Steady amount of spending under management
56% of law firms have more than $75 million in annual spending under a formal procurement process, up sharply from 29% a year ago. This is an important return to trends we saw in 2016-2018 and also illustrates that there is still significant room for procurement to expand its scope of influence by increasing the spend that it actively supports.
Increase in staffing resources
This year’s survey found that 39% of law firms have four to six full-time equivalent professionals working in procurement/vendor governance roles and 28% of firms have seven to ten FTEs, notable increases over 32% (4-6 FTEs) and 22% (7-10 FTEs) in 2019. The increase in procurement staff is tied to law firm leaders understanding that working with vendors is increasing in complexity, cost and risk, which is driving the need for procurement to play a more active role in support vendor management.
More focus on vendor risk management
The majority of law firms (57%) are now conducting in excess of 50 vendor risk assessments per year, an important milestone because our survey also revealed that 50% of law firms have more than 100 “high-risk/critical” suppliers. Effectively assessing and managing vendor risk is a major challenge, as 87% of law firms we surveyed reported that they have 1,000+ active suppliers in their environment. Clients and regulation are the driving force behind this increased emphasis on understanding vendor risk, especially related to data privacy and information security. We anticipate firms will continue to focus on and invest in implementing more structured vendor governance programs.
Acceration in supplier diversity
Our survey found that law firms are making measurable progress with turning discussion about the importance of supplier diversity into real action to promote social justice: 50% of firms report on supplier diversity spend and 57% of firms ask vendors about their diversity status as part of the onboarding process. Moreover, 29% are now actively managing the amount of spend with diverse suppliers, 10% are now incorporating diversity into their supplier RFPs and 7% have established a formal supplier diversity policy.
Shift in internal visibility
The procurement function has experienced an increase in visibility within the law firm and a heavier workload, according to the survey respondents. Some of the examples given were “more involvement with ordering supplies” and “involved with more departments” across the firm, a trend partially driven by the pandemic. They also noted an increased emphasis on risk and cost reduction in the procurement function, such as greater focus on contract management.
Procurement's value proposition
Our survey found that 71% of law firm procurement leaders perceive that the biggest opportunity for their teams to increase their value in their organizations is through an increased centralization of vendor management activities. The same amount identified increased support for risk management initiatives as a top opportunity and 43% noted the potential for expanded use of technology to automate and streamline activities.
About the survey
Our annual Law Firm Procurement Survey is designed to equip law firm leaders with a point of reference for advancing the role of procurement and an industry baseline to benchmark against their peers. In addition, the survey provides insight into relevant trends and challenges facing the broader legal industry each year.
Survey participants
Respondents to this year’s survey included procurement leaders at a variety of Am Law 100 and Global 100 law firms, collectively doing business in the U.S., Canada, Europe, Middle East and Asia. More than half of the survey participants work at law firms with more than 20 offices.
Here is a general profile of the procurement leaders who responded to the survey:
- 75% have 11 or more years of experience in procurement
- 53% have 11 or more years of experience in the legal industry
- 70% work in firms with four or more full-time procurement professionals
- 76% describe their department’s structure as centralized
- 58% report to the CFO, COO or Executive Director in their firms
For the full report, download the PDF.
- Cost & spend management
- Procurement
- Vendor governance