Thomson Reuters report spotlights gap in legal teams' value

Thomson Reuters Institute has published its 2026 State of the Corporate Law Department Report. It points to a gap between how general counsel and senior executives assess the value of in-house legal teams.

Based on more than 2,300 interviews with corporate general counsel, the report found that 86% of respondents viewed their department as a significant contributor to organisational objectives. Only 17% of C-suite executives agreed, while 42% said the legal department contributed little or not at all.

The findings suggest many legal leaders believe their teams have changed how they work but have not convinced senior management of the impact of those changes. The report argues that the issue is less about legal departments failing to deliver and more about how they explain their work to the wider business.

That matters because legal teams are competing for budget, staff and technology investment as companies reassess priorities. If general counsel cannot show how legal work supports broader corporate aims, their departments risk losing influence over strategic decisions.

Visibility gap

Nearly half of general counsel cited staffing and resource constraints as the main barrier to delivering additional value. The report also highlighted persistent problems with communication and integration across the business.

Those pressures come as expectations of in-house legal teams shift. Departments are no longer judged only on legal accuracy or risk management. They are increasingly expected to show how their work affects growth, transactions, compliance and overall business performance.

In practice, that means moving beyond descriptions of routine legal work such as contract reviews, risk assessments and deal support. Legal leaders need to explain why those activities matter to strategic business outcomes.

"Legal departments have done the hard work of transformation - streamlining operations, adopting AI, and aligning their priorities to the business. Yet our research reveals a striking disconnect: 86% of general counsel believe their department significantly contributes to organizational objectives, while only 17% of C‐suite executives agree. The issue isn't that legal isn't delivering value - it's that they're not speaking the language that makes that value visible. GCs have become adept at unlocking capacity through efficiency and AI. The next step is channeling that capacity into outcomes the C‐suite can clearly see and measure. That's the shift from a legal department that transforms itself to one that transforms the business," said Laura Clayton McDonnell, President of Corporates, Thomson Reuters.

AI priority

The report also found a marked shift in how corporate legal departments are approaching artificial intelligence. Technology was named as a key strategic priority by 28% of respondents, up from 14% in the previous report.

Among those who cited technology as a priority, 86% referred specifically to AI. That suggests legal departments are moving the technology closer to the centre of planning rather than treating it as a side project.

Access to generative AI is also expanding. According to the report, 47% of corporate legal departments now have access to generative AI tools. Nearly three-quarters of corporate legal professionals, 72%, said generative AI should be applied to legal work, while 60% said they felt either excited or hopeful about its prospects.

The language used by general counsel has also changed. Discussion of AI has moved away from broad ambition and towards implementation, with more than half of those naming AI as a strategic priority now using terms such as use, implement, adopt and deploy.

Spending shift

Alongside the emphasis on AI, legal departments are changing how they allocate their budgets. Teams are moving away from broad cost-cutting and towards more targeted spending linked to business growth and operational demand.

Legal spending is expected to keep rising in areas such as mergers and acquisitions and regulatory work. Regulatory matters remained the largest expected area of spend growth, while anticipated spending on M&A in the fourth quarter of 2025 was ten times higher than in the same period a year earlier.

That shift does not amount to a broad return to higher budgets. After three quarters of declining net spend anticipation at the start of 2025, general counsel reported a modest rebound in the fourth quarter despite mixed economic conditions.

The picture that emerges is of legal departments under pressure to become more visible within their companies while adopting new technology and responding to heavier regulatory and transactional demands. In that environment, legal leaders appear to be balancing efficiency, investment and influence.

The next challenge for general counsel, according to the report, is to present legal work in terms that resonate with senior management. That includes showing how support for transactions, regulatory oversight and contract analysis contribute to broader business aims, rather than describing them as stand-alone legal tasks.

For in-house teams, the issue is not only whether they are changing, but whether the rest of the business recognises that change. The gap identified in the report leaves many legal departments facing a familiar corporate question: not whether value exists, but whether others can see it.