Key insights:

• • • A significant visibility gap persists between legal departments and the C鈥慡uite 鈥� Most general counsel believe their legal department contributes strategically, yet senior executives often fail to see or understand that value.

    • Strong internal relationship鈥慴uilding is critical (and often underdeveloped) 鈥� This capability enables legal teams to spot risks earlier, stay embedded in decision鈥憁aking, and make their work more visible across the business.

    • Closing the gap requires communicating legal鈥檚 value and increasing true AI fluency 鈥� For legal teams to be seen as proactive, strategic partners rather than task executors, communication and strong AI fluency are essential.

General counsel (GCs) have spent years doing more with less, tightening their legal spend, and aligning the law department鈥檚 priorities with the wider business. And yet, despite all of this effort, a striking visibility gap persists. While 86% of GCs believe their department is a significant contributor to overall organizational objectives, only 17% of the C-Suite agrees, according to the , from the 成人VR视频 Institute, which was based on more than 2,300 interviews with corporate general counsel. Meanwhile, 42% of C-Suite executives say the legal function contributes little or not at all to company performance.

The challenge for GCs is whether their staff have the skills and capabilities to make their work visible, relevant, and understood by the business at large. To address this perception gap in 2026, every GC needs to prioritize building richer internal relationships with business leads, moving from task-based to outcome-focused messaging, and improving the team鈥檚 collective AI fluency.

Empower teams to build internal relationships

Nearly half of all GCs surveyed for the report cited staffing and resource constraints as the top barrier to delivering additional value, a concern that has remained stubbornly consistent for years. Beyond headcount, the report underscores that the deeper challenge facing legal departments is relational.

Internal relationship-building is one of the most critical and underrated people skills in a legal department’s collective skill set. Indeed, 68% of GCs rate internal dialogue as their most valuable source of information about emerging risks. In fact, the most successful GCs use a deliberate combination of formal and informal methods to build connections with the internal business units that they serve.

You can learn more about how to assess your legal department鈥檚 strategic positioning with the听成人VR视频 Institute鈥檚 Value Alignment toolkit, here

Some run structured weekly face-to-face sessions with business departments, complete with schedules, plans, and frameworks. Others rely on walking the halls, open-door policies, and ad-hoc conversations that keep the corporate law department visible and accessible on a human level.

The report offers a five-dimensional framework to help GCs audit where, with whom, and how often legal is in dialogue with other parts of the business.

Use communication tactics that focus on business outcomes

Even when legal departments are doing excellent work, they often describe it in the wrong language. Many in-house lawyers categorize their contributions in task-based terms 鈥� such as 鈥淲e support M&A鈥� or 鈥淲e analyze contracts鈥� 鈥� rather than in value-creating terms.

Some in-house legal leaders have progressed to stakeholder-level framing, such as, 鈥淲e protect the company from competitive threats鈥� or 鈥淲e support new business opportunities.鈥� Still, neither of these levels truly communicates value to a C-Suite audience, the report shows.

To effectively align the law department’s priorities with business goals, in-house attorneys need to develop the skill of communicating through a business lens. For example, one GC states that the primary goal of the law department is to “find the fastest and most compliant way for the sales department to sell products.” This response reframes the legal function鈥檚 activities as much more business fluent and value-added.

Legal teams are not always good at touting their accomplishments, however, and this is a challenge when a lot of the work can be categorized as invisible. For example, when protecting the company is done right, threats are eliminated before they occur and no one notices. When efficiency is unlocked through process improvement, the C-Suite only sees the outcome if someone connects the dots explicitly. This is why surfacing invisible value is now a business imperative for corporate law departments.

Advancing from AI literacy to AI fluency

The most significant skills challenge facing legal departments in 2026 is how to best use AI strategically. Mentions of AI as a strategic priority among GCs have doubled in the past year, according to the report. In fact, almost half of all GCs now reference AI in their survey interviews. Yet the report draws a sharp distinction between being AI literate and being AI fluent, with most departments being the former but not the latter.

To close that gap, the report recommends a six-layer model covering learning, empowerment, ownership, accountability, usage, and expectations.

At its core, the model asks GCs to start with open encouragement and access to AI tools to build momentum, then shift toward more formal expectations around adoption to make AI use a daily habit.

You can download a full copy of the 成人VR视频 Institute鈥檚 here

Key takeaways:

• • • Disconnect between legal departments and C-Suite perceptions 鈥� While many general counsel believe their departments are significant contributors to business success, most C-Suite executives do not share this view. Fully 86% of GCs say they believe their department is a significant contributor, but only 17% of C-Suite executives agree.

    • A need to find new ways to demonstrate value 鈥� Legal departments are under increasing pressure to do more with less, as nearly half of GCs surveyed cite staffing and resource constraints as their top barrier to delivering additional value. Despite these limitations, expectations from the C-Suite continue to rise.

    • AI adoption accelerates, business strategy comes next 鈥� Legal departments are rapidly embracing technology to improve efficiency, manage resources, and address cost pressures. Not surprisingly, the proportion of GCs calling AI a strategic imperative has doubled.

Over the past several years, general counsel and corporate law departments at large have transformed their operations. Many have become more efficient enterprises, leveraging technology, in particular AI, at an increased pace. GCs have adjusted their hiring practices to conform with the modern corporation, taking new ways of working into account. And they have embraced data-driven decision-making, evaluating outside counsel and their own operations alike with a wider suite of new metrics and KPIs.

But do you know who hasn鈥檛 yet realized the fruits of that labor? The corporate C-Suite.

Jump to 鈫�

2026 State of the Corporate Law Department Report

The , released today by the 成人VR视频 Institute, reveals a disconnect between how GCs and their corporate law departments view their own alignment to the wider business, and what C-Suite executives believe the legal department contributes. Within this gap, the message is clear: GCs not only need to align with their organizations鈥� overall business strategy, they need to learn how to prove that alignment to the rest of the company.

