Legal Service Providers Are Not Just Another Vendor: Why Legal Should Lead Onboarding, Not Procurement

Introduction

Onboarding external legal service providers (like law firms) is a process that many companies mistakenly funnel through their general procurement departments. While general procurement teams excel at sourcing standard goods and services, legal services are a different animal altogether.

This article argues that the onboarding of law firms and other legal service providers should be led by the legal department or legal operations team – not handled solely by general procurement. 

We will explore the unique nature of legal services procurement, the risks and inefficiencies of a one-size-fits-all procurement approach, and why engagement terms and regulatory complexities demand legal’s oversight. 

We also examine real-world case studies where procurement-driven onboarding went awry, and conclude with guidance on adopting a differentiated approach that acknowledges procurement’s value while entrusting legal experts to manage legal vendor relationships.

The Unique Nature of Procuring Legal Services

Procuring legal services is unlike buying office supplies or software licenses. Legal matters are often time-sensitive, high-stakes, and wrapped in regulatory complexity. They carry significant liability risks and invoke fiduciary obligations that simply don’t exist in ordinary vendor relationships. 

For example:

◼️Time Sensitivity: When a company faces a lawsuit or regulatory investigation, engaging the right lawyer quickly is critical. Legal issues often come with hard deadlines that leave no room for a lengthy vetting process – a drawn-out RFP could mean missing a filing deadline or losing a case opportunity.

◼️Regulatory Complexities: Lawyers operate under strict professional rules. Attorney-client privilege, conflict checks, and other ethical requirements must be addressed properly from the start. In some jurisdictions, only specially licensed attorneys can handle certain matters, adding compliance steps that general procurement may not anticipate.

◼️High Liability Stakes: Delaying or choosing the wrong legal advisor can lead to multimillion-dollar losses or penalties. Unlike buying a product, hiring a law firm directly impacts the company’s legal risk – you need the most qualified counsel, not just the lowest bidder.

◼️Fiduciary Trust: Attorneys owe fiduciary duties of loyalty and confidentiality to their clients. Engaging a law firm is a trust-based relationship, not a standard vendor transaction. The legal team inherently understands this, whereas procurement might approach it too transactionally.

These factors make legal services procurement unique. As one seasoned GC put it, selecting a law firm "is not the same as buying 1,000 laptops or 5,000 paper clips"​ (thomsonreuters.com). The skill set and speed required to onboard critical legal advisors are very different from sourcing routine goods.

Why General Procurement Struggles with Legal Onboarding

General procurement professionals excel at controlling costs and enforcing policies. However, their methods can become inefficient or risky for legal services due to a lack of legal expertise. Procurement teams are typically generalists without legal training​ (lawcadia.com), so they may not grasp nuances like assessing a law firm’s specialized expertise or the urgency of a legal crisis.

As a result, several problems often arise when procurement manages law firm onboarding:

◼️Misaligned Criteria: Procurement may fixate on cost and generic metrics, whereas hiring outside counsel involves many intangible factors. There is a real worry that procurement will “hire the cheapest law firm…regardless of that firm’s suitability” (thomsonreuters.com), overlooking critical qualities like specialized expertise and trust.

◼️Process Delays: Standard procurement entails RFPs and multiple approvals, but legal matters often demand immediate action. This mismatch can cause harmful delays. In-house teams frequently express frustration at how long it takes to onboard counsel (lawcadia.com). If a lawyer isn’t in place quickly during a crisis, the company can be left exposed.

◼️One-Size Terms Don’t Fit: Boilerplate vendor contracts (indemnities, warranties, etc.) rarely align with legal engagements. Law firms use engagement letters that meet ethical duties and risk norms. Forcing a firm to accept standard procurement terms often leads to protracted negotiations or outright refusal to engage.

Engagement Terms and Regulatory Complexities Demand Legal’s Oversight

One of the most critical aspects of onboarding a legal service provider is negotiating the engagement terms. Unlike standard vendor contracts that procurement is used to, law firm engagement agreements must be tailored to fit within legal industry norms and regulatory frameworks. There are several reasons the legal department (or legal operations) needs to drive this process:

◼️Professional Ethics & Confidentiality: Law firms operate under strict ethics rules and require engagement letters covering scope, fees, conflicts, and confidentiality. Procurement may not know these norms and might impose terms that clash (e.g. broad indemnities or IP ownership clauses that lawyers cannot accept). The legal team must ensure engagement terms protect the company and respect the lawyers’ professional obligations.

◼️Standard Policies vs. Reality: Corporate procurement rules on payment terms, liability, or portals can clash with legal practice. For example, a policy might demand 60-day payment and unlimited liability, but law firms expect 30-day payment and capped liability. Enforcing a one-size-fits-all policy can lead to stalemate and delay.

In light of these challenges, many organizations acknowledge that legal services require a different approach. For instance, one university’s procurement office explicitly lists “Law Firm Retainer” contracts as handled outside of standard procurement (​procurement.gwu.edu). Typically, the general counsel or legal ops team handles law firm engagements – a clear sign that this process demands legal acumen.
 

Unintended Cost Implications of Procurement Delays and Missteps

Ironically, trying to control legal spending via traditional procurement methods can backfire and increase costs for both the company and the law firm. When onboarding is delayed or mishandled, the company may incur higher expenses in several ways:

◼️Escalating Costs of Delay: When outside counsel is onboarded late, legal problems can worsen and become more expensive. A slow start might mean missed chances to settle or comply early, leading to higher fees or fines. Meanwhile, in-house lawyers may be pulled from their regular work to fill the gap, a hidden productivity cost.

