It’s puzzling: Most corporate departments jump at the opportunity to save even 10% for services from competitive vendors that offer equal quality, yet your legal department continues to pay 50%-70% premiums to law firms for services that alternative legal services providers (ALSPs) such as Axiom can perform equally well or better.
This represents an invisible drain on organizational resources—not through poor decision-making, but through outdated procurement approaches. It's like having your entire IT department handle routine help desk tickets when specialized support services could deliver the same outcomes more cost-effectively.
The Scale of Legal Budgeting Malpractice
According to new research conducted by The Harris Poll and commissioned by Axiom, companies are spending an average of 16% of their annual budgets on ALSPs versus roughly 38% on law firms. That modest 16% allocation might seem reasonable until you discover that ALSPs can handle a most of the work that in-house teams are sending to law firms—and at discounts that can be far more than the 10% a team member would jump at otherwise (you can expect up to a 50% discount over law firm rates at Axiom).
According to The Harris Poll research, organizations operating at the highest budgeting maturity levels allocate nearly 3x more of their legal spend to ALSPs compared to the least mature organizations. This translates directly to higher ROI on their legal spend and measurable business outcomes.
The performance differential is striking, according to the research:
- 45% lower cost per matter
- 38% faster turnaround times
- 52% higher client satisfaction scores
It’s fair to say these aren’t marginal improvements. They represent the difference between legal departments that operate as necessary cost centers and those that function as strategic business enablers and value generators. Yet half of CFOs—perhaps (and most likely) unaware of the high double-digit savings ALSPs offer—continue to allocate law firm budget to hyper-costly law firms, unwittingly sustaining the status quo and setting the stage for budget malpractice.
The 30% Savings Paradox: Why Legal Fails to Capture Value
Here’s where it becomes clear that budgeting malpractice is a real factor generating wasteful spending in-house. The Axiom-Harris Poll research found 68% of legal leaders—that includes CLOs, GCs, and CFOs—would switch legal services providers for savings of 30% or less. Yet Axiom delivers 50%-70% savings versus law firms for the same work while maintaining or improving quality.
Indeed, 99% of Axiom’s clients rate our talent as equal to or better than law firms, and earned an industry-leading NPS score of 75 for talent quality. That’s more than double the legal services industry average of 37, vaulting Axiom’s talent into the “excellent” category.
The result is a truly absurd market dynamic:
- 68% of legal leaders said they would switch legal services providers at a 30% savings (or less!)
- Axiom offers 50-70% savings
- Yet companies continue to send huge amounts of legal work out to law firms, grossly and unnecessarily overspending on legal services (budget malpractice)
Compare this to any other business function, where a 10% or 15% cost savings advantage would trigger vendor evaluation and remediation. The legal department’s requirement for 30% savings just to consider alternatives reveals a fundamental dysfunction in procurement discipline related solely to the in-house legal function and decades of looking at legal as a necessary and unavoidable high-cost center. That’s no longer the case.
Easy Ways to End Budget Malpractice
The Harris Poll research exposes a costly operational gap. While 50% of CFOs actively encourage their legal teams to use ALSPs for cost efficiency and strategic flexibility, only 36% have established the formal policies necessary to systematically capture those benefits.
What’s more, the research reveals a notable irony: 89% of legal leaders rate their relationships with CFOs as “excellent” or “very good,” yet fundamental misalignment exists in the relationship. Half of CFOs report they control legal budget-setting, but only 36% of legal leaders agree that CFOs have independent spending authority. This budget authority gap, which perfectly aligns with the ALSP policy gap above, creates operational friction that can undermine approved strategies.
But CFOs can break this cycle with three conversation starters:
- “Show me our current ALSP allocation compared to the 16% industry average.”
- “What’s stopping us from capitalizing on the 50-70% savings available from Axiom?”
- “At what spending level should we require competitive evaluation of legal services?”
Moreover, only 32% of legal and finance departments conduct comprehensive ROI evaluations together. Without structured collaboration on value measurement, even successful ALSP initiatives can remain isolated rather than scaled across the organization.
💡Practical steps are often all that’s needed to shift legal from cost center to value driver.
Measures that Drive ROI
Legal leaders aren’t approaching ALSP selection casually. When choosing alternative legal service providers, they use comprehensive evaluation criteria that demonstrate strategic thinking, according to The Harris Poll’s research. These processes can be used in partnership with finance to support periodic ROI evaluations:
- 50% have quality assurance protocols
- 43% use specialized expertise matching
- 38% use scalable capacity planning
- 41% look for comprehensive service offerings
- 41% have established risk management protocols
It turns out this additional sophistication prioritizes ALSPs like Axiom that offer enterprise capabilities, proven track records with Fortune 500 companies—including 75% of the Fortune 100 who place their trust in Axiom, with 95% client satisfaction—and the ability to handle complex, high-stakes matters and projects, not just routine work.
Solving the Zero-Sum AI Game
The urgency for systematic ALSP adoption extends beyond immediate cost savings. The research reveals that 78% of legal departments are expected to implement AI without dedicated funding, forcing 56% to take funds from technology or other budgets to fund AI. This creates a zero-sum dynamic where departments must choose between maintaining current service levels and investing in future capabilities.
Axiom has a solution by helping in-house teams use their legal budget to try AI before they buy. Axiom’s Tech+Talent solution provides AI-accelerated attorneys using world-class legal AI that can help in-house teams accelerate technology transformation and enhance operational and financial performance, without depleting other budget line items.
💡AI adoption shouldn't come at the expense of today's needs. It should fuel transformation and savings.
A Three-Step Framework to End Budget Malpractice
The research showed that the most mature budgeting processes encourage and capture greater value-based performance through some simple yet effective operational changes:
- Implement an ALSP Use Policy. Establish a policy requiring ALSP consideration for appropriate work. This ends reflexive “send it to the law firm” behavior across the in-house team and quickly starts driving considerable savings and value capture. The policy should establish clear evaluation criteria (example: any matter or project requiring more than 500 hours), define “bet the company” exclusions to go straight to the law firm, and create consistent ALSP vendor assessment frameworks and review cycles.
- Use Strategic Resource Allocation. Rather than maintaining separate ALSP budgets, the most successful departments integrate alternative legal service providers into a single legal services budget that also includes law firms, allowing them to optimize spend across all provider types based on the value captured.
- Ensure Budget Authority is Aligned. CFOs and legal leaders need to agree on who owns the budget, spending decisions, and how spending decisions are made. Clear spending authority frameworks reduce approval bottlenecks and empower legal teams to execute approved strategies efficiently and reliably. This requires unambiguous agreement between CFOs and legal leadership on decision-making parameters.
The Bottom Line: Your Move, CFO
The Axiom-Harris poll data reveals a significant opportunity: While procurement teams routinely achieve 10% savings, legal departments often have access to 50-70% potential savings on certain law firm spend through alternative legal service providers like Axiom for appropriate matters. Many in-house teams are discovering that strategic use of ALSPs, alongside their existing law firm relationships, can deliver substantial cost reductions while maintaining quality.
The solution is straightforward: Implement ALSP policies, align budget authority between finance and legal, and strategically allocate resources based on value, not habit. With 75% of the Fortune 100 already trusting Axiom and achieving lower costs per matter, the question isn't whether to make this shift, but how quickly you can start capturing these savings.
The tools, data, and proven frameworks are ready. The only thing missing is your decision to end the inertia that drives budget malpractice.
Based on research from The Harris Poll’s 2026 Legal Budgeting Report, commissioned by Axiom, which surveyed 530 senior legal officers and CFOs across eight countries.