Indeed, when asked how they view legal鈥檚 contribution to the rest of the business, 86% of GCs surveyed said they viewed the legal function as a significant contributor. However, only 17% of other C-Suite executives said the same 鈥� and 42% said legal contributes little or not at all.

As the report explains, this disconnect lays the inherent groundwork for the tension facing many GCs today. While they are increasingly aiming to align to business standards, the rest of the organization is not recognizing those actions. Instead, many C-Suites are looking for even more out of today鈥檚 legal departments to prove their contributions to organizations鈥� business imperatives.

As in past years, many in-house legal departments are being tasked to do more with less. Nearly half of GCs cited staffing and resource constraints as the top barrier they face to delivering additional value. Indeed, many said they expected outside counsel spend in some key areas 鈥� such as regulatory work and mergers & acquisitions 鈥� to remain high. As of the fourth quarter of 2025, more than one-third (36%) of GCs said they expect to increase overall spend on outside counsel over the next year, while only 20% said they plan to decrease their spend.

Despite legal departments’ gains, their C-Suites are looking for them to take the next step, turning operational excellence into business success.

Not surprisingly, many GCs said they view technology as one of the primary ways they have to combat these resourcing and cost issues. In fact, the proportion of GCs mentioning technology as a strategic priority entering 2026 doubled over the year prior. Legal departments have begun to feel positive effects of AI in their own organizations, the report notes, such as increased efficiency or time feed up for strategic work.

Despite these gains, C-Suites are looking for are looking for their legal functions to take the next step, turning operational excellence into business success. This can take a number of different forms, such as explicitly tying advice to client business objectives, presenting legal spend in the context of the business by showing it as a percentage of revenue, or approaching risk management with the goal of aiding business imperatives. 鈥淲hen we have a risky legal subject, the company never prefers just to see the legal opinion,鈥� said one retail GC. 鈥淭hey鈥檙e also requesting you to drive them how to make a decision.鈥�

AI and technology should also be approached in this same way, the report argues. Although almost half of all corporate legal departments have some type of enterprise-wide GenAI tool, according to the survey, very few are collecting success metrics around AI鈥檚 implementation or linking its use to business revenue. Put a different way, many legal departments are focused on unlocking capacity, rather than deploying capacity in a business-centric way 鈥� much to the chagrin of their C-Suites.

Although legal departments have established a solid foundation upon which a business can stand, ultimately, C-Suites don鈥檛 want just a foundation. They want help building the entire house, the report shows, directly enabling the services that companies provide to customers. In that, GCs and legal departments have more work to do, not only tying strategy to overall business initiatives but actively communicating how the legal function鈥檚 work aids the company as a whole.

You can download

a full copy of the 成人VR视频 Institute’s “” here

Key insights:

• • • Managing resources is key 鈥� The effectiveness of a legal department depends on how internal and external resources are managed, coupled with the quality and commerciality of the advice provided.

    • Strategic resource allocation needed 鈥� Using the right resources for the type of task is critical for GCs who are looking to create operational value in their legal departments.

    • Providing quality legal advice is a differentiator 鈥� GCs are looking to their outside law firms to provide commercially relevant legal advice that will help the in-house legal department drive value creation.

Today鈥檚 corporate general counsel (GCs) find themselves juggling a challenging load of responsibilities. Frequently in the past, the 成人VR视频 Institute (TRI) has talked about the four spinning plates that today鈥檚 GC must monitor 鈥� effectiveness, efficiency, protection, and enablement of business growth.

Previously, we described the first of these plates, effectiveness, as an area in which frequently the expectations of C-Suite leaders about their GCs鈥� office are slightly out of alignment with the daily reality of many GCs.

This misalignment does not mean that business leaders overemphasize operational effectiveness or that GCs neglect this priority; rather, this misalignment is most likely due to the differing perspectives each group has on the operations of in-house legal departments. Within each organization, the C-Suite rightly expects its GC to be operating its enabling function as effectively as possible 鈥� it鈥檚 a baseline expectation. However, because it is a baseline expectation, it can easily become table stakes for the GC in terms of day-to-day focus. It鈥檚 not that effectiveness isn鈥檛 top of mind, it鈥檚 that focusing on the effectiveness of the department has become business as usual.

However, TRI鈥檚 2025 State of the Corporate Law Department report provides a new lens through which to view the effectiveness of the legal team. As covered extensively in that report, GCs have demonstrated a rapidly increasing focus on extracting value from their team. GCs are looking to bring their teams into alignment with the business鈥檚 enterprise-wide value system, attaining greater value from their external legal spend and generating greater value for the business 鈥� all while working to protect the value the business itself has created.

Generating value for the business

The idea of generating greater value for the business can be a challenging one for GCs to deliver. The legal team isn鈥檛 tasked with product development, lead generation, or sales, so how is the team supposed to generate value?

As discussed in the recent Corporate Law Department report, one way that GCs can create value for the business is by creating greater operational value. This relies on how effectively the in-house team operates, adding a new label to the now-familiar effectiveness plate that GCs are already spinning.

But how does that kind of value-generation work in practice?

This effectiveness equation provides a handy framework to which GCs can refer when trying to optimize the effectives of their operations. In sum, how GCs manage their resources and talent, coupled with how they provide advice and service, equates to how effectively their team operates.

Which resources to use and when

The first component of the equation deals with striking a balance between internal and external resources. GCs tend to look primarily to internal resources for day-to-day and core types of work as well as matters that require a greater sense of the commercial interests of the business. They also favor their in-house teams when cost is a factor, an increasingly common consideration.

Further, GCs tend to look to law firms for help when they need specialized expertise or a boost to their in-house capacity. Many GCs describe themselves as Swiss Army Knives, that are adept at doing a little bit of a lot of things. However, when a matter requires deeper expertise, GCs will then turn to their specialized toolbox, which means outside law firms or, occasionally, alternative legal service providers (ALSPs). Another common area in which GCs will leverage outside law firms deals with issues of capacity. GCs frequently report dealing with increasing matter volumes while managing flat to declining internal attorney headcounts and budgets. External law firms can provide much needed pressure relief, but such relief often comes at a cost.