◼️Lost Fee Savings: Law firms often charge premium rates if brought in under crisis conditions. An onerous onboarding can also make firms less willing to offer discounts or alternative fees. If the relationship begins transactionally, the firm has little incentive to go the extra mile on pricing.

◼️Rigid Pricing Backfires: Forcing impractical fee structures can drive costs up. If a firm is pressed into a fixed fee for an unpredictable matter, it will either pad the price (the company pays extra up front) or later demand change orders for anything outside the narrow scope. In either case, the company risks paying more in the end – as Case Study 3 will show.

Moreover, top law firms may decline opportunities or add a "hassle surcharge" if a client’s onboarding process is too burdensome. In effect, a cumbersome procurement approach can shrink the pool of quality firms and raise costs indirectly.

Case Studies: When Procurement Processes Fail Legal Needs

The following real-life-inspired scenarios demonstrate how procurement-led onboarding of legal services can go wrong, reinforcing the need for legal department leadership:

Case Study 1: Standard Terms Derail a Law Firm Engagement – A corporation’s procurement team insisted that a newly hired law firm sign the company’s standard vendor terms, even though Legal had negotiated a tailored engagement letter. The boilerplate terms conflicted with the law firm’s professional obligations (e.g. violating ethical rules and insurance limits), so the firm refused to proceed. This stalemate delayed the engagement by several weeks — a critical compliance deadline passed with no counsel in place. The company ultimately reverted to the law firm’s own engagement terms.

Lesson: Pushing standard procurement T&Cs on a law firm can cause an engagement breakdown and dangerous delays.

Case Study 2: RFP Process vs. Urgent Legal Need – A company facing an urgent regulatory investigation was required by procurement to run a full RFP for outside counsel, using rigid scoring that emphasized cost over niche expertise. The RFP took weeks to complete, during which the regulatory situation escalated. By the time a firm was selected, the company had to beg regulators for extensions and the chosen law firm had to rush its work at higher cost.

Lesson: A rigid procurement process can critically delay urgent legal support, undermining the company’s response and increasing costs.

Case Study 3: Fixed Fee Gone Wrong – Trying to save money, a procurement team negotiated a fixed-price deal for a complex litigation, assuming it would be simple. When the case grew more complicated, the law firm exhausted the budget. Procurement refused to adjust the fee arrangement, and the firm withdrew mid-case. The company had to hire new lawyers in an emergency, ultimately paying far more (and duplicating efforts) than if a flexible fee had been in place. 

Lesson: Unrealistic fixed-fee demands for legal work often backfire, costing the company more in the long run.

A Differentiated Approach: Let Legal Lead, with Procurement Support

To manage legal services effectively, companies should adopt a tailored approach that leverages the strengths of both groups. In short, let the legal department lead, and have procurement support – not the other way around. Key elements of this approach include:

◼️Legal in the Lead: The legal team (or legal ops) should drive selection and onboarding of law firms. Legal experts can identify the right firm, negotiate appropriate terms, and ensure ethical and regulatory compliance. They understand the stakes and can move quickly to engage counsel on the company’s behalf.

◼️Procurement as a Partner: Procurement still plays an important role – but as a supporting partner rather than a decision-maker. They can assist with process efficiency, such as managing RFP logistics or vendor onboarding paperwork, and lend expertise in cost analysis. Crucially, they should work under legal’s guidance on criteria and priorities. This way, the company benefits from procurement’s skills without compromising on legal quality or speed.

◼️Tailored Policies & Communication: Companies should establish clear guidelines that set legal services apart from standard procurement. Also, designate one or two procurement staff to be trained as legal procurement specialists. Ongoing communication is vital – legal can educate procurement about the needs of each matter, and procurement can adjust their processes accordingly. Over time, this collaboration builds mutual trust and a smoother workflow.

This differentiated approach preserves procurement’s value – cost discipline and process rigor – while adapting to legal’s needs. It treats legal procurement as its own category requiring bespoke treatment. Notably, companies that have implemented a legal–procurement partnership have reaped benefits: one law department reported about a 30% reduction in outside counsel spending after aligning procurement’s role properly​ (thomsonreuters.com). In sum, with legal at the helm and procurement supporting, the company can get timely, high-quality legal help and control costs.

Engaging outside legal service providers is a high-stakes task that should not be shoehorned into a standard procurement routine. The time pressures, regulatory constraints, and trust dynamics of legal services demand that the legal department (or legal ops) steer the onboarding of law firms. General procurement teams, for all their skill, lack the specialized knowledge and agility that selecting outside counsel requires. Imposing a conventional procurement approach on legal engagements often introduces delays, friction, and hidden costs that ultimately harm the business.

The solution is to adopt a legal-led but collaborative process. By letting legal experts drive decisions – and leveraging procurement for support in areas like process streamlining and spend tracking – companies can get the right counsel when they need it, on fair terms. This tailored approach protects the company’s interests far better than any one-size-fits-all policy. Ultimately, treating legal service providers not as just another vendor, but as strategic partners in risk management, will pay dividends in both risk mitigation and cost-effectiveness.