I've spent the better part of 17 years at Axiom watching in-house legal teams navigate the same tension: doing more with less while law firm bills keep climbing. What's different right now is that the reality has become untenable for a lot of teams, and legal leaders are finally ready to act on it.
We just wrapped a webinar, The Great Legal Reset, where I had the chance to speak with Katherine Dominus, Head of Commercial Contracting at Quest Diagnostics, and Stephen Kim, Chief Legal Officer at Avicanna. Between the three of us, we covered a lot of ground: the data behind the shift underway in legal resourcing, how to think about what actually belongs with outside counsel, and what it takes to get a real handle on legal spend. This post captures what I think are the most useful takeaways, along with some practical guidance on the two areas I get asked about most: how to reduce outside counsel spend, and how to make outside counsel guidelines actually work.
The Numbers Are Hard to Ignore
The context for this conversation is straightforward. Law firm rates are not slowing down. One leading industry platform reported U.S. rate increases of 12.6% and UK increases of nearly 16% in recent months alone. That rate of inflation, year over year, is becoming genuinely difficult to defend to CFOs and boards who are scrutinizing every line item.
At the same time, our own research— a global survey of more than 500 senior in-house leaders— surfaced a finding that I think a lot of people recognize immediately. Four in five legal leaders say law firm rates are too high. And separately, 80% say they plan to shift work away from firms in the next 18 to 24 months. Yet 61% admit they are still sending work to law firms out of habit rather than strategic choice. That gap between knowing and doing is exactly where in-house legal teams are sitting right now.
When you step into a legal leadership role, you often inherit a resourcing model you didn't design, with legacy relationships, work that has always gone outside for reasons no one really remembers, and institutional pressure to keep certain matters at big firms regardless of whether it makes sense. Untangling that takes deliberate effort.
How to Reduce Outside Counsel Spend
The first step is honest visibility. Before you can manage legal spend, you need to know what it actually is, including what is being sent outside by business partners rather than by legal itself. That sounds obvious, but it catches a lot of teams off guard. The legal team is responsible for delivering the best possible outcome for the company, and that means making sure spending decisions are tied to outcomes. You cannot spend a million dollars litigating a $20,000 case. The math has to make sense.
Once you have visibility, the question becomes about right-sourcing: figuring out which work actually belongs with outside counsel and which can be handled more cost-effectively elsewhere. The framework Kate and Stephen both described is essentially a risk-and-value filter. High-stakes, highly specialized, or bet-the-company matters— a major M&A transaction, litigation involving subsidiaries in jurisdictions your team doesn't cover, complex regulatory work— those warrant the experience and cost of a large firm. Low-risk, high-volume, repeatable work is a different calculation entirely. Katherine gave a clear example: a $50,000 lab testing agreement does not need to go to outside counsel. That work belongs in-house or with a more cost-effective resource.
A few practical levers worth considering:
Audit before you optimize
Map what is going outside, who is sending it, and whether legal has visibility into all of it. At Quest, Katherine found outside counsel quietly supporting business areas that had never been routed through legal at all, spend that was flying under the radar for months after she started. You cannot manage what you cannot see.
Build a matter classification system
Stephen described categorizing matters by type, like revenue-generating, operational, long-term R&D, and also by urgency. That kind of structured approach lets you prioritize resources toward the work that actually moves the business forward and creates evidence for conversations with the CFO when spending decisions need to be defended.
Track KPIs that connect legal work to business outcomes
Legal departments get labeled cost centers when they can't demonstrate value. The KPIs that change that narrative are ones tied directly to speed and revenue, like average time to first draft, time to signature, and the percentage of deals closed within a target SLA. Every day a contract sits in the queue is a day that revenue isn't recognized. That framing, legal as a velocity driver, is the one that resonates in the C-suite.
Push for alternative fee arrangements
Hourly rate negotiations only go so far. Fixed fees, capped arrangements, and outcome-based billing give you more predictability over legal costs and shift the incentive structure in a direction that better aligns with what you actually want: faster, well-resourced outcomes, not billable hour volume.
Consider right-sourcing as a default mindset, not a one-time exercise
The question for every matter should be: what is the best and most cost-effective home for this work? That includes in-house teams, ALSPs, and flexible legal talent options alongside traditional outside counsel.
Put the right work in the right hands and unlock more from your legal team.
A Word on AI and What It Changes
We spent a portion of the webinar on AI, and it belongs in this conversation because it changes the calculus on both outside counsel spend and internal capacity in a real way. I'll say what I said there: I don't think AI replaces lawyers. I do think it changes what is economical to keep in-house versus what to send out.
The work that is most ripe for AI-assisted internal handling is exactly the category that has been reflexively sent to outside counsel for years: high-volume, repeatable contract review, first drafts, summarization, and issue spotting. In our pilots at Axiom, we've seen 40 to 60% efficiency gains in contract-related tasks when lawyers are equipped with the right tools. That changes the math on what makes sense to handle internally.
The important caveat is that tool selection matters enormously, and this is an area where teams waste real time and money getting it wrong. Start with the outcome you're trying to achieve, not the feature set of whatever tool is being demoed. Validate security and data governance before you get excited about the interface. Keep pilots narrow, just one contract type and one workflow for 60 to 90 days before you broaden. And if the tool doesn't demonstrate measurable ROI in that window, that's data.
The shift in how in-house legal teams think about outside counsel spend is real, and the teams that are further along aren't doing anything magical. They've built visibility into what they're spending, built discipline around what actually belongs outside, made their outside counsel guidelines do real work, and started using new tools to expand what their internal teams can handle. Those things compound over time.
Kate's closing thought from the webinar stuck with me: The goal is continuous improvement of the team and the department, not a one-time exercise. That framing is right. This is not a problem you solve once; it's a standard you raise incrementally, and it's one of the most direct ways legal teams can demonstrate their value to the business.