Outside counsel spend is a budget the GC controls, and it is often what your product gets compared with. As of the fourth quarter of 2025, 36% of GCs expected to raise overall outside counsel spend over the next year and 20% planned to cut it (Thomson Reuters Institute, State of the Corporate Law Department Report, March 2026). It is a late-2025 reading, not a forecast for your deal.
AI is now part of how legal departments judge their firms. The 2026 Legal Department Operations Report says that among corporate legal leaders responsible for purchasing decisions, 68% would consider changing an outside law firm that was not delivering clear AI value within the next five years, and 11% are already reconsidering some firm relationships for that reason. The report credits those figures to the Institute's 2026 AI in Professional Services survey (January 2026). It also says legal operations increasingly evaluates technology-enabled in-sourcing and rewrites outside counsel AI expectations.
A third Institute survey, its Future of Professionals 2026 legal report (data gathered March to April 2026), found 71% of in-house legal professionals expect outside firms to change their commercial models as AI use grows, and 77% of clients call AI-enabled quality improvements from their firms very important or essential. Each figure has its own survey base, so do not add them up or compare them directly.
The read for a seller: a tool that lets a GC bring work in-house, or hold firms to an AI standard, competes for outside counsel dollars, not just the software budget.