Ensuring quality of service

Even as GCs strive to strike a balance on the first portion of the effectiveness equation, they must be mindful of the quality of the service they are providing. The Corporate Law Department report made the point that corporate law departments do not operate effectively or efficiently as ends in their own right. Rather, all of the law department鈥檚 activities must be done in service to the broader commercial interests of the business.

This applies not only to the advice the in-house lawyers provide but also to external counsel, whether that be a law firm or an ALSP. Legal advice, no matter how correct or thorough, will be of little ultimate value to the business if it bears no relation whatsoever to the commercial realities of the business. Likewise, advice that is not responsive or timely to the end stakeholder鈥檚 needs, or which is so complex as to be unusable, does little to help demonstrate the effectiveness of the legal team.

As a result, GCs are increasingly making it a priority to ensure that their in-house lawyers provide advice that is timely, responsive, and understandable for stakeholders across the business, and increasingly, they expect their outside counsel to do the same.

When the component parts of this effectiveness equation come into balance, it not only helps the GC demonstrate the effectiveness of their team, but it also helps to service broader interest in growing the business and providing strategically relevant counsel to leadership.

Keys to driving business objectives

Another TRI report 鈥� the recent 2025 C-Suite Survey 鈥� discussed how business leaders do not generally view their enabling functions as making significant contributions to the ability of the business to achieve its overall objectives. For GCs looking to improve the perception of their in-house legal teams, how effectively their team operates in the creation of operational value can be key.

For starters, GCs looking to enhance operational value should:

• • • constantly evaluate when to keep work in-house, when to outsource, and which type of outside resources are most appropriate to GCs鈥� specific needs;
    • explore whether technological enhancement could create additional capacity to keep work in-house, mitigating the need to seek outside counsel;
    • ensure that the advice their teams offer is commercially attuned to the needs of the business and responsive to the stakeholders; and
    • hold outside counsel and ALSPs accountable to the same standards of commerciality.

While the discrete goals and key results of the business may vary from year to year, GCs must always be attentive to how effectively their legal department is operating. Frameworks such as the effectiveness equation can prove to be useful reference tools for GCs who are trying to identify what metrics they should be monitoring.

Not surprisingly, C-Suite leaders have high expectations for the leaders of their enabling functions. The good news for GCs is that they have plenty of options at their disposal to demonstrate how effective their departments can be in improving organizations鈥� ability to meet their goals.

You can download a full copy of the 成人VR视频 Institute鈥檚 2025 State of the Corporate Law Department report here

Yet it is an inescapable reality that GCs, generally speaking, must rely to a large degree on outside law firms to meet all the needs of their organizations, which carries a significant cost. In fact, the cost of outside law firms is not only high, but continues to rise, and quickly. According to TRI鈥檚 recent Q1 2025 Law Firm Financial Index, law firm worked rates grew by 7.3% in the first quarter of 2025, the fastest pace of growth for this figure in nearly 20 years.

We should pause for a quick note: this growth in billing rates is not occurring without input from GCs as clients. Indeed, we are talking about growth in worked rates, also known as agreed-upon rates, or the rates clients agree to pay to engage new matters.

So how can clients that are so concerned about cutting costs agree to such large billing rate increases?

Moving work to save money

We should begin with an observation that agreeing to pay a certain price for something is not the same as agreeing to buy a certain number of units of that thing at that price. Put another way, simply because GCs are agreeing to pay increased rates for law firm billable hours does not imply any guarantee as to how many hours GCs will actually hire their traditional law firms at those rates.

We have observed a years-long trend of demand for law firm services shifting away from the top-tier, most expensive law firms, while demand for hours from Midsize and Am Law Second Hundred law firms has continued to grow. Indeed, we have dubbed this pattern demand mobility. In addition to shift work to lower-cost law firms, other GCs are looking to reduce their spend on outside counsel as a whole by bringing more of their legal work in-house.

In fact, among all corporate GCs interviewed for the State of the Corporate Law Department Report, 42% said they anticipate increasing the percentage of their overall legal spend that they dedicate to their internal team.

As the chart also demonstrates, 22% of GCs said they predict a decrease in their spending with outside counsel. Interestingly, however, a plurality of GCs also anticipate increasing their spend with alternative legal service providers (ALSPs), including those affiliated with law firms. This may indicate that it is not necessarily the idea of working with law firms against which clients are potentially pushing back, but rather, clients may be looking toward the more predictable cost structures typically associated with ALSPs.

A push toward ALSPs?

In fact, the report also provides some indications that GCs are looking more favorably toward ALSPs. According to the above chart, roughly 15% of GCs overall said they intend to increase their spending with ALSPs; but among GCs who are current users of ALSPs (whether independent or affiliated with a law firm), that number is closer to 25%. This suggests that GCs that are already clients of ALSPs appreciate the services they are receiving and intend to use these providers even more.

It is likely no coincidence then that those GCs using ALSPs were also more likely to be looking to reduce their use of outside law firms. In fact, 33% of GCs that are currently using an ALSP, even one affiliated with a law firm, said they were looking to decrease their spend on outside law firms 鈥� an 11-percentage-point increase over the overall population of GCs surveyed.

This provides a fairly strong indication that there is something about ALSPs that GCs find favorable. Indeed, TRI鈥檚 2025 Alternative Legal Service Providers Report provides plenty of evidence for myriad reasons why GCs like ALSPs. In the context of costs, however, a likely favorability driver is the predictability of ALSPs鈥� cost structures.

ALSPs tend to work off of fixed fees or other pricing models that provide alternatives to the traditional billable hour much more frequently than do law firms. GCs likely view this as an advantage. In fact, it鈥檚 a practice GCs are encouraging their outside law firms to pursue more aggressively. Fully 61% of GCs say shifting toward value-based billing or alternative fee arrangements is a medium-to-high priority 鈥� and they are placing the onus for that shift on their outside law firms.

