77% of legal tech fails because vendors do not understand how law firms operate. Therefore, instead of making work easier, they become liabilities. These tech tools are often tasked with handling sensitive client data, controlling key system access, and influencing legal compliance. If their security fails, your firm pays the price.

A structured vendor audit helps prevent these risks. It ensures that whatever tool you integrate with your legal team meets security standards, follows compliance laws, and supports your firm’s operations without adding unnecessary complications.

Here are seven essential steps to audit legal tech vendors effectively.

Quick Overview

1. Define Audit Goals: Focus on security, compliance, performance, and integration.
2. Categorize Vendors by Risk Level: Prioritize high-risk vendors handling sensitive data.
3. Collect Security Documentation: Verify certifications, encryption policies, and compliance reports.
4. Assess Security & Performance: Evaluate uptime, response times, and regulatory alignment.
5. Conduct a Direct Review: Test real-world functionality and engage vendor teams.
6. Implement Fixes: Address security gaps, enforce SLAs, and strengthen compliance.
7. Monitor & Reassess: Set up regular audits, performance tracking, and contract updates.

Step-by-Step Guide to Auditing Legal Tech Vendors

A thorough audit ensures that every vendor aligns with industry standards, protects client data, and supports legal operations.

Here’s how to conduct a comprehensive vendor audit in seven clear steps.

Step 1: Define Your Audit Goals

A vendor audit without clear objectives is a wasted effort. When firms lack a structured approach, audits become reactive rather than strategic. Instead of focusing on critical vendors, time is wasted on reviewing minor tools that pose little to no risk. The audit process should strengthen compliance, security, and operational efficiency.

To avoid this, firms must set clear priorities from the start. Not all vendors require the same level of scrutiny. A legal billing platform that processes payments requires deeper evaluation than a contract template tool that stores non-sensitive data. Defining what matters most ensures that audits focus on vendors that impact security, compliance, and daily operations.

A structured audit should revolve around four key areas:

• Security: Does the vendor use AES-256 encryption and multi-factor authentication (MFA) to protect sensitive client data?
• Compliance: Will the platform be able to comply with industry regulations like GDPR, CCPA, and ABA security standards?
• Performance: Can the system maintain 99.9% uptime and process requests fast enough for legal workflows?
• Integration: How does the tool sync with case management, billing, and compliance systems without disrupting operations?

By establishing these priorities upfront, firms avoid wasted effort on low-risk vendors and ensure deeper evaluations where they matter most.

Step 2: Categorize Vendors by Risk Level

Not all legal tech vendors carry the same level of risk. Some manage sensitive client data and directly impact legal operations, while others provide supporting tools with minimal security exposure. Prioritizing vendors by risk level ensures that high-risk vendors receive deeper scrutiny while lower-risk ones do not consume unnecessary resources.

Failing to categorize vendors properly can lead to overlooking critical threats. A survey found that 26% of law departments experienced a security breach, often due to vulnerabilities in third-party services. By assessing vendors based on their risk level, firms can focus their audits on those that pose the greatest security and compliance risks.

To structure this process, vendors should be categorized into three levels based on data access, operational impact, and integration depth:

Risk Level	Data Sensitivity	Business Impact	Audit Frequency
High Risk	Handles confidential client data, financial transactions, or case management systems	Directly affects legal operations, compliance, or client security	Quarterly audits
Medium Risk	Manages internal firm data but does not store highly sensitive legal records	Supports legal workflows without directly affecting case outcomes	Semi-annual audits
Low Risk	Works only with public or non-sensitive data	Minimal impact on legal operations	Annual audits

By categorizing vendors into these risk levels, firms ensure time and resources are spent where they are needed most. High-risk vendors require frequent audits and deeper evaluations, while low-risk vendors can be reviewed periodically.

Step 3: Collect Vendor Security Documentation

Before evaluating a vendor’s security practices, firms must first obtain and review key documentation that outlines their data protection measures. Without proper documentation, verifying whether a vendor meets industry security and compliance standards is impossible.

