2026 Will Be the Year GCs Say “Enough is Enough”
Let’s be honest, one reason law firms continuously raise rates is because clients have allowed them to do so. But my prediction for 2026 is that’s about to change.
(I know what you’re thinking. Here he goes again bashing on law firms. But stay with me on this!)
2026 is the year GCs will finally say “enough is enough” to runaway hourly rates.
Why am I so sure?
Because AI has reached escape velocity with in-house teams. Because scrutiny from the CFO has never been greater. But mostly because when I talk with GCs now, there is a shift in sentiment. They have the technology and the internal pressures and want to see real change.
The two questions every CFO Is asking right now
AI isn’t fringe anymore. It’s part of legal’s daily workflow, and the teams who use it aren’t going back.
The C-suite has taken note, too. Articles like the recent Say Goodbye to the Billable Hour (subscription req.) piece in The Wall Street Journal are mainstreaming leadership’s expectations in pretty stark terms:
AI efficiency creates lower costs.
Just about every GC I speak with says CFOs are asking the same two questions:
- If we have a legal team plus AI, why are we still sending work out?
- If work has to go out, why is it still costing so much?
AI isn’t just a technology story anymore. It’s a finance story. And finance stories get executive attention.
Do the math
Fortunately, the economics here still overwhelmingly favor legal.
If you’re the GC of a business that has a 2.5% profit margin (think retail, airlines, manufacturing, logistics), every $1M of legal spend you avoid is the equivalent of $40M in sales that the business doesn’t have to generate.
Let’s spell it out:
$40M in sales × 2.5% margin = $1M in profit.
So when a GC says:
“We negotiated rate increases down to 10% instead of 15%,”
the CFO hears:
“We accepted millions in unnecessary cost.”
In a world where AI is delivering step-change efficiencies, traditional rate hikes don’t just look expensive, they look illogical.
2026: The year GCs redraw the lines
So what does “enough is enough” actually look like? Here’s what leading GCs will do next year.
1. A hard reset on what goes out
AI is going to allow in-house teams to do a lot more work in-house, particularly the repetitive, labor-intensive, but necessary legal tasks that would typically be sent to law firms.
Think of all the tedious SEC and other regulatory filings, due diligence for any sort of M&A activity, or mass document review-type tasks. Add to that research and even ‘first-pass’ legal advice, and the use cases start to look exponential. As the CLO of Crowdstrike, Cathleen Anderson recently said, her lawyers are much better prepared for discussions with outside counsel “because it’s very easy to do a quick early case assessment.”
With the right controls and QA (and guardrails to avoid an AI Jevons Paradox) in place, much of this work never needs to touch a law firm again. Firms will be reserved for genuinely complex and specialized work.
2. If It goes out, hourly becomes the exception
The use of fixed fees, phase-based fees, and value pricing will accelerate dramatically.
I’ve said it many times, but hourly billing collapses under the weight of AI-enabled efficiency.
If a firm can’t price for outcomes in an AI world, that’s not a negotiation problem, it’s a business model problem.
3. New value categories will emerge
Time and outcomes are not the only measures of value. Clients will pay for deep, proprietary datasets.
As Bayer GC Thomas Laubert put it during our recent Age of Agentic AI webinar:
“I think hourly rates will go away. I need access to the data that I don’t have in-house. I will pay for data the same as I pay for IT tools at some point.”
Data will be foundational for the next decade of law firm economics.
4. Firms will need to show their AI homework
The days of vague “we’re using AI” are over. GCs must ask:
- Where are you using AI on our matters?
- How much time is it saving?
- How is that reflected in fees and staffing?
The good news is that firms are adapting as they adopt AI! But the onus is still on GCs to keep pushing and demanding specifics.
5. AI native firms and AI-based delivery models will emerge
We will see the rise of new AI-native law firms and AI-based service delivery models from more innovative firms and legal service providers, such as ALSPs. An example of the former is Norm Law LLP, which uses the proprietary platform of Norm Ai, a Blackstone-backed legal and compliance AI company that builds agentic AI for regulatory/compliance use cases. Norm Law LLP has a strategic partnership with Blackstone to identify legal services that Blackstone procures that could benefit from an AI-native approach.
This is going to be a fascinating space to watch in 2026. I think we’re going to see increasing openness from clients to explore alternative delivery models for legal services. To my mind, the investment that Blackstone is making in this space is something of a straw in the wind…
6. Legal gets measured in revenue-equivalent terms
Elite GCs are already reframing their financial impact:
“We avoided $5M in external spend by keeping this portfolio in-house with AI and disciplined sourcing. At a 2.5% margin, that’s $200M in revenue the business didn’t have to chase.”
That is the language of the boardroom. And it’s the language every GC will be expected to speak in 2026.
Happy New Year
The legal industry loves to say, “We’re different,” but 2026 is the year the rest of the business stops believing that.
When AI can do in minutes what used to take days, and when $1M saved can equal $40M in revenue avoided, double-digit rate hikes become indefensible.
GCs have a choice:
- Spend 2026 fighting over discounts on ever-increasing rates, or
- Use AI, data, and outcomes-based pricing to fundamentally reinvent how they buy legal services, and deliver compounding value back to the business.
Have you had enough?
Happy Holidays everyone!!
Cheers,
-Jim
This article originally appeared in the Value Standard Newsletter, which delivers fresh benchmarking, AFA expertise, and insider insights from Fortune 500 teams to your inbox every other week. Subscribe here.