Implications for cost structures in 2025 and beyond

Law firm standard hourly billing rates for 2025 are already locked in place and unlikely to change. However, there will undoubtedly be room for GCs to use increased leverage in agreed-rate negotiations or to push for increased use of value-based billing practices going forward. Indeed, many GCs already are making their desire for more predictable billing models well known, appearing ready to push work toward those law firms that can provide alternatives to traditional billable hour arrangements or even to ALSPs that can provide more predictable billing structures.

Regardless of what mix of strategies GCs pursue in their search for cost savings, the top-down nature of the push coming from corporate C-Suite officers is clear, and GCs will be feeling the pressure to deliver results.

You can download a full copy of the recently released 2025 State of the Corporate Law Department Report from the 成人VR视频 Institute here

The majority of the research conducted for the State of the Corporate Law Department Report every year isn鈥檛 based on survey responses. Rather, it鈥檚 based on one-on-one interviews with GCs who are answering open-ended questions 鈥� nearly 2,500 GCs from all across the globe were interviewed last year alone. Their answers give a fairly clear picture about what鈥檚 top of minds for them.

With that in mind, it鈥檚 quite remarkable to see a thrice-fold increase in the number of mentions of the concept of value emerging from these interviews. It鈥檚 not a case of GCs selecting an answer from a pre-populated survey list; rather, three times as many GCs brought up the idea of value of their own accord.

Avoiding buzzwords

Value is a rather amorphous and subjective concept. What one person values deeply, another may dismiss out of hand.

Indeed, the Merriam-Webster鈥檚 online dictionary for the word value as a noun, and an additional three as a verb or adjective. Definitions range from concepts of monetary worth to utility, and even the duration of a musical note or the relative darkness of a color. With this broad spectrum of definitions available, it is no wonder that GCs find it challenging to clearly articulate what they value.

The following figure from the report illustrates this more clearly:

Unless a GC can clearly articulate what they mean when they talk about value, there is a genuine risk of the word losing all meaning.

Understanding the spectrum of value

From the table above, perhaps my two favorite examples to illustrate the need for clarity in defining value are the top and bottom boxes on the left-hand side. Most often when we think of value in the context of legal work, we think about the idea laid out in the middle of the table 鈥� value for the money spent. Indeed, we know that of all the metrics tracked by corporate GCs, metrics related to their total budget 鈥� and in particular their spend on outside counsel 鈥� are the most frequently tracked.

If our definition of value stopped there, measuring and communicating value would be a relatively easy exercise. However, the top and bottom boxes on the left-hand side very quickly show that such a definition is far too limited.

On the top left of the table is the idea of aligning to organizational values. This definition of value is far different than just dealing with money. Rather, it speaks to what the organization as a whole finds important or intrinsically desirable. 成人VR视频, like most organizations, dedicates full pages and more to our own statements on values, even articulating a robust set of Trust Principles that guide our work. For GCs, aligning to their organization鈥檚 values plays a critical role in how they understand and enable the business. It can be more challenging, however, to communicate that need for alignment to outside counsel and other legal services providers.

To get there, we must contrast the top box on the left side of the table with the one on the bottom left in which the idea of value is incorporated into a phrasal adjective. This example of value 鈥� citing value-based pricing 鈥� treads much closer to the common monetary understanding, but even then, understanding this example is not quite so simple.

True, value-based billing arrangements, often called alternative fee arrangements, are largely based on how much the work will cost. Yet, the value the firm is hoping to receive in such matters also depends on other factors, such as:

• • • how quickly the work is completed
    • whether the actual outcome of the work matches the desired outcome
    • the value of the settlement or judgement compared to the claimed amount
    • how effectively protracted litigation was avoided
    • the cost of the matter compared to similar past examples
    • the innovation displayed in solving the legal issues
    • and myriad other potential considerations.

In short, what is valued in a particular legal matter under a value-based billing arrangement can be a moving target. The concept of value-based billing might be generally understood, but the actual definition of the value of any given piece of legal work will vary.

Communication is key

Recognizing that the definition of value can be a shifting concept, it is vital that GCs facing this challenge engage in a high degree of communication. One of the action items laid out in the 2025 State of the Corporate Law Department report is a call for GCs to make settling on a definition of value 鈥� or at least the framework of a definition 鈥� a key focus for 2025.

As the report states:

鈥淚t should be a goal for each law department to determine what value means to them and to promulgate that definition to their key stakeholders. By doing so, GCs will accomplish several important tasks. First, they will give internal stakeholders in the business a better understanding of exactly what the legal function is hoping to contribute to the business鈥檚 broader interests. Second, it will clarify for those within the in-house legal team itself what goals and objectives they should be working to meet. Third, it will communicate to outside counsel and other service providers what those vendors should be working to deliver to the in-house legal team as the direct client.鈥�

Of course, this is not an easy task; but it is one which will help GCs ensure that they are capturing what matters most to the business and making those efforts known to key stakeholders.

You can download a copy of the full听听here

Many law firms have begun to restructure their talent pyramid even before the effects of generative AI (GenAI) have really even begun to be felt.

Most common among these shifts have been reductions in equity partner and associate tiers. At the same time, many law firms have been doing their best to keep up with the seemingly ever-increasing associate pay scales. And even those law firms that don鈥檛 feel the need to pay absolute top dollar to their associates (particularly the more junior ones) have still felt the need to increase associate salaries to some degree in order to recruit and retain talent.

And all of this has occurred in advance of what many industry observers and commentators consider to be an inevitable change in law firm talent models catalyzed by broader adoption of GenAI technologies with an even greater capability to perform legal-related tasks. Many believe this will lead to even greater contraction of the associate ranks within law firms.

The result of this has been generally fewer associates than in past generations who are used to commanding higher salaries. These factors have combined to create a rather vexing problem for corporate law departments.

W(h)ither the in-house talent?

Lawyers working in-house for corporate law departments are feeling the pressure. The average in-house lawyer repots working a 49-hour work week, yet 6 in 10 say they don鈥檛 have enough time to accomplish everything they would like to do. At the same time, most corporate law departments report but flat to declining budgets and attorney headcount.

