Major legal organizations, Association of Corporate Counsel and Major, Lindsey & Africa, unveil the 2025 Law Department Management Benchmarking Report
In the ever-evolving landscape of the legal industry, the **2025 ACC Law Department Management Benchmarking Report** offers valuable insights into the strategic changes shaping corporate legal departments worldwide. The report, based on data from 395 legal departments, reveals trends in technology adoption, staffing, outside counsel spend, fee arrangements, and the strategic expansion of legal departments.
### Technology Adoption
The report underscores a **significant increase in AI adoption** within law departments, rising from 34% last year to 52% in 2025. AI tools are being used to accelerate workflows such as document interaction, summarizations, contract review, and analysis. This trend reflects a broader industry movement where corporate counsels expect their law firms to use advanced technologies like generative AI, signaling a shift from debating AI adoption to focusing on effective implementation.
### Staffing
Mid-sized companies (with revenues from $1 billion to $5 billion) have increased their median total legal staff from 16 to 20, corresponding with a rise in internal legal spending from $2.8 million to $3.1 million. This strategic expansion of internal legal teams is aimed at managing increased or more complex workloads.
### Outside Counsel Spend
Companies are consolidating their legal panel, reducing the median number of law firms they engage from 14 to 10. There is a growing reliance on **Alternative Legal Service Providers (ALSPs)**, especially among companies earning over $1 billion, reflecting a strategic shift in how external legal services are sourced for cost-efficiency and specialty expertise.
### Fee Arrangements
Traditional hourly rate billing remains dominant, reflecting its deep entrenchment in legal services. However, there is a growing adoption of **fixed/flat fees in intellectual property (IP)** work (used by 25% of law departments), as well as **capped fees in mergers & acquisitions (14%) and litigation (12%)**, showing a trend towards more predictable pricing models in select practice areas.
### Strategic Expansion of Legal Departments
The data underscores a dynamic legal environment where law departments are increasingly focused on **efficiency, cost containment, and strategic resource allocation**. They are actively adapting their internal operations and external legal partnerships in ways tailored to their size, growth phase, and priorities. Rapid technology adoption, particularly AI, is a key driver in this transformation, enabling departments to manage workloads more effectively and support business objectives with enhanced legal operations.
Overall, the 2025 ACC report highlights the accelerating integration of technology, especially AI, a trend toward leaner and more strategic external counsel relationships, diversification in fee arrangements for better cost predictability, and deliberate growth of internal legal capabilities. These findings point to a future where legal departments play an increasingly strategic and efficient role within their organizations.
The report provides law department leaders with a comprehensive view of industry benchmarks, offering them critical information to make informed decisions on staffing, workload allocation, legal spend, and technology in an increasingly unpredictable world. For more information or to access the report, interested parties can contact either Amy Hawkes Repke at [email protected] or Jennifer Silver at [email protected]. Custom data reports can be commissioned by contacting [email protected].
[1] Reference to the original bullet points for clarity and accuracy. [2] Reference to the original bullet points for clarity and accuracy. [3] Reference to the original bullet points for clarity and accuracy.
- In the realm of personal-finance, the growing trend of data-and-cloud-computing and technology in the legal industry, specifically the increased adoption of artificial-intelligence, may offer valuable insights for future investments in these sectors.
- As businesses seek to optimize their expenses, understanding the strategic expansion of legal departments, focusing on efficiency, cost containment, and strategic resource allocation, could provide invaluable knowledge for business-related investments.
- The shift in legal departments from traditional hourly rate billing to more predictable fee arrangements in select practice areas, such as Intellectual Property, Mergers & Acquisitions, and Litigation, presents an opportunity for investing in Alternative Legal Service Providers (ALSPs) and businesses that specialize in cost-efficient and specialized legal services.
