What's Happening?
A recent report by Axiom, titled '2026 GC Report: Beyond the Billable Hour,' highlights a significant shift in the legal services market. Over 80% of global in-house legal leaders plan to reallocate work traditionally sent to law firms to their internal teams or alternative legal service providers (ALSPs) within the next two years. This change is driven by rising law firm rates, widespread AI adoption, and the need for improved operational efficiency despite increased budgets. Sara Morgan, Chief Revenue Officer at Axiom, notes that this shift represents a fundamental reassessment of how legal work is allocated. The report indicates that larger legal departments are leading this transition, with a focus on reserving law firms for high-stakes
work while utilizing ALSPs for routine tasks.
Why It's Important?
The findings of the Axiom report suggest a potential transformation in the legal services market, which could have significant implications for law firms and their clients. As in-house legal teams increasingly turn to ALSPs, traditional law firms may face pressure to adjust their fee structures and service offerings. This shift could lead to a more competitive market, where law firms must demonstrate value beyond high rates. Additionally, the increased use of AI and alternative providers may drive innovation and efficiency in legal services, benefiting clients through cost savings and improved service delivery. The report highlights a growing satisfaction gap, with in-house leaders expressing greater satisfaction with ALSPs compared to traditional firms.
What's Next?
As the legal services market continues to evolve, law firms may need to reevaluate their strategies to remain competitive. This could involve adopting new technologies, revising pricing models, and expanding service offerings to meet the changing needs of clients. In-house legal teams are likely to continue exploring ways to optimize their operations, potentially leading to further integration of AI and alternative providers. The report suggests that legal departments will increasingly focus on strategic allocation of work, balancing in-house capabilities with external resources to achieve greater efficiency and effectiveness.
