to be impacted by this, and prepare your budget in the context of what is happening. So don’t ask for the biggest budget increase of any operations department, every year. It becomes a fatigue, where it’s like, “No, just give them the 2%, we’re not going to listen to why they deserve more year after year than every other department.” So I think coming in and being able to communicate, “We understand that lateral growth is one of our key strategic priorities and that you’re going to spend a large portion of our budget on legal recruitment. So this year, I have put in place some specific elements and activities that will support legal recruitment, and I have increased my budget request from a 6% increase to a 2% increase. And again, you can negotiate two or three years ahead and then say, “I just ask that when we look at my budget in two years, or in three years, we appreciate that I ask for a smaller increase this year. , given where we are, what we do. You know, it goes that far when there’s been an off year.
So so far we’ve been saying, use 2019 as a baseline, don’t ask for the biggest budget increase from every operational department every year, try to negotiate two or three years ahead in your business, but also negotiate two or three years in advance with your partners or suppliers, depending on what you call them. You know, being able to say, “Look, we want to do this. And we can’t be all-in this year because our budget won’t allow it, but can we negotiate an 18-month relationship with you and spread it over a 24-month period? Negotiate a bit! These are companies that want to partner with you. I also think it never hurts to ask and get comfortable, again, in partnership with your suppliers. That’s why I always call them partners and not suppliers. Be comfortable partnering with them and say, “Look, here are a couple of things I’m trying to accomplish. And I see only one of those things in the proposal you sent me. Are there things you can put here that are revenue neutral? Or are there ways we can reallocate our spending and help me achieve these other budget goals? They will work with you. So negotiate with management, then partner with your vendors.
I spoke with many companies. And another thing that I see companies are really starting to do is ask themselves, “Where’s the lowest risk and highest reward?” and vice versa, and making sure your budget represents this, for example: “Boy, this is the lowest risk and a very good return.” So we’re going to do more. And that’s a very risky and very questionable return. We will do less. And by the way, having these conversations with your executive committee or your management partners or your executive committee about how you view risk versus return, or contextually where you fit into the operational turnover of the business, if you want, this stuff will help you in the long run.
It’s really great that you emphasize the need to let your suppliers know what your goals are. It’s sometimes very difficult when people are like, “What’s the price? You know, what, what, what’s your best price? » What is important to you? It’s not really a trading technique, we want to know where to focus to best suit your needs. And if we have no idea what your goals are or what you’re trying to highlight, that makes things infinitely more difficult.
This year, or any other year, are there any budget items that you would suggest CMOs pay more attention to this year than in previous years or anything unique this year that they might want to highlight other than the points you raised about using 2019 as a benchmark against the previous two years? Which was just weird. Is there anything else different?
You know, I think this is the time when everyone is looking at the horizon and wondering, “Is there a slowdown? Is there a recession? Is there a lean year ahead? What do we do?” You know, you have, you ask yourself all these questions. I think it’s also a year, when you look at your budget, to look at the elements that drive efficiency, scalability, revenue generation, right? There’s a difference between cost and investment. Make sure your budget has a good healthy mix of “These are things we want spend money to get more money. And then these are places where we want to spend money to achieve a goal,” and I call them return on goals and return on investment. “We want to be known on this new market. We want to open an office in Texas. And so we’re going to spend a lot of time, money, energy and budget to really spread the word by creating awareness in Texas. It’s a objective, right? If it’s that we really want to get a little closer to the quartile bottom line of our clients in terms of income and say, “How can we help them with more problems than we are doing right now? How can we take them and really try to increase the share of wallet they spend on outside attorneys? It’s a return on investment. So, you know, have that healthy mix of ROI and ROI.
Fair enough. So briefly, your Intapp firm? How do they help law firms in their budget process? Are there specific things they are set to do to help?
Thank you for asking me and for being so kind. Because yes, I think the answer is yes. So Intapp can help law firms create insights to find income, find where there is work that’s more profitable, find where, you know, there are spaces and opportunities, or be able to basically measuring things, and having that one source of truth in your corporate law, where you have all these technologies helping all these different operating departments all logging in, that’s why it’s called Intapp, there’s an integration to that, and they all integrate and talk to each other. And that kind of information can tell law firms what kind of money they’re spending and what kind of return they’re getting. And that can be as simple as looking at your marketing campaign’s open rate for your last email, to looking at very strategic information like “here are spaces or places in our business where we could work more closely with customers, or an industry where we haven’t saturated as much as we could. So it can go from tactical to strategic, and that’s what Intapp does. That’s why it’s such an amazing company .
So, is Intapp more process- or technology-based or does it kind of marry them when working with law firms?
This is another excellent question. So it’s a technology company. And I think what surprised me the most was the intelligence that’s in Intapp and all the people that are there to help customers successfully deploy or change the management professionals that help you to get more engagement in your business, or help you with use cases for smarter ways to use technology.
So Intapp sells technology that has professionals who also help you with people in the process. It’s a little competition secret.
It looks like a good game. As always, we appreciate Beth’s time sharing her thoughts with us and her experience and the kind of trends she’s seeing and marrying them with the experience she’s had over the years. Thanks a lot.
It was great seeing you, Jennifer. So good to see you. Thank you for inviting me and be well. True North.
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