The old growth model is done.
For years, when workload increased, legal departments had two reliable options: hire more staff or spend more on outside counsel. The 2026 State of the Industry Report, developed in partnership with Harbor, shows both levers are losing their pull. Outside counsel spend expectations dropped from 58 percent of departments anticipating increases last year to 37 percent this year. Inside budget growth has cooled by a similar margin. Headcount is largely flat.
Demand keeps climbing regardless. Regulatory compliance and cybersecurity are surging. The work isn’t shrinking, although the resources available to meet it are indeed.
Closing the gap
Eighty percent of legal operations professionals are now prioritizing technology strategy, and the approach has matured well beyond early experimentation. Departments are applying AI to workflows, research, and productivity, with serious attention to governing adoption and managing tool overload.
The goal is to free up internal capacity for the work that requires human judgment. When high-volume tasks are handled by well-governed technology, legal teams can focus where their expertise delivers the most value. That changes what legal operations is for in actuality.
Financial discipline as strategy
Tighter budgets are pushing departments toward something they should probably have been doing anyway– treating every dollar as a decision. Seventy-two percent of departments identify financial management as a priority, and sixty-two percent are focused on outside counsel and vendor management, using benchmarking data to evaluate performance and spending against peers.
When you can show a GC or CFO that your staffing ratios and technology spend are in line with the market, you’re building the credibility to ask for what you need next.
What the data can’t do alone
Data tells us where the profession is at any given time. People move it forward.
The best resource most of us have access to is each other. When someone is rolling out a new CLM or building a vendor management framework from scratch, the fastest path forward is someone who’s done it and is willing to walk them through it.
That’s what the benchmarking in this report is designed to support–a way to see where you stand relative to peers, and to find the people whose navigated through it.
As leaders, we have to be listeners first. Our job is to respond to what members are telling us, not just tell them what we think they should learn.
The 2026 data shows a profession adapting under real pressure with real discipline. What comes next is on us, to make sure no one is navigating it alone. CLOC ensures its members don’t have to re-invent the wheel.
Go deeper at the CLOC Global Institute
If you’re joining us at CGI in Chicago, the CLOC and Harbor State of the Industry session on Tuesday, May 12th (2:10 p.m., Willis Stage) goes deeper into the data with CLOC board member Stacy Lettie of Organon, Lauren Chung of Harbor, and Greg Bennett of Workday. Bring your questions and pressure-test what you’re seeing in your own department against what the broader market is telling us.
