Deloitte: legal teams boost AI spend

Deloitte’s 2026 legal-industry survey points to a change in who captures the economic benefit from legal AI. The firm said corporate legal departments are increasing AI spending as they move beyond pilots and look for lower costs, more in-house capacity and different pricing from outside counsel. The findings come from Deloitte’s report, “The AI Imperative: Reshaping of the Legal Industry,” which draws on responses from 121 legal leaders, according to Law.com’s Corporate Counsel. (deloitte.com) (globallegalpost.com) The survey suggests the pressure is not limited to software budgets. Deloitte said legal departments expect AI to automate or save more than a quarter of their work in the next two to three years, while most legal leaders believe the technology will change how law firms price services. (deloitte.com) ### Why are in-house teams spending more on AI now? Deloitte said 79% of in-house teams reported an increase in AI budgets over the past year, with those budgets rising 67% on average. Global Legal Post, citing the report, said 61% of teams are now in the deployment stage and 10% say AI is fully embedded. Only 2% of in-house teams said they had not adopted AI, down from 76% in 2024, according to the same report. (law.com) Deloitte said that shift showed the business case had moved from whether to invest to how and where to invest. ### What do legal departments want from outside counsel? Deloitte said cost reduction is the top expected benefit from law firms’ use of AI. (deloitte.com) Legal Futures, citing the report, said 78% of legal department leaders ranked lower costs as the most important benefit from external providers’ use of AI, ahead of improved quality of legal services at 57% and innovative pricing at 55%. The same report said legal departments want to capture AI benefits in two ways: by pushing firms for lower bills and by using the technology internally to handle more work themselves. (globallegalpost.com) That creates pressure on the traditional hourly-rate model that has long dominated outside counsel relationships. ### How much pressure is this putting on hourly billing? Deloitte said 85% of general counsel surveyed believe AI will change how law firms price their work. Legal Futures reported that the share of work billed on an hourly-rate basis is expected to fall from 72% today to 44% within two to three years. Deloitte attributed that expected change to client demand for pricing models that “better reflect the economics of AI-assisted delivery,” according to Legal Futures. (legalfutures.co.uk) Law firms that use AI to complete document-heavy work faster are likely to face more questions from clients about whether time-based billing still fits the service being delivered. ### Does this mean legal departments expect smaller teams? (legalfutures.co.uk) Deloitte said 58% of respondents think their legal teams will stay roughly the same size, but change in composition, seniority and skills. Global Legal Post reported that 20% expect teams to shrink, double the share that said so in 2024. (legalfutures.co.uk) The skills mix is also changing. Deloitte said 96% of respondents expect technology and AI literacy to be the most important skill set over the next two to three years, with learning and adaptability close behind. ### What new questions does this create for law firms? Deloitte’s report says the shift is not only about software adoption but also about operating models. (legalfutures.co.uk) As clients ask for lower bills, more innovative pricing and clearer evidence of value, outside firms face decisions on procurement, governance and how they disclose AI use in client work, according to the report’s framing and related coverage. Deloitte said legal departments expect AI to automate or save more than a quarter of their work in the next two to three years. (globallegalpost.com) The firm’s report is already being cited across legal-industry outlets, and the next test will be whether outside counsel adjust pricing and staffing as corporate clients move more AI work from pilot programs into routine delivery. (deloitte.com)