Thursday, July 14, 2005

The Economics of a Law Practice - Part I - Advertising

One of the things I've long heard about lawyers is that, while we may be good lawyers many of us are not good businessmen. In other words, there are many lawyers who are good at preparing papers and speaking in court, who are not so good at marketing, accounting, budgeting, etc.

I had some bumps along the way. My biggest problem, and it hasn't been too bad, is figuring out where to spend money. Yellow Pages advertising, for example, is very expensive. So are television and radio. I have spent thousands on yellow pages, TV, radio, and other print ads. My general experience so far is that the Yellow Pages are probably worth it, but it's a close call. TV, radio and other print might be worth it, but you have to spend a lot of money. And they're probably only worthwhile for areas of practice where you can get high fees, such as personal injury. When I do that advertising, I tend to shoot for a niche as a Spanish speaking lawyer. But even for that kind of niche, I think I'd have to spend at least $25K/year to establish some degree of brand identity with the target community.

I remember when I did one set of radio ads, I got a lot of calls from Spanish speakers who had a family member in jail. I learned pretty quickly that if they can't afford bail, they can't afford me.

I've found the web to be far more cost effective, at least for me. I'm probably a bit more web-savvy than the typical attorney, so it's a little easier for me. I programmed my own site in html using Netscape Composer. It's not pretty, but it's functional, and somewhat optimized. I also set up my own PPC programs. I spend about $300/month, not counting what I'm spending on a soon to be deployed upgrade to my site. I spent a lot of time getting all that going. In doing so, I learned a lot. I could see someone who is not web-savvy hiring someone, paying them a lot of money, and not getting nearly as much out of it. I've even thought of setting up a side business as a web consultant for lawyers.

The area where the web has generated the most business for me is speeding tickets and other traffic tickets. Most of my clients are from out of the area. They get a ticket as they're driving through. When they get home, they look for a lawyer in this area. They're not going to use the Yellow Pages - because they don't have one from this area. TV and radio ads won't help them either. The internet is the most logical way for them to search for a lawyer.

I can say based on my experience that this area of law probably won't end up with too much competition because the volume of business won't sustain it. I'm getting maybe $1000 - 2000 a month in revenue from traffic tickets. If that were all I did, I'd be starving. It doesn't make much sense for someone else to spend $10K to start competing, if that divides the pool in half.

I do get a few DWI cases off the web, along with other criminal defense and even fewer personal injury cases. Those generate higher fees, but they're not regular revenue.

Some of this is probably specific to the Albany, New York area. I suspect there's more web competition in NYC or LA, etc.
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