Clearly, in-house legal teams need some relief. The question is, where will it come from?

At a recent event hosted in collaboration with the , several corporate general counsel (GCs) talked with me about the challenges they are having recruiting new in-house talent in today鈥檚 market. As noted above, law firms have been recruiting fewer associates on average. As a result, GCs who have followed the traditional recruiting path of looking for talent that is leaving law firms after gaining a few years of experience are finding a shrinking talent pool. And those lawyers who are looking to shift from a law firm to an in-house law department have very different salary expectations compared to those from even a few years ago, placing additional strain on already stretched corporate budgets.

At the same time, many in attendance at this event shared with me that the traditional argument in favor of better work-life balance by moving in-house is losing its effect. Many law firms have adopted more flexible working arrangements with some even allowing associates to into varying billable hour requirements. In-house lawyers, on the other hand, often find themselves working longer hours for comparatively less overall compensation. And today鈥檚 challenges may only increase in the future.

That鈥檚 chiefly because GenAI will almost inevitably work its way more deeply into lawyer workflows. If those who think this will mean smaller associate classes for law firms are proven correct, the recruitment challenges faced by GCs today will likely compound. The already tight recruiting market will shrink further; and fewer first-year associates in today鈥檚 class ultimately will mean fewer third- or fifth-year associates later.

So what can be done?

The likelihood that GCs will find themselves in an even trickier recruiting position in just a few years seems quite high. There are, however, a few potential solutions.

As an obvious starting point, GCs may have to take a close look at increasing the starting salaries for their law firm recruits. This option, however, will be a difficult path given the already high degree of pressure placed on law department budgets. Indeed, 20% of corporate C-Suite officers already say that continuing to cut costs is a high priority.

Another option many GCs are considering is changing who they recruit. Rather than waiting until an attorney has put in several years of service at a law firm and established a set salary expectation, many GCs are strongly considering more aggressive recruitment directly out of law school. Historically, this option was viewed less favorably because the sweat equity required to teach a junior lawyer how to actually be a lawyer (as opposed to simply how to think and act like one) carried high time and cost commitments. However, now with the advent of better technology to assist and train inexperienced lawyers, the sweat equity required may be considerably less. And that shifts the calculus more in favor of GCs who are looking to recruit greener lawyers.

The ability to leverage better technology could also help strengthen the case for why law firm lawyers would want to move in-house. Many law firms are engaged in a race to be second by choosing to wait for GenAI and other advanced technologies to become more proven before making a serious move to adopt. For GCs willing to be more aggressive, and frankly to do more to meet their C-Suites鈥� desires to be among the early adopters of AI, this presents an opportunity.

Law firms have been recruiting fewer associates on average; and as a result, GCs who have followed the traditional recruiting path of looking for talent that is leaving law firms after gaining a few years of experience are finding a shrinking talent pool.

In 2022, the 成人VR视频 Institute released a study looking at how law firms compete for talent and what makes attorneys want to stay at a firm. That study found those lawyers more likely to stay at their current firm cited factors such as the firm鈥檚 direction and strategy as well as the support they received from their IT teams. Interestingly, these factors often were cited more than simply the amount of money they made. Moreover, firms that were more likely to retain their attorneys also tended to be classified as innovators or early adopters on a technology adoption scale. Significantly, quality of work 鈥� meaning the perceived quality of the work the attorneys were assigned 鈥� was cited more than twice as often as a reason lawyers were likely to stay at their current firms or that they liked about where they currently worked.

For GCs, this presents an opportunity. One of the best early use cases for GenAI is its ability to absorb lower-value work. This is the type of work that can often be viewed as less engaging and stimulating by the lawyers that have to do it. As more of that work is handled by GenAI, in-house lawyers will have an increased capacity for more engaging, higher-level work.

Indeed, a move toward faster adoption of evolving technologies could give GCs several needed results: i) It will help them address team capacity and budget pressure; ii) it will create additional capacity for the in-house team without having to hire a large number of new lawyers; and iii) it could help create an environment in which the quality of the work lawyers get increases, even if the number of hours worked does not vary that much, which could certainly boost the attractiveness of the in-house role.

The future of talent recruitment for GCs promises to be challenging, and law firms do not appear poised to make it any easier. However, by leveraging thoughtful strategies in the short-term, today鈥檚 GCs could help create more favorable outcomes for their departments down the road.

You can download a full copy of the 成人VR视频 Institute鈥檚 just-published here

Jump to 鈫�

The 2025 State of the Corporate Law Department Report

To examine this more closely, the 成人VR视频 Institute has published , offering a comprehensive analysis of the current trends and challenges faced by GCs. This report, based on interviews with more than 2,400 corporate GCs, delves into the concept of value and its multifaceted role in today’s corporate legal environment.

The quest for value

The term value has become a frequent buzzword in the corporate legal world. In fact, the idea of value was mentioned three times as often during interviews for this year鈥檚 report as it was just 12 months ago. GCs are increasingly focused on the value that their law departments bring to the business and are continually evaluating how they can work efficiently and effectively to meet the rapidly evolving needs of their organizations.

This emphasis on defining and delivering value fits quite well with the widely accepted framework of the four key areas of focus within today鈥檚 corporate law department:

1. 1. 1. Effectiveness: Creating operational value 鈥� GCs must ensure that they add value through the quality of their legal advice and interactions with stakeholders. This involves having the expertise to meet challenges and providing operational advice that鈥檚 aligned with the strategic goals of the business.
      2. Efficiency: Capturing greater value for money 鈥� Efficiency is about serving the business’s needs in a cost-effective manner. GCs are increasingly focused on cost control and leveraging technology, particularly AI, to enhance efficiency.
      3. Protection: Safeguarding business value 鈥� Protecting the business’s value involves managing risks, regulatory compliance, and safeguarding assets and competitive advantages. Today鈥檚 GCs must navigate a complex and frequently shifting regulatory landscape while anticipating emerging risks.
      4. Enablement: Generating greater value for the business 鈥� GCs can enhance their businesses鈥� value by aligning their legal functions with companies鈥� vision and mission. This includes providing strategic advice, fostering relationships with law firms, and leveraging AI to improve efficiency 鈥� all with the goal of meeting the needs of the current quickly and effectively.

