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

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.”

The 2025 In-House Legal Budgeting Report offers in-depth analysis of these trends, as well as insights into the evolving relationship between GCs and CFOs, differences in budgeting strategies between enterprise and SMB legal departments, and key performance metrics for legal teams. The complete report is available at https://www.axiomlaw.com/resources/articles/2025-legal-budgeting-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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SOURCE Axiom