The Insourcing Revolution Is Here. And It’s Bigger Than Anyone Expected

Earlier this year, I asked whether legal was approaching a second inflection point—the moment after a business model matures; the moment when an industry collectively decides that change is here to stay. I called it a quiet revolution then because it still felt early. It doesn’t feel early anymore.

Here’s what I’m seeing. The perimeter of what in-house teams own is expanding. Not gradually. Fast. For years, legal departments drew a circle around what they did and what they outsourced to law firms. M&A, litigation and specialized work almost always went to outside counsel, given that in-house teams typically lacked the unique expertise to handle such matters.

What’s more, a lot of “business as usual” work went outside the in-house circle, because sending it to law firms was faster and easier (despite being more expensive) than hiring more full-time staff. What remained inside the circle? A relatively small fraction of the in-house team’s total workload.

Now the in-house circle is expanding, catalyzed by AI. Rising law firm rates—and the associated frustration—are fueling an insourcing revolution, with AI as a driving force. This revolution is giving in-house teams something they haven’t had before: a productivity supercharger plus access to legal functionality that lets them take on work that previously would have been out of scope, outside the perimeter.

But here’s the part nobody’s saying out loud. A lot of teams driving the insourcing revolution are discovering they bit off more than they can chew. They’re bringing work in-house because AI makes it look possible and because C-level stakeholders are pushing them to take an AI-first approach.

In a lot of cases, AI does expand what’s the possible. But possible isn’t the same as sustainable. The work still has to get done and reviewed, and the in-house team needs to be able to stand behind it 100%. AI hasn’t erased those requirements. It’s just changed who’s on the hook when the surge in work volume shows up.

And higher volume is showing up everywhere at once, because internal teams are producing new products and services at an exponential rate with AI, which is sending workload through the roof for the legal teams that need to evaluate these new offerings. You know what that looks like. It’s not pretty.

That’s the growing tension our 2027 budget report reveals. We surveyed 510 in-house legal and finance leaders at global enterprises and found 83% expect their budget to grow this year—yet 55% say their team’s workload will outpace that budget growth! Those two numbers shouldn’t coexist. More money should mean more relief. But that’s not what’s happening, and I think I know why. The perimeter expanded faster than the budget and capacity required to hold it.

In-house teams have more agency now than they’ve had in a decade. That’s good. But agency without a release valve just turns into a backlog with a nicer name. In-house teams need a way to absorb the new work without taking on more fixed cost from hiring additional staff and/or reverting to the expensive law firms they were trying to escape from in the first place.

The insourcing revolution isn’t just “use AI to bring more work in-house and save money.” It’s use AI to bring more work in-house, build a modern operating model that can tackle it with optimal efficiency and effectiveness, and save money. Develop flexible, AI-enabled capacity that scales up when the volume spikes, and doesn’t leave your team carrying fixed costs when volume ebbs.

Yes, the in-sourcing revolution is here, and it’s expanding the perimeter. The question every legal leader need to ