Legal departments: spend hits six-year low, but outsourcing rises
Legal costs as a share of revenue continue to decline, while the portion of budgets allocated to external counsel climbs to 47%. Investment in technology remains limited
Corporate legal spend continues to fall relative to revenue, even as legal departments are being asked to shoulder increasingly heavy workloads. That is according to the 2026 ACC Law Department Management Benchmarking Report, produced by the ACC – Association of Corporate Counsel and Major, Lindsey & Africa, based on data from 576 legal departments across 45 countries.
In 2026, median legal spend stood at 0.43% of revenue, down from 0.53% in 2025 and marking the lowest level recorded in the past six years. Spending patterns vary significantly by industry, with higher ratios found in highly regulated sectors, IP-intensive businesses and industries characterised by high transaction volumes.
At the same time, pressure on in-house teams continues to mount. In 2026, each in-house lawyer supported an average of 367 employees, up from 300 in 2021, reflecting a steadily expanding scope of responsibilities. Meanwhile, legal departments have become leaner: companies now employ an average of three in-house lawyers per $1 billion in revenue, compared with between 3.6 and 4.2 over the previous five years.
The role of external advisers has continued to grow, albeit moderately. In 2026, law firms and other outside providers accounted for 47% of total legal spend, up from 45% a year earlier, with larger organisations showing a greater propensity to outsource.
Investment in innovation, however, remains limited. Alternative legal service providers account for just 3% of legal budgets, while technology spending represents 5%, highlighting the limited flexibility available for new investments.
From an organisational standpoint, 42% of legal departments rely on temporary or contract professionals, a figure that rises to 74% among large companies. In addition, one in four companies uses alternative fee arrangements for external counsel, predominantly fixed-fee models.
“Legal departments are taking on broader and increasingly strategic responsibilities, without necessarily receiving additional resources,” said Greg Richter, global vice president for in-house counsel recruiting at Major, Lindsey & Africa. “This data can help legal leaders build a stronger business case to ensure that teams and investments are aligned with broader business objectives.”
