4 in 5 say rates are too high, while nearly two-thirds send work to law firms out of habit, not strategy

NEW YORK, Feb. 17, 2026 /PRNewswire/ — The legal services market has reached a “threshold moment,” with over 80% of global in-house legal leaders planning to reallocate law firm work to their internal teams or alternative legal service providers (ALSPs) within the next two years. Three forces are converging to drive the change: rising law firm rates, near-universal AI adoption, and relentless pressure to improve operational efficiency despite budget increases.

Yet a striking contradiction emerges: Despite clear frustration with law firm rates and intent to change course, 61% of departments continue sending work to law firms simply because “we have always done it that way.” The finding reveals that legacy habits, not strategic choice, still drive legal spending for most organizations.

These findings and more come from Axiom’s 2026 GC Report: Beyond the Billable Hour, a global study of 516 senior in-house legal leaders (CLOs, GCs, DGCs, AGCs, legal ops) across eight countries, conducted by InsightDynamo and commissioned by Axiom to provide an impartial benchmark on the state of the legal services market.

“We’re seeing a fundamental reassessment of how legal work gets allocated,” said Sara Morgan, Chief Revenue Officer at Axiom. “Law firm rates are up, AI is creating new possibilities for bringing work in-house, and Boards and CEOs are demanding better efficiency despite giving legal departments more budget. The combination is forcing GCs to change habits that have governed their outside counsel spend for decades.”

The research reveals four dynamics reshaping the legal services market:

The Great Reallocation: A significant majority of global in-house legal leaders are planning to move substantial portions of law firm work to their internal teams or ALSPs within the next two years. Larger departments are leading this shift, with enterprise legal teams most aggressively reallocating work previously reserved for law firms.
The Satisfaction Gap: In-house legal leaders are three times more likely to report “extreme satisfaction” with ALSPs than with traditional law firms, suggesting that comparable or superior talent quality at significantly lower cost is reshaping how legal departments evaluate their providers.
The Inertia Paradox: While most legal leaders recognize ALSPs as viable alternatives for strategic legal work beyond gap fills and secondments, many organizations continue reflexively using law firms as their primary option rather than engaging ALSPs at scale, although this is rapidly changing.

The AI “No Man’s Land”: While AI adoption is nearly universal, most teams have not scaled implementation beyond pilot programs, limiting returns on these investments. Teams remain stuck in transition, with the sheer number of providers and concerns about security and accuracy creating hesitation around full deployment.

“This is a real opportunity for GCs and legal leaders to reassess what work is being sent to law firms and determine whether it can be done more efficiently and effectively in-house, through alternative providers, or by combining internal resources with ALSPs,” Morgan said. “The question is whether we’re crossing the Rubicon to a market where law firms are reserved for ‘bet the company’ work, while alternative providers handle the ‘run the company’ and ‘grow the company’ work. Legacy habits are difficult to break, but it’s clear that the pace of legal transformation is accelerating.”

The 2026 GC Report: Beyond the Billable Hour is available at https://www.axiomlaw.com/resources/articles/gc-survey-report

For more information or to talk to an Axiom representative, visit https://www.axiomlaw.com/. For more information about Axiom, please visit our website, hear from our experts on the Inside Axiom blog, network with us on LinkedIn, and subscribe to our YouTube channel.

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Axiom invented the alternative legal services industry 26 years ago and now serves more than 3,500 legal departments globally, including 75% of the Fortune 100, who place their trust in Axiom, with 95% client satisfaction. Axiom gives small, mid-market, and enterprise clients a single trusted provider who can deliver a full spectrum of legal solutions and services across more than a dozen practice areas and all major industries at rates up to 50% less than national law firms. To learn how Axiom can help your legal departments do more for less, visit axiomlaw.com.