March 01, 2021 The Marketing Issue

The Impact of Lead Generation

Lead generation service providers are aplenty, but how do they really work and are they right for each lawyer?

Conrad Saam
Turning leads into actual paying clients requires an extremely efficient, responsive, professional intake staff.

Turning leads into actual paying clients requires an extremely efficient, responsive, professional intake staff.

via MikkelWilliam / E+ / Getty Images

Marketing has undergone a radical transformation right under the noses of many lawyers. Lead generation for lawyers is the low (financial) risk marketing channel usually shrouded in some layer of fuzziness—i.e., “how” exactly are these “leads” being “generated” and by “whom”?

Lead Generation Fundamentals

Many law firms have been built on the backs of lead generation services—some with multiple vendors driving a variety of leads. Lead gen companies typically charge lawyers on the pay-per-lead (PPL) model—i.e., law firms pay a set price for each inbound opportunity delivered. Predictably, the pricing is highly variable by practice area, ranging from $20 to north of $700 per inbound opportunity.

One of the reasons law firms like lead generation, especially the pay-per-lead model, is the simplicity in evaluating the cost effectiveness of the vendor. For example, a lawyer can easily think, “If a lead costs $45 and I typically convert 10 percent of my inquiries, then that’s a $450 cost per client while my clients are worth $4,000.” The problem with this overly simplistic approach is twofold: (1) the quality of PPL companies is highly variable; and (2) many lead generation companies cycle the lead to multiple lawyers. This shotgun approach generates a mad rush of phone calls to a prospect who quickly becomes overwhelmed by lawyers and paralegals.

Simply put, turning leads into actual paying clients requires an extremely efficient, responsive, professional intake staff. Applying the typical assumption of a firm’s conversion rate (which is probably overly optimistic already) to lead generation often results in poor cost-per-client numbers (read: poor ROI). Therefore, success in the lead generation market also requires extremely accurate and efficient tracking infrastructure that can track the lead throughout the law firm’s sales cycle.

The Many Players And Models in Legal Lead Generation

There are a variety of lead generation companies—some known brands, some obscure and some operating from the shadows of the legal search engine optimization (SEO) market. Large-branded players in the legal field include Lawyers.com, FindLaw, Nolo and Martindale-Avvo. These cover the gamut of consumer-focused practice areas and rely on SEO-driven traffic to their directory pages. Some, like FindLaw, have extensive content libraries that drive a large volume of inquiries.

While these directory services are used by many, they have drawbacks. One of the nefarious realities of these directories is that many of their leads are driven by a name search for a specific attorney and then resold back to other law firms. For example, a prospective client (PC) may be recommended to Bill Jones. The PC researches Bill Jones through Google, lands on an Avvo listing for Bill Jones and eventually fills out a form that goes to . . . a paying lawyer (or lawyers) other than Bill Jones. These changes can be a detriment to an individual’s marketing efforts as a result.

Some providers have modified their marketing models, while others provide a slightly different approach to marketing for professionals. In 2016, Avvo ran afoul of fee-sharing decisions with its Legal Services—Avvo fixed fees for a consultation for which attorneys paid Avvo a fee. Martindale-Avvo (unlikely brand bedfellows spawned by the acquisition of Avvo by Internet Brands) recently launched pay-per-lead services along with its more traditional advertising blocks. FindLaw’s network, which includes Superlawyers and LawInfo, drives a PPL model driven by basiconline form fills. LegalMatch functions like the eHarmony of legal services, with prospective clients filling out a “case” for lawyers to review and operating on a subscription basis with longer-term commitment requirements.

Innumerable lesser known brands exist in the legal generation business. Unbundled Attorney provides leads for attorneys offering flat-fee services (this makes the all-important ROI calculation even more straightforward). Another brand is 4LegalLeads, which offers a rotation model for its leads—contacting one lawyer after another. This rotation model is a welcome spin on the shotgun approach (blasting a single lead simultaneously to multiple attorneys).

Nonlaw-focused firms have entered the lead generation business as well—most interestingly Thumbtack. This extremely deeply funded tech service provides lead generation for an array of businesses, including law firms. Thumbtack shepherds prospective clients through a series of rudimentary questions in an attempt to prequalify those leads and match them to an attorney. Attorneys provide prospective Thumbtack clients with a quote to review. While lead generation options are abundant, the real issue comes with obtaining results from the lead generation service of choice.