Legal tech vendors should provide detailed records of their security policies, data handling procedures, and regulatory compliance measures. The following documents are essential for a thorough assessment:

• Security Certifications: Proof of compliance with industry standards such as SOC 2 Type II, ISO 27001, or GDPR compliance reports.
• Data Protection Policies: Documentation detailing how client information is stored, encrypted, and shared.
• Access Control Measures: Policies outlining user authentication, multi-factor authentication (MFA), and role-based access control.
• Incident Response Plan: A structured approach for handling security breaches, data leaks, and system vulnerabilities.
• Data Retention and Disposal Policies: Guidelines on how long data is stored, when it is deleted, and how secure disposal is handled.
• Audit Logs and Monitoring Reports: Records that track unauthorized access attempts, security events, and system vulnerabilities.

Without these documents, firms cannot determine if a vendor is taking the necessary steps to secure client data. Reviewing security documentation early in the audit process helps identify potential gaps before deeper testing begins.

Step 4: Assess Security & Performance Standards

Vendor security policies and certifications provide an initial layer of assurance, but real protection comes from how well those measures perform in practice. A vendor might meet compliance requirements on paper. Still, firms cannot determine whether the technology is genuinely efficient without testing their security controls, system reliability, and performance benchmarks.

Beyond security, performance also plays a major role in vendor selection. Legal tech ROI depends on whether the platform enhances productivity, integrates smoothly, and maintains uptime standards that keep operations running. A system that frequently lags, crashes, or slows workflows drains time and resources instead of improving them.

To assess security and performance effectively, firms should evaluate vendors across four critical areas:

Assessment Area	Key Focus	Evaluation Method	Industry Standard
Data Security	Encryption, access control, and threat detection	Review AES-256 encryption, multi-factor authentication (MFA), and penetration test results	AES-256 encryption, MFA required for all users
Compliance	Regulatory alignment with legal standards	Validate adherence to GDPR, CCPA, ABA security guidelines	GDPR, SOC 2 Type II, ISO 27001
System Uptime	Platform availability and stability	Analyze uptime reports and response times under peak workloads	99.9% uptime with response times under 200ms
Operational Efficiency	Impact on legal workflows and ROI	Track error rates, automation success, and integration speed	Reduces manual work by at least 30%, seamless API integrations

A vendor not meeting industry security and uptime standards weakens legal operations. The organization should focus on vendors that enhance efficiency while maintaining strong security.

Step 5: Conduct a Direct Vendor Review

A vendor’s policies and reports provide insight into their security and performance, but a direct review reveals how well their systems operate in real-world conditions. Engaging directly with vendors allows firms to verify security claims, test system reliability, and assess overall transparency.

To conduct an effective vendor review, firms should focus on the following key actions:

• Perform hands-on testing: Run a controlled trial to evaluate how the platform handles real legal workflows, data transfers, and compliance tasks. Test the user interface, system response times, and automation capabilities to confirm efficiency.
• Assess vendor transparency: Ask vendors to walk you through their security policies, data protection strategies, and risk mitigation plans. Request incident response reports, past security audits, and ongoing monitoring procedures to validate their commitments.
• Meet with security and compliance teams: Speak directly with vendor representatives to understand how they manage encryption, access control, and regulatory compliance. Ensure they have dedicated personnel responsible for cybersecurity and compliance updates.
• Review customer support responsiveness: Test response times for support tickets and live assistance to determine how quickly vendors address system failures or security concerns. Evaluate whether they offer 24/7 support, dedicated account managers, or emergency response protocols.
• Analyze past incidents and resolutions: Request records of previous security breaches, system failures, or service disruptions. Verify how issues were resolved, whether corrective measures were implemented, and what steps were taken to prevent recurrence.

A direct vendor review provides practical insights beyond documentation. Before moving forward, firms should document findings and compare them against security, compliance, and performance benchmarks.

Step 6: Implement Fixes & Risk Mitigation Plans

Once security gaps and performance issues are identified, the next step is to address weaknesses and strengthen vendor relationships through structured mitigation plans. A proactive approach prevents recurring vulnerabilities and ensures vendors align with legal industry standards.

