Legal operations professionals currently stand at a crossroads, facing critical decisions about which functions to bring in-house and which to send to external partners. According to the 18th Annual Law Department Operations Survey, 94% of legal operations teams are contemplating increased insourcing. This shift is largely fueled by the rapid advancement of generative AI, which offers the potential to boost internal capabilities and reduce reliance on outside counsel.
However, the decision to insource or outsource is rarely simple. It requires navigating the persistent challenge of measuring legal value, complex pricing strategies, and the need to position the legal department as a strategic business partner. To help you navigate these choices effectively, Wolters Kluwer ELM Solutions’ thought leader Jennifer McIver outlines a data-driven approach based on the latest industry insights.
How can legal teams navigate the current landscape?
The drive toward insourcing is gaining momentum. The survey reveals that 93.6% of respondents expect generative AI will enable them to bring more work in-house, while 87.5% believe wider AI adoption will reduce their law firm spend.
Despite this confidence, legal departments still struggle to quantify the strategic impact of their work. A record number of professionals view value measurement as "more art than science." Furthermore, pricing strategies remain an area for improvement. While reliance solely on engagement partners for fee negotiations dropped from 85% in 2024 to 71.7% in 2025, most teams still do not engage specialized pricing professionals. This limits transparency and slows the adoption of value-based fee arrangements.
To overcome these hurdles and optimize your operating model, consider the following three approaches.
Approach 1: Build a data-driven business case
The foundation of any strategic sourcing decision must be data. Rather than relying on intuition or historical precedent, legal operations leaders should analyze both the costs and the value of specific legal workstreams.
To do this effectively, work with pricing professionals or use legal spend management software to gain transparency regarding external expenses. Compare these internal insights against industry benchmarks to understand the true cost of outsourcing. Simultaneously, calculate the expected return on investment (ROI) of bringing that work in-house. This comparison provides the financial clarity needed to make informed decisions that satisfy finance and leadership stakeholders.
Approach 2: Define value beyond cost
While cost control is a primary objective for legal operations, it should not be the only factor in sourcing decisions. You must move past basic cost comparisons to assess the broader strategic impact of legal activities.
Create a narrative that connects legal work to tangible business outcomes. For example, does keeping a specific function in-house improve compliance speed or reduce risk exposure more effectively than outsourcing it? Use internal data to determine which tasks require deep institutional knowledge—and are therefore better insourced—and where outsourcing or utilizing Alternative Legal Service Providers (ALSPs) adds more value through scalability and specialized expertise.
Approach 3: Develop a strategic roadmap
Insourcing and outsourcing should not be viewed as isolated, binary choices but as components of a unified strategy. To achieve operational maturity, develop a formal plan that details exactly which types of work you intend to insource or outsource and the timeline for each transition.
This roadmap must account for the necessary resources. If you plan to insource, you must invest in the appropriate technology, talent, and processes to support that workload. If you plan to outsource, ensure you have robust vendor governance in place. Finally, set clear metrics to monitor the success of your strategy, ensuring you can pivot if business needs change.
Transforming strategy into action
The legal industry is at a pivotal juncture. By addressing the intertwined challenges of value measurement, pricing, and strategy, you can do more than just manage costs. By adopting a holistic, data-driven approach to insourcing and outsourcing, legal operations leaders can transform their departments into vital strategic partners for the wider business.
To learn more about these insights, download the 18th Annual Law Department Operations Survey here.
