2022's key findings are around contract management, supplier diversity, and cradle-to-grave vendor relationship management.
Contract management is now ubiquitous at major law firms. Almost all law firms consider contract review and administration as required business practices. Among their core functions:
- 97% of law firm procurement teams perform contract reviews, and
- 91% handle contract administration.
Risk management and the changing regulatory environment are driving the increased focus on contract management. Quick access to vendor relationship information is crucial.
The number of contracts under management is also rising, illustrating firms' greater rigor over contract management, from review to storage:
- 75% of firms manage 1,000 or more active vendor contracts.
- 79% of firms review at least 200 contracts annually.
Supplier diversity is proving more challenging for firms than expected.
More than half of the firms surveyed (53%) identified supplier diversity as a key procurement service. However, their efforts appear to have been more opportunistic than strategic:
- 88% cite diversity as a firm goal, but
- Only 56% have implemented or are implementing a formal supplier diversity program.
- Many firms (37%) lack an active approach to identifying potential diverse vendors.
Comprehensive vendor relationship management
While early law firm procurement efforts focused on discrete parts of the vendor relationship cycle, those efforts are now shifting towards managing vendor relationships from engagement to termination. The combination of the procurement functions' increased maturity and firms' business needs has put greater emphasis on cradle-to-grave vendor relationship management. Some of the survey data points illustrating this shift include the following:
- 25% of respondents consider vendor relationship management as the most significant role for procurement to drive value in supporting operational change.
- 76% of law firm procurement teams track and report on contracts reviewed, contracts under management, and overall spend managed.
- 43% of firms use or plan to use third-party management tools for vendor relationship management.
The combination of increased law firm procurement maturity along with practice business needs requires firms to put a greater focus on managing vendor relationships, from initial vendor engagement all the way through exiting the relationship.
The annual Law Firm Procurement Survey equips law firm leaders with a point of reference for advancing the role of the procurement function, as well as an industry baseline to benchmark against their peers. Peer-based insights into relevant procurement trends and areas of focus can help firms tackle the increasing complexity around effectively managing third-party vendor relationships, as necessitated by increasing risk, regulations, and other requirements.
The 2022 survey was conducted in conjunction with our 8th Annual Law Firm Procurement Roundtable, a forum for leading law firms to discuss broader procurement trends and priorities. Respondents to this year’s survey included procurement leaders at more than 30 Am Law 100 and Global 100 law firms, with the majority (75%) in the Global 100.
It is noteworthy that there was a 21% increase in the procurement function reporting to senior leaders (CFO, COO, ED) at firms, as compared to the survey results from 2021 (59% vs. 36%). This reflects law firm procurement’s continued maturation and recognition of procurement’s increasingly important role.
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