Elusive Economic Success of Lead Generation

In general, the economics of lead generation companies are poor, especially for those who rely heavily on advertising to generate those leads. Consider a simple scenario where a lead gen company drives website traffic through pay-per-click (PPC) advertising and then simply resells that traffic to lawyers. Very little additional intrinsic value exists for the consumer to go through that resource to find a lawyer. (Perhaps the consumer can contact more lawyers from one resource or is shepherded through a “qualifying” series of form questions.) In general, the lawyer is much better off attracting that prospective client directly to her own website instead of through the lead generation middleman who is engaged in advertising arbitrage—aka buying PPC traffic, marking it up and repackaging it in a PPL model.

Having said that, lead generation is a frequent supplement to many marketing portfolios. A smattering of my clients rely extensively on lead generation for the majority of their client development efforts. Anecdotally, these firms tend to be aggressively growth minded, volume-based, midsize personal injury firms with exceptionally well-run intake processes and highly accurate reporting infrastructure. Given the cost, success at scale with lead gen simply requires converting a high percentage of prospects into clients and a firm structure that accepts lower margins.

Lead Generation and Local Spam

For years, local search (the map in a Google search with the red pins in it) has been polluted by fake listings. From a Google perspective, fake listings include local law firms pretending to have an office at a location that isn’t really staffed (think a mailbox at a Regus office), out-of-state law firms pretending to be in state, and nonlaw firms masquerading as law firms. The latter category is the foundation of many leads that are resold to law firms. With the right experience and technical know-how, it is possible to set up a fake business and get it to rank on Google local search results. The legal industry has been particularly targeted with these tactics, because the industry is both very lucrative and very competitive. These tactics have been used by foreign actors, enterprising (albeit unethical) individuals and lawyers themselves.

Even more commonplace is a nonlawyer pretending to be a law firm. The giveaway for identifying these listings is the website that looks very much like a law firm’s until you realize there is not a single lawyer listed anywhere on the site. These listings also tend to have no (or very few) Google client reviews. Leads generated through these fake businesses are then sold back to attorneys—sometimes laundered through the more recognized branded lead generation companies.

The "New" 800-Pound Lead Generation Gorilla

Not to be left behind, Google has entered the lead generation game with its new (to legal) Local Service ads (LSA) that operate on a PPL model. LSA popped up in August 2020 and have been slowly rolling out ever since. They are extremely effective—supplanting Google Ads for the prime position at the top of the search engine results pages (SERPs) and pushing local search and organic search even farther down the page.

The Google LSA aren’t entirely new—they rolled out in 2017 to the home services industry and now cover 48 different types of businesses. Just look for a plumber or roofer in Google, and three ads will appear at the very top of the page with the word “Guaranteed” next to them. Google (wisely) decided not to guarantee legal work, but instead provides a green “Google Screened” checkbox for participating law firms.

To be included within the Google Screened advertisements, law firms need to jump through three hoops. First, Google validates if the attorney is licensed to practice law in the specific state. I had hoped that this would be used to drastically reduce the aforementioned spam on the local search results; however, the data going into the LSA do not impact the other listings on the SERPs (i.e., no green screen check mark next to a local search listing). Second, Google does a background check through a third-party agency called Pinkerton. Third, for states where the state bar requires it, Google confirms insurance coverage. These three elements offer very high value to consumers and are affirmed by the green check mark.

Google has evolved its PPC model into the much simpler PPL model for these LSAs. Further, it has split out legal practice areas into very finite levels of detail to provide an efficient marketplace. For example, there is even a category for red-light traffic tickets. Currently, in typical Google fashion, these ads are being rolled out both geographically and by practice area; so depending on your search, you might not see them yet. But know they are coming.

The firms that are ahead in LSA ads are currently experiencing extremely positive economic returns from their first-mover advantage, with cost-per-client rates hovering around 60 to 80 percent below what a comparable Google Ads campaign would return. This economic windfall will last for a short time. Cost-per-lead numbers for the earliest personal injury ads were pinned at $75, they quickly grew to $150, and now we are seeing numbers in the $250 range.

Lead generation companies are far more sophisticated with better targeting capabilities than previous iterations. For the right type of practice, lead generation could be a worthy financial investment that grows your practice without the lengthy time investment of more traditional forms of new client location and development. 

Conrad Saam

Founder

Conrad Saam founded Mockingbird, an online marketing agency focused exclusively on legal. Saam is the author of The FindLaw Jailbreak Guide, is a Google Small Business Advisor and has held positions for various ABA practice management marketing committees. conrad@mockingbirdmarketing.com

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