Introduction
Over the past decade, law firm procurement teams have shifted focus from cost reduction to strategic objectives like risk management and societal goals. While core priorities remain consistent—risk mitigation, centralization, and broader impact—external forces have evolved.
Technological advancements, particularly generative AI, introduce both efficiencies and unique risks, such as data privacy and compliance. Procurement is increasingly aligned with the Office of the General Counsel, highlighting its role in managing legal, regulatory, and reputational risks. Additionally, ESG initiatives have gained importance, with firms expected to deliver measurable results in emissions reduction and diversity, as these efforts are important for client trust and competitive advantage.
Three key areas of focus for 2025
This year’s procurement priorities maintain a balance between consistency and change, with law firm procurement leaders focusing on three key areas:
- Enhancing vendor risk management amid evolving compliance standards and increasing AI adoption.
- Centralizing and professionalizing procurement to improve efficiency and strategic alignment.
- Integrating ESG practices to address sustainability and societal responsibilities meaningfully.
Enhancing vendor risk management
Robust vendor risk management is critical as law firms increasingly rely on third-party vendors, with ecosystems averaging 2,000 vendors and median spends exceeding $150 million. Key risks include:
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Compliance and security: Noncompliant vendors can expose firms to legal and regulatory penalties, particularly when handling sensitive client data under laws like GDPR and CCPA. Vendor failures or cyberattacks, such as those seen in 2023, can disrupt operations and cause revenue loss.
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AI-related risks: As firms adopt AI tools, risks like data accuracy, model bias, transparency, and regulatory compliance must be managed to protect sensitive information, maintain client trust, and avoid reputational damage.
How law firms can address these risks
- Quantify the risk landscape: Identify vendor relationships, assess risk and criticality using scoring systems, and prioritize vendors based on risk and strategic importance.
- Implement a centralized risk mitigation program: Embed rigorous onboarding, standardized contract terms, and compliance checks. Contracts should address key risks (e.g., breach notifications, audits, AI governance) and define vendor obligations for security and service continuity.
- Continuously monitor vendor risk: Conduct ongoing reviews, track performance metrics, and analyze risks through dashboards to ensure compliance, detect issues, and improve program effectiveness.
With AI increasingly integrated into legal workflows, procurement teams should include contract provisions specific to AI, such as data handling standards, model transparency, and restrictions on certain high-risk AI applications.
Professionalizing and centralizing the procurement function
A professionalized, centralized procurement function transforms vendor governance into a strategic advantage for law firms by enhancing efficiency, reducing costs, and mitigating risks.
How law firms can unify and professionalize procurement
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Defining authority and roles: Establish strong leadership, such as a chief procurement officer, and assign specialized roles (e.g., vendor risk managers) to ensure oversight and accountability.
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Standardizing vendor selection and onboarding: Implement standardized processes, a centralized vendor database, clear selection criteria, and a vendor code of conduct to ensure quality, security, and compliance.
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Implementing contract management and performance metrics: Use standardized contract terms, KPIs, and regular performance reviews to evaluate vendor compliance and effectiveness. Analytics tools help identify trends, cost savings, and risks, enabling data-driven decisions.
Strengthening sustainability and supplier diversity
Law firms face increasing pressure from clients, investors, and regulators to prioritize sustainability, social responsibility, and ethical governance.
Key ESG focus areas for procurement
Law firms face unique ESG challenges, with nearly 90% of their carbon footprint tied to supply chain vendors. Procurement teams play a key role in advancing ESG goals by focusing on:
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Sustainability in the supply chain: Assess carbon footprints, prioritize Scope 3 emissions, set measurable reduction goals, and incorporate sustainability criteria into vendor selection. Collaboration and carbon offset initiatives further support long-term environmental goals.
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Supplier diversity: Develop structured programs with clear goals, include diverse suppliers in RFPs, and support them through training and mentorship. Regularly measure and report diversity metrics to demonstrate progress and accountability.
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ESG standards, benchmarking, and reporting: Use KPIs to track progress, benchmark against industry standards, and ensure transparency with clients. Robust reporting highlights meaningful actions over performative ones, enhancing the firm’s reputation as a responsible partner.
Nearly 90% of a firm’s carbon footprint stems from its supply chain, primarily from the vendors and partners it engages.
To read the full report, download the PDF.
- Procurement
- Risk management
- Technology
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