Aligning with organizational priorities

To optimally serve their companies, the legal functions鈥� goals and priorities should be in alignment with that of their broader companies, especially around vision, priorities, and values. Corporate C-Suite officers themselves are focusing on building operational efficiency, and 20% of them said that cost control is a key priority. GCs largely share that focus; and in fact, cost control is the top strategic priority for GCs in the United State, the United Kingdom, and Canada.

For many GCs, the emphasis on cost control also means an increased focus on delivering value-based services, value-based billing, and value-added advice to positively impact the bottom line. For example, many GCs said they are looking to reduce expenses by bringing more work in-house and leveraging alternative legal service providers (ALSPs). The report also highlights the increasing expense of working with outside law firms and the need for GCs to find more cost-effective solutions.

Indeed, one key strategy for controlling outside counsel costs that many GCs are hoping will help them achieve their goals is a greater emphasis on value-based billing or alternative fee arrangements (AFAs). Almost two-thirds (61%) of GCs said that increasing the use of AFAs is a medium- to high-priority over the coming 12 months, and they place the responsibility for developing those alternative pricing models on their outside counsel.

Technology as a driver of efficiency

The report also notes that GCs are investing in technology to drive greater efficiency and capacity within their departments. This includes improving the quality of work, bringing more work in-house, and leveraging AI to enhance operational efficiency. One-third of GCs said that they anticipate an increase in their overall technology spend in the coming year with the primary goal of that investment being an increase in their operational efficiency. In fact, GCs said that this will not only increase the capacity of the in-house legal team to absorb more work and thereby reduce outside counsel costs, but it will help GCs achieve the efficiency goals set by their C-Suite.

Building talent for future effectiveness

GCs also are identifying new skills and roles needed to meet the changing reality of legal work. This includes recruiting AI-specialist legal professionals, cybersecurity experts, and AI developers. GCs must balance technology adoption with professional skill development to find the best way to meet an AI-driven future.

Defining and delivering value

A key final consideration in the discussion of value centers on the idea that the quality of the legal advice from the legal function and the efficiency with which it operates cannot exist in a vacuum. Indeed, the law department must always keep its focus on how it protects the business from risk, thereby safeguarding the value of the overall business. In this way, the law department can better enable the growth of the overall business and improve the company鈥檚 ability to create new value for its ultimate customers.

鈥淭he goal for corporate law departments in 2025 should not be to develop a definition of value for its own sake,鈥� the report states. 鈥淩ather, GCs and their teams should use 2025 to develop the mechanisms for determining what they value in a way that those same mechanisms can be applied as needs and goals evolve.鈥�

You can download

a copy of the full here

This duality is part of the reason why so many corporate general counsel (GCs) are taking a bit of a wait-and-see approach to rolling out these new technologies within their departments, especially when it comes to the use of generative AI (GenAI). That鈥檚 not to say they鈥檙e completely sitting on their hands. In fact, according to 成人VR视频 recently released Future of Professionals 2024 report, one-third of GCs surveyed said believe that AI will enable them to bring more work in house in the next five years.

However, to arrive at that point in the future, today鈥檚 GCs will have to navigate a few tricky crossroads which exist in their current reality.

Two perspectives on technology

Earlier this year, we reported on an interesting bifurcation in the technological reality of today鈥檚 GC.

On the one hand, nearly three-quarters of GCs recognize that AI has the potential to improve efficiency. Nearly as many say that using technology to simplify their workflows is a high priority for their departments. Both of these are very understandable findings.

GCs have spoken for years about the pressure they feel to do more with less and to bring costs under control. Key to both of these goals is optimizing the capacity of in-house staff 鈥� and that means making sure that each staff member creates as much value as possible out of each working hour. Leveraging technology to improve efficiency and simplify workflows is a seemingly obvious way to fulfill these goals; streamlined workflows create better efficiency, which in turn allows more time for the in-house legal team to conduct more higher-value work, thereby reducing the company鈥檚 reliance on expensive outside counsel.

However, there is a potential contrast that is reducing the impact of this forward motion.

While GCs recognize the potential for AI to help reach certain goals, they also report slow adoption of new technology and a potential lack of budget resources to pay for it.

Nearly three-quarters of GCs recognize that AI has the potential to improve efficiency, and nearly as many say that using technology to simplify their workflows is a high priority for their departments.

Fully 90% of GCs interviewed for the 成人VR视频 Institute鈥檚 2024 State of the Corporate Law Department report said that their law departments make only slow to moderate progress on adopting new technology. This has long been a hallmark of lawyers in general, many of whom are often perceived to be set in their ways and averse to the risks that new technologies may present. In normal times, slow to moderate progress in adopting new technologies would not necessarily be a problem; however, these are not normal times.

GenAI has seen a meteoric rise in prominence since ChatGPT made its first big splash in November 2022. This advanced tech has dominated nearly every sphere of professional chatter for more than a year and almost every new product looking to appeal to business customers is touting its AI enhancements.

In-house lawyers must be careful that reticence to adopt new technologies themselves does not hinder their desire to quickly learn about these innovative tools. Other parts of the business will be relying on the legal team to advise on how to best use these technologies in daily operations. Indeed, GenAI has rapidly become a 肠补苍鈥檛-蝉补测-苍辞 proposition for many GCs.

Moreover, legal teams within other businesses may not be taking the same wait-and-see approach. I recently attended a GC event in the Bay Area and the level of sophistication from these GCs on all things AI-related was incredible. What was intended to be a general discussion centered on ways to increase teams鈥� familiarity and comfort with AI instead took a turn towards a more detailed discussion of advanced AI implementations and custom AI solutions. In short, GCs who attempt to be too hands off regarding AI may quickly find themselves lagging well behind their peers in terms of knowledge and, therefore, their ability to advise their organizations.