To implement fixes effectively, firms should:

• Prioritize critical security fixes: Address high-risk vulnerabilities that threaten sensitive legal data. Work with vendors to apply security patches, strengthen encryption, and enhance access controls within a set timeframe.
• Ensure compliance updates are implemented: If a vendor fails to meet GDPR, CCPA, or ABA security requirements, ensure they submit an updated compliance roadmap with deadlines for necessary corrections. Request proof of completion before extending contracts.
• Set accountability measures in vendor agreements: Revise service-level agreements (SLAs) to include stricter security obligations, clear uptime commitments, and penalties for non-compliance. A strong SLA prevents vendors from delaying crucial fixes.
• Using AI for risk monitoring: As legal operations become more tech-driven, firms are increasingly exploring the potential of AI to automate compliance tracking, detect security threats, and assess system performance. AI-powered tools provide real-time insights into data access trends, encryption standards, and vendor reliability.
• Schedule follow-up security assessments: Conduct penetration tests, vulnerability scans, and system performance reviews to verify that security fixes have been implemented correctly. Use previous audit findings as a benchmark for improvement.
• Document risk mitigation efforts and review effectiveness. Maintain a risk resolution log to track vendor improvements over time. If a vendor fails to meet security and compliance expectations, consider alternative solutions that better align with firm-wide risk management strategies.

Security and compliance require continuous oversight. Implementing automated risk monitoring and scheduled security reviews ensures vendors remain accountable long after initial fixes are applied.

Step 7: Establish Ongoing Monitoring & Reassessments

A one-time audit is insufficient to ensure vendors maintain security and compliance standards. New vulnerabilities can emerge without ongoing monitoring, regulatory requirements may change, and vendor performance can decline over time. A structured reassessment plan ensures continuous oversight and accountability.

To maintain vendor security and efficiency, firms should focus on these key areas:

Monitoring Focus	Key Actions	Frequency
Security Compliance	Verify encryption, access controls, and compliance updates	Quarterly
Performance & Reliability	Review uptime reports, response times, and system efficiency	Monthly
Regulatory Changes	Track new legal and industry regulations	Annually or as needed
Incident Management	Review past security incidents and vendor responses	Semi-annually
Contract & SLA Review	Reassess vendor agreements and update security terms	Annually

To ensure vendors remain compliant, firms should:

• Schedule recurring audits: Establish a timeline for quarterly security reviews, annual compliance assessments, and regular performance checks.
• Use automated monitoring tools: AI-driven solutions can track system performance, security threats, and SLA adherence in real-time, reducing the burden of manual oversight.
• Maintain vendor communication channels: Hold regular meetings with vendor security teams to discuss updates, new risks, and required improvements.
• Assess vendor adaptability: Evaluate how well vendors respond to new legal regulations, emerging cybersecurity threats, and evolving business needs.
• Update contracts and SLAs as needed: Ensure vendor agreements reflect the latest security and compliance expectations to keep them accountable.

A strong monitoring framework prevents security lapses, reduces legal risks, and ensures vendors consistently meet performance standards. Firms can maintain a secure and efficient legal tech ecosystem with ongoing reassessments.

Conclusion: Strengthening Legal Tech Security Through Comprehensive Vendor Audits

Legal technology vendors significantly influence a firm's security, compliance, and operational efficiency. Conducting thorough vendor audits ensures these technology partners adhere to stringent security protocols, regulatory requirements, and performance standards. Without regular oversight, potential security gaps, compliance failures, and system inefficiencies may remain undetected, exposing firms to unnecessary risks.

A structured approach to vendor management helps prevent security failures before they occur. Regular assessments enable firms to make informed decisions about their technology partners, ensuring that vendor relationships support rather than hinder business operations.

For many organizations, the challenge extends beyond recognizing the need for vendor audits to possessing the expertise required to conduct them effectively. This is where platforms like Lawtrades can provide value. Lawtrades connects legal teams with compliance professionals and legal operations experts specializing in areas such as vendor risk management, making it easier for firms to establish structured audit frameworks.

By integrating expert legal oversight with structured vendor management, firms can proactively safeguard their systems, improve efficiency, and maintain compliance. A well-executed vendor audit process ensures that legal technology remains a security asset rather than a liability.