2025 In-House Legal Budgeting Report: Optimize Legal Department Spend
Where are GCs expecting to increase their legal department spend next year? How do they plan to deploy their budget overall, and how often do they revisit that plan? The answers might surprise you.
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What Will I Learn?
Discover how to optimize your legal department's budgeting strategy for 2025 with the latest budgeting insights for GCs*, including:
- Legal department budget increases
- 2024's top budgeting buckets
- What's in store for 2025 spending
- Legal tech and AI investments
- Budgeting models and forecasting
*The 2025 Axiom Legal Department Budget Survey Report was conducted by Wakefield Research, and commissioned by Axiom, among 200 U.S. General Counsel at companies with a minimum of $250 million in annual revenue
Legal Department Budgets: Finally Trending Up!
During a year of inflationary pains, global crises, and economic pressures, 96% of GCs suffered budget slashes in 2023, by an average of 11%. But the latest findings show hope—legal departments are now reporting a moderate, yet positive, shift in 2024, as more than half of GCs reported a budget increase this year, albeit by an average increase of 4%. Even better, only 10% saw a decrease, while a little more than a third (36%) saw no change at all.
Most legal leaders (96%) reported that they’ll need to update their current budgeting buckets for legal resources and expertise to account for AI or other emerging risks. This could account for why, in addition to technology, they plan on increasing their investments in external resourcing options like flexible legal providers or virtual law firms. Fortunately, the majority (61%) also anticipate another increase in legal department budgeting for 2025.
GCs Anticipate Meaningful ROI from Legal AI and Tech Investments in 2025
Once considered leaders of the most unlikely department to embrace change, legal leaders now indicate a growing emphasis on technology within legal departments. In 2024, 44% of GCs prioritized technology in their budget allocations, with a significant focus on legal operations (38%) and in-house staff salaries (36%).
This trend is expected to continue into 2025, with 96% of GCs acknowledging the need to update their budgeting buckets to address AI and other emerging risks. Technology investments, particularly in AI-powered tools like virtual legal assistants, predictive analytics, and contract review, are anticipated to drive meaningful returns on investment (ROI) in the coming year.
Most GCs Plan to Shift from Current Budgeting Model in 2025
While the majority of legal leaders reported they currently use the zero-based budgeting model (ZBB) for their legal department, most GCs said they’re considering or actively planning to shift their budgeting model in 2025, and more than a third already have. The top reasons for the shift are to become more agile and responsive, to meet regulatory and compliance requirements, and because the legal ops function within legal departments has evolved.
Even though the ZBB model took precedence in 2024, most of the GCs who implemented it are planning to, or have already, shifted their model to become more agile. GCs who had already adopted an agile, rolling/continuous legal budgeting strategy saw larger budget increases in 2024 and largely avoided cuts altogether.
As 2025 approaches, legal departments are gearing up for significant shifts in their financial strategies, driven by emerging challenges and opportunities in technology and compliance.
Legal departments are strategically adjusting their financial plans to capitalize on emerging opportunities in AI, tech, and compliance. Many departments are prioritizing smarter budgeting models to manage rising costs while improving efficiency. Learn how these shifts in financial strategy can empower your department to navigate change and maximize value in a rapidly evolving legal landscape.
Interested in past editions? See how insights have evolved over time. View all Budgeting Reports