ZG Alert: ZG Survey Finds Continued Growth in Law Firm Marketing Departments
According to the results of our second survey of Am Law
200 law firms, law firms have invested in their marketing
and business-development organizations in spite of the
recession. The survey, conducted to learn about their
marketing and business-development practices, indicates
that while large and highly profitable firms experienced
greater growth in their marketing and business-
development teams, all firms, on average, increased
the number of marketing professionals as measured
by the ratio of such professionals to lawyers. Moreover,
marketers now play an even more strategic role than ever,
participating at the highest levels and taking on increasing
responsibilities despite already full plates.
In June 2011, Zeughauser Group conducted a survey of
the largest 200 American law firms (the Am Law 200) to
collect data about the size, structure, salaries, and roles of
their marketing and business-development departments.
Similar research was conducted in December 2007, which
provides for an analysis of trends over time, and changes
that have occurred pre- and post-recession. Sixty-two of
the Am Law 200 firms responded to the survey in 2011,
and a similar number responded in 2007. The firms
responding represent a cross-section of the Am Law 200
in size, profitability, and geography. As a result, we believe
that the results reasonably describe the state of marketing
and business development in Am Law 200 firms.
Marketing Organization Size
In our survey, we found that firms increased the size of
their marketing departments between 2007 and 2011
even though, on average, Am Law 200 firms were under
revenue and profit pressure and generally were cutting
back in other areas, including staffing. The average ratios of
lawyers to marketing and business-development staff went
from 1:29 to 1:25 among respondents in 2007 vs. 2011.
This translates to a 16% increase in headcount per lawyer.
Sixty percent of firms reported increasing marketing FTEs
from 2007 to 2011, while 22% stayed the same and 18%
Between 2007 and 2011, larger firms increased the size
of their marketing and business-development staffs to an
even greater extent than smaller firms. Firms with fewer
than 500 lawyers increased their marketing staffs by 15%
on average, while those with more than 500 lawyers
increased their staffs by 22%, even though they had
proportionately more marketers on staff in 2007. Moreover,
profitable firms have much larger marketing staffs than less
profitable firms. The firms in the most profitable quartile,
which averaged a PPEP of $1.5M, employed almost 50%
more marketers per lawyer than those in the least profitable
quartile, averaging a PPEP of $0.5M.
These results tell us that a robust marketing and business-
development team has become the norm for successful law
firms, following the precedent of corporations, accounting
firms, and other professional and business organizations.
In addition, law firms with higher revenues and profits
are using some of that cash to invest in marketing and
business-development talent, presumably because they
believe talented marketers help them enhance revenue
generation even further, providing a positive return on
their investments. We also believe, based on observations
from our consulting practice, that firms cut back on other
areas of marketing and business-development expenses,
such as advertising and sponsorships, but invested in staff
to support a shift in emphasis to business-development
activities that they perceive to be more likely to lead directly
to an increase in business.
Although some high-profile firms have experimented with
splitting the marketing, business-development, and even
communications functions into different departments, all
but one firm among our respondents consolidate those
functions under one person. We view this as a best practice
because, in our experience, the business-development,
marketing, and communications functions are most
effective when they are highly integrated. These functions
need to support each other so that the whole is greater than
the sum of the parts, and this level of integration is best-
achieved under the supervision of a single strong leader.
In fact, many firms have added to the already extensive
responsibilities of their marketing heads. Thirty-eight
percent of our responding firms require marketing heads
to manage other areas, such as professional development
and lawyer recruitment.
Most firms have adopted the title of “Chief” for their top
marketers. In 2011, 72% of the top marketers were
“Chiefs” vs. 54% in 2007; of those, three quarters had
the title Chief Marketing Officer (CMO). In light of their
extensive responsibilities, which often include strategic
initiatives for the firm, CMOs at two-thirds of responding
firms regularly attend executive committee meetings vs.
38% in 2007. Many also regularly attend strategic planning
meetings, partner meetings, and retreats as well.
The substantial salaries and bonuses firms pay their
CMOS are an indication of how much they value them.
In 2011, 75% of responding CMOs had compensation
packages, including salary and bonus, with potential to
reach $400,000 and above, as much as a newly-minted
partner in nearly all Am Law 100 and 200 firms. CMOs
at the largest and most profitable firms are most highly
compensated, with “national”* and “international”* firms
typically paying more than $600,000, including a bonus.
The most profitable firms increased the compensation of
their CMOs by a greater degree, with the top PPEP quartile
of respondents in the survey, which averaged $1.5 million
in PPEP, increasing their CMO’s compensation by an
average of 39% between 2007 and 2011.
We believe that the CMO salaries increased in spite of
the recession due to the forces of supply and demand.
Relatively few people are willing, able, and interested in
managing the demands placed on the CMO of a large law
firm. This lack of supply is exacerbated by the industry
trend of hiring CMOs from other law firms, rather than
from outside the industry. The long-standing debate
about whether to hire candidates from other industries
in hopes that they will bring a different perspective or
skills versus engaging a current law firm CMO with “hitthe-
ground-running” experience continues, but currently
appears to favor those with prior legal marketing expertise.
Seventy percent of CMOs in the survey came from the
legal industry in 2011 vs. 57% in 2007. Moreover, our
experience suggests that law firms seek to hire CMOs who
are employed by firms they view as more prestigious than
their own, limiting the supply even further.
Other marketing department salaries (i.e., those of directors,
managers, coordinators, and so forth) stayed relatively flat.
Demand for those positions ebbed and flowed during the
recession, but our survey results suggest that demand
is back up and we will see increased pressure on those
salaries as well.
Fortunately, law firm CMOs appear to be increasingly
successful, judging by their lengthening tenure. Average
tenure of our responding firms’ CMOs was 4.5 years in 2011,
compared to 3.9 years in 2007. We conclude from this
change that higher turnover was not driving higher salaries.
Increased tenure suggests that law firms are hiring more
qualified and well-suited CMOs, that CMOs are viewed as
more valuable and less dispensable than in the past, that
law firm expectations and use of marketing professionals
are aligning better with the skills of their CMOs, and that
there are benefits that accrue from increased incumbency.
Our 2011 survey indicates that leading law firms
increasingly recognize that high-level marketing and
business-development professionals can provide strategic
guidance, which leads to better, richer, and stronger client
relationships, and ultimately, to higher revenues and profits.
*We used The American Lawyer’s definition of national and international: If no more than 45 percent of the firm’s
attorneys are located in any one region of the country, the firm is identified as “national.” If 40 percent or more of the
firm’s lawyers are located outside the United States, the firm is identified as “international.”
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