Research: GCs Expect Bigger Budgets and a Shift to Agile Budgeting in 2025

AI, flexible legal talent, staff retention, and improving GC-CFO dynamics are top priorities 

NEW YORK, September 17, 2024—Today Axiom published the 2025 In-House Legal Budgeting Report, a national research study conducted by Wakefield Research and commissioned by Axiom. The report provides a representative view of budgeting trends, priorities, and financial strategies across a diverse range of company sizes and industries, offering valuable insights for in-house legal leaders and their CFOs when planning their 2025 budgets.

The biggest surprise: For the first time in years, the research found General Counsel expect budget increases for their in-house teams next year. The research also discovered a growing number of GCs and their CFOs are embracing new and agile budgeting models which they anticipate will help them better manage desired investments in digital transformation, AI, flexible legal talent, and staff retention. 

Among the top findings: 

• Budget Increases on the Horizon: 61% of GCs surveyed anticipate budget increases in their next budgeting cycle, with an average expected increase of 5%. Only 10% of GCs experienced a budget decrease in 2024, compared to 96% of GCs who reported their budgets had been reduced an average of 11% at the beginning of 2024.
  

• AI Takes Center Stage: Perhaps no surprise here, 96% of GCs surveyed believe AI investment will meaningfully reduce costs in their legal departments, with virtual legal assistants topping the list of planned purchases, and AI-driven analytics tools also commonly included on these lists.
  

• A Shift Towards Agile Budgeting: Over 60% of GCs are considering or actively planning to shift their budgeting strategy in their next budgeting cycle—and 35% have already done so—moving away from traditional models (such as zero- or precedent-based or others) towards more agile approaches (such as in the rolling/continuous model), which can improve budgeting flexibility. Indeed, those who reported having already shifted their model said it was because they wanted an emphasis on agility and responsiveness.
• Flexible Talent Flexing Muscle: 41% of legal department leaders said they plan to increase spending on flexible legal talent providers, virtual law firms, or alternative legal service providers (ALSPs) in in their next budgeting cycle. Moreover, flexible legal talent providers are one of the two top areas where GCs anticipate increased spending, alongside technology investments.
  

• Lower Priority for Traditional Law Firms: SMB and enterprise legal leaders alike ranked law firms as their lowest spending priority for 2025—a significant departure from historical patterns. This pivot reflects GCs’ recognition that transforming their resourcing to use more value-oriented services and solutions can drive substantial cost savings.
  

• GC-CFO Tensions Hampering Success: Despite 49% of GCs reporting a very good or strong relationship with their CFO, unfortunately 77% also reported there were areas of tension in their relationship, primarily due to conflicting priorities between cost-cutting and risk management. Left unresolved, this tension impacts budgeting, strategic business alignment, performance metrics, and forecasting accuracy.
  

These insights and many more are uncovered in the 2025 In-House Legal Budgeting Report, which  is based on a comprehensive survey of 200 General Counsel (GCs) and Chief Legal Officers (CLOs) from U.S. companies with minimum annual revenue of $250 million. To ensure a proper perspective, the sample was mixed between organizations with revenues ranging from $250 million to $1 billion and those exceeding $1 billion. The survey gathered insights on budgeting strategies, technology adoption, and operational challenges facing legal departments. 

 “This year’s study uncovers an unmistakable trend towards more agile, value, and technology-driven legal departments,” said David McVeigh, CEO of Axiom. “Beyond the research, clients consistently tell me they are at the end of their rope on law firm costs and annual rate increases. I believe this will drive major shifts in budget allocation, away from traditional law firms and towards more innovative, value-driven law firms, flexible legal talent, and technology to improve lawyer productivity.”