Recognizing the use cases in front of us

Part of the path to comfort in an AI future relies on finding the right starting point. Interestingly, while there may be a potential use case available for many reticent future AI users, the challenge comes in recognizing it and putting it to work.

Protecting the business from risk is arguably the central function of the GC鈥檚 role, and keeping up with the evolving risk landscape is a common challenge for GCs. According to the Corporate Law Department report, 71% of GCs said that identifying and mitigating emerging risks is a top priority. Nearly 6 in 10 also said they place top priority on keeping abreast of upcoming regulatory or legislative changes. Yet far fewer 鈥� only 44% 鈥� said there is an opportunity for AI use to help achieve their risk management goals.

Here again we see an interesting juxtaposition, which illustrates our second contrast. While GCs are quite clear on their priorities around risk identification and mitigation, they don鈥檛 necessarily see the role AI could play in helping meet those priorities.

Technology that can automate tracking of legislative and regulatory issues is nothing new 鈥� I advised lawyers how to use technology to do exactly that more than a decade ago when I was working as a reference attorney. But while the idea is well-tested, the newer technologies themselves may not be fully understood enough yet for some GCs to grasp their potential.

While GCs are quite clear on their priorities around risk identification and mitigation, they don鈥檛 necessarily see the role AI could play in helping meet those priorities.

Herein lies the potential use case for GCs looking to begin experimenting with emerging technology. Just about every GC likely has a standard practice in place today for monitoring legislative and regulatory changes and running an AI-powered alternative would create an easy opportunity for comparison and learning. It鈥檚 not necessarily a question of stopping one to start the other 鈥� rather, let them run in parallel for a while to allow the team to exercise the new technology muscle they鈥檙e building.

This toe-in-the-water approach could also help to improve the other contrast we explored earlier regarding slow adoption. Building comfort and experience in a low-risk exercise with a well-proven use case around regulatory and legislative monitoring could help to build toward the level of comfort that will help to speed adoption.

This, in turn, will help improve the utility of the technology to solve broader departmental priorities and, hopefully, bring about greater realization around the department鈥檚 critical goals of increasing team capacity and stretching budgets.

The recently released 2024 State of the Corporate Law Department Report, published in March by the 成人VR视频 Institute, discussed a variety of strategies that GCs have employed in their efforts to better control their departments鈥� costs.

In fact, both fellow GCs and those outside law firm partners looking to win new client business can learn some valuable lessons from these insights.

Complete in-house work more efficiently

The top priority for GCs seeking to bring more work in-house is to create more efficient internal work processes. Part of the quest for improved processes will undoubtedly involve greater usage of evolving artificial intelligence (AI) technologies. In fact, for 52% of corporate GCs, technology and automation is playing a significant role in their cost recovery strategy, according to the report.

This presents a bit of a conundrum for many GCs. More than 7-in-10 GCs said that AI has the potential to improve department efficiency and that using technology to simplify workflows is a high priority. At the same time, however, 90% of GCs said that their department only makes slow to moderate progress in adopting new technology 鈥� and, more worrisome, fewer than one-third are reporting an increase in their legal technology budgets.

The reasonable conclusion, therefore, is that GCs know that AI can help drive better efficiency, moving work in-house and automating work processes wherever possible is going to play a major role in controlling department costs going forward, but GCs still view the uptake of new technology with some skepticism. To overcome this, GCs need to be looking for best practice use cases for technology, either from external exemplars or by notching early wins internally, that can help motivate otherwise reluctant in-house team members to speed up their personal adoption of the available tech stack because of the benefits it will bring, or perhaps more importantly, the pain it can help remove through greater efficiency.

Triage and reallocate work

In addition to looking at how efficiently work is getting done, GCs are also exploring the question of who is doing the work. Roughly two-thirds of GCs said they are bringing more work in-house as part of their cost control efforts, according to the report. Here again, increased efficiency made possible through technology will play a major role in creating capacity for in-house lawyers to more easily absorb increased workloads.

But it鈥檚 not simply a question of whether work will be handled in-house or by outside counsel. GCs are also closely scrutinizing which law firms they鈥檙e sending their work. Nearly half of GCs said that they plan to send more work to lower-cost legal service providers, whether smaller law firms or alternative legal service providers 鈥� and this is not a new trend. In fact, it鈥檚 something we鈥檝e been discussing for several years in our annual Report on the State of the US Legal Market, including in the most recent iteration. For the past two years, Midsize law firms in the US 鈥� those that exist outside the Am Law 200 rankings 鈥� have been the clear winners in terms of increasing demand growth. More recently, clients seem to be shifting in favor of Am Law Second Hundred law firms. Regardless, both law firm segments present rate-friendly alternatives to larger firms, making them appealing candidates for GCs looking to source lower-cost legal services.

GCs are also clear about the types of legal work they鈥檙e looking to reallocate.

Contracts work is the most likely task to be brought within the corporate law department; and litigation matters are the most likely legal work to be shifted to lower-cost law firms, with nearly 40% of GCs saying they鈥檙e looking for lower-cost litigation counsel. Given the recent results reported in the Q1 2024 Law Firm Financial Index (LFFI) that showed 3.8% growth in litigation demand for the average law firm, that shift could prove quite lucrative for firms on the receiving end.

Drive greater value from firms

The Q1 LFFI also provided new insight into another issue with which cost-conscious GCs must grapple: Ever-increasing law firm billing rates. In the first quarter of 2024, average law firm agreed rates grew by 6.4%, exceeding even the high pace of rate growth set last year. Notably, the fact that these are agreed-upon rates means that, by definition, clients have agreed to these rate increases in the process of engaging new matters. However, that does not mean they鈥檙e not seeking alternatives.

Two-thirds of GCs said they are planning to seek greater discounts on rates as a means of controlling costs. On the one hand, rates are rising at a record clip; yet, on the other, clients say they鈥檙e seeking higher discounts 鈥� and interestingly, both can be true at the same time. A client that received a 10% discount last year could, in theory, get a higher discount this year even as the firm experiences faster rate growth than the year prior, depending on how much the firm stated it was increasing its standard rates this year. This results in a de facto revenue increase to the outside law firm, despite the higher discount.

