I talk with General Counsel every week who are under pressure to cut 10%, 15%, sometimes 20% from outside counsel costs. The challenge is always the same: they don't have clear visibility into where the money's going. You can't cut what you can't see. The good news? Reducing legal spend isn't about slashing quality or burning bridges with your external partners. It's about creating visibility, making smarter choices about which work goes where, and setting up the systems that prevent cost surprises before they happen. This guide covers what I've learned from in-house teams across five continents.
Where Legal Spend Actually Goes
Most in-house legal teams break their spending into three buckets: outside counsel costs, internal salary and overhead, and legal technology. Outside counsel is usually the biggest piece and the easiest to control,but you can't manage what you don't see. Start by auditing your last -twelve months of invoices. Group them by matter type, firm, and practice area. You'll quickly spot patterns. We work with an organization that discovered they were spending three times more on one type of work than they realized. Another found they'd scattered the same work across too many firms, losing any volume negotiating power.
Five Practical Strategies to Reduce Legal Spend
1. Negotiate from data
Bring benchmark data to your firms showing market rates for equivalent work. Show them your volume with their practice. Most firms will come down when they see evidence and understand what's at stake. Frame it as mutual: you'll commit more work if rates drop, but you're testing the market if they won't move.
2. Tighten your panel
Having –fifteen firms spreads your volume too thin. Consolidate to 5-8 firms where you have real use. Your key firms will understand your business, move faster, and fight harder for your work. You'll also cut management overhead.
3. Bring high-volume work in-house
Look at your invoices. What matter types repeat most often? Employment advice, routine contract reviews, IP administration? If you're regularly paying external counsel for similar work, you might have an opportunity to internalize. Even one mid-level hire can offset their salary many times over.
4. Set realistic budgets upfront
Work with business partners to list every significant legal matter expected in the next year. Get firm estimates for each. Add contingency for unknowns. Track actual spend plus accruals monthly. If you're 20% over by March, act then, not November.
5. Use alternative fee structures
Hourly billing incentivizes slowness. Fixed fees, capped fees, and success fees align incentives. Start with your highest-volume, most-predictable matters. Once a firm proves they can deliver on a fixed fee, expand it.
The Data Problem (and How to Fix It)
Most in-house teams can't reduce spend because they can't see it clearly. A spreadsheet tracking invoices manually is slow, error-prone, and never current. You're always three weeks behind. By then, a matter has already spiraled. Billing disputes crop up mid-project. Conflict checks delay engagements.
Effective spend control requires real-time visibility. You need to see spending patterns as they happen, not after the fact. You need to track accruals (what you owe based on work performed) separately from invoices (what you've been billed). You need to flag unusual spending immediately. If a matter suddenly shows a spike in hours, you catch it fast. You can investigate. Is scope creeping? Are you getting duplicate work? These conversations are much easier mid-matter than after invoicing.
How Xakia Helps You Control Legal Spend
We built Xakia's spend management capability because we kept hearing the same complaint from General Counsel: they couldn't see their spend clearly enough to manage it. Our platform gives you full visibility over outside counsel costs, internal budgets, and spend trends in one place. With AI-powered search, you can ask questions like "which firms cost us the most on employment matters this year?" and get answers in seconds instead of building spreadsheet reports. No more chasing invoices through email or reconciling at quarter-end.
Pair that with Xakia's matter management function and you'll see exactly where your legal budget is going by matter type, business unit, or outside firm. The analytics dashboard turns that data into reports your CFO will use. You've got the data to negotiate from. You've got real-time accruals, so surprises disappear. You've got proof when you need to justify staffing decisions to leadership.
The setup takes 2-4 weeks. Pricing is per user, not module-based, so you can start small and scale as you see value. And your data lives in the same platform as your matters, so there's no disconnect between your legal work and your financial reality.
FAQs
Taking Control of Your Legal Budget
Reducing legal spend doesn't require drastic cuts. It requires systems. When you track spending clearly, manage external counsel strategically, budget realistically, and optimize your resourcing, costs naturally come down. You'll also get better outcomes. Your external firms will work more efficiently. Your team will gain visibility. Your business partners will understand the trade-offs in your legal strategy.
Once you've built these systems, they sustain themselves. You're not fighting the budget every month. You're managing it. You're not scrambling when a big bill arrives. You've already accrued it. You're not wondering if you're paying too much. You've benchmarked it.
If you're managing legal spend across multiple matters and partners, the right tools make all the difference. At Xakia, we've helped thousands of in-house teams build the visibility and controls they need to take back their budget. The principles are simple: see what you're spending, make deliberate choices about where that money goes, and hold your external partners accountable. The results speak for themselves.
Ready to start? Audit your last twelve months of invoices. Track them by matter. Look at the patterns. You'll quickly spot your biggest opportunities. From there, build your strategy. Because controlling legal spend isn't about squeezing suppliers. It's about being intentional. That's where real savings come from.
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