To illustrate, let鈥檚 assume the firm鈥檚 standard rate last year was $100. If the client agreed to a rate of $90, that would mean the client was receiving a discount of 10%. For the sake of argument, let鈥檚 assume that represents a 5% increase in agreed-upon rates for the firm from the prior year. This year, then, the new agreed rate is $100, and an 11% increase for the firm. If the firm published a standard rate for this year of $120, that would mean the client鈥檚 discount increased to 16.7%. So, that means the firm pushes rate growth while the client receives discounts. In a sense, it鈥檚 a win-win of a sort. However, given the actual scale of law firm rates, and clients鈥� desires to lower overall costs, it is, perhaps, a pyrrhic victory for the client.

Which brings us to the final element of cost control 鈥� alternative fee arrangements (AFAs). After sitting stagnant for nearly a decade, many observers feel AFAs may be ripe for a new surge. Clients are expressing greater interest, and many law firms have staffed up their pricing capabilities in order to offer more creative 鈥� and hopefully just-as-profitable 鈥� pricing arrangements that don鈥檛 depend on the billable hour. And there is a growing consensus that AFAs, particularly fixed-fee arrangements, are going to become a necessity in an AI-driven future for legal services.

You can find out more about here.

Rather, corporate general counsel (GCs) are striving to shift the discussion to center around the value that the law department contributes to the business. However, this new mindset is not an easy one to shift to, especially with the traditional metrics reporting that GCs often provide to the business.

Much of the discussion in the recent 2024 State of the Corporate Law Department Report focused on an examination of the four key areas of responsibility for today鈥檚 corporate law department: effectiveness, cost efficiency, protection, and enablement. Some of these are natural areas of strength for in-house legal teams, such as protecting the business and providing effective legal representation. Yet others are a natural fit as well: Cost efficiency is an area in which law departments have built deep experience over years of continual focus; and enabling the business represents a potential growth area for those GCs who seek to transform their function from the Department of No to the Department of How.

Yet, no matter how skilled a law department may be at performing in these areas, many still struggle with how to report on their performance. Even in an area like cost control on which GCs have been focusing for years, their ability to report on how that focus contributes tangible value and cost savings back into the business may be lacking.

Rethinking law department metrics

In the State of the Corporate Law Department Report, each section around these four areas of responsibility concludes with a portion called For your consideration. There, GCs can find a selection of three metrics for each of the key focus areas that can help in-house law departments better and more effectively tell their department鈥檚 story. Together, these 12 metrics can help progressive GCs transform how their law department is viewed by the C-Suite.

Effectiveness

1. 1. 1. Employee engagement score 鈥� taken across the legal team and compared with a company-wide benchmark
      2. Matter success score 鈥� taken as a 1 to 10 score ratings on how well a matter鈥檚 outcome met business objectives, which can be rated by outside law firms, the in-house legal team, and stakeholders across the business
      3. Satisfaction with outside counsel 鈥� rated by the in-house legal team and comparing scores across the firms with those other departments or internal leaders with whom your department works with on a periodic basis

Cost efficiency

1. 1. 4. Proportion of revenue spent on legal 鈥� this should be benchmarked against industry and geography
      5. Internal to external spend ratio 鈥� comparison on costs of outside counsel to work done internally by legal team
      6. Time saved through automation 鈥� comparisons should be made to previous work processes

Protection

1. 1. 7. Number of risks mapped 鈥� this should be compared to the number of critical incidents
      8. The amount of fines, penalties, and payouts 鈥� this should be compared to similar companies and may be anecdotal rather than hard data, but either way, it鈥檚 a good method to show the value of the absence of risk
      9. Prevalence of risk awareness and compliance training 鈥� this should track the level of internal risk-mitigation education across the whole business

Enablement

1. 1. 10. Percentage of legal team鈥檚 individual objectives aligned to company鈥檚 vision and goals 鈥� to show how the legal team is lining up with the C-Suite
      11. Number of new product or service pitches 鈥� Those in which the law department was asked for an assessment of costs and risks should be tallied
      12. Legal attendance 鈥� the presence of legal department representatives at Board of Director meetings and early consultation on strategic decisions should be noted

This collection of metrics will not be the complete answer. And determining the exact mix of metrics that best tell the story of a particular law department will vary based on a variety of factors, such as what matters to that particular company鈥檚 C-Suite, corporate board priorities, specific department priorities, industry sector macroeconomics, mix of matter types, and more.

Rather than being the secret formula to the question of which metrics matter the most, GC should see this list instead as a way to spark new ideas around gathering certain law department metrics and using them to demonstrate the value of the department.

A full story in one investment

For a brief example of how this can work, let鈥檚 build off the suggestion of savings gained through automation. A focused set of metrics centered around an investment in technology may actually serve multiple purposes. For instance, if a company were to invest in an automated document generation tool for non-disclosure agreements (NDAs), clearly there would be metrics around the cost of that investment.

However, that investment would also demonstrate a potential improvement to the effectiveness of the law department due to consistent quality of output, which are now based on form documents and managed inputs into those forms. This investment could represent overall cost-savings through a reduction in either: i) reliance on outside counsel; or ii) in-house working hours spent producing NDAs. Moreover, the business would theoretically be better protected through an increased prevalence of the use of NDAs when engaging outside partners. And easier engagement with outside partners could enable faster growth of the business through more streamlined pathways to innovation. Thus, we can see that one investment 鈥� if undertaken strategically and reported on effectively 鈥� can tell a compelling story that more clearly demonstrates the value of the law department.

Telling that story, however, involves rethinking how the corporate law department tracks and reports on its achievements. How that story comes together will very likely vary by department, but the key aspect of taking a fresh approach will be unavoidable and may result in the kind of shift in the mindset of C-Suite members that some GCs have been seeking.

For more on this topic, check out the 成人VR视频 Institute’s recent 2024 State of the Corporate Law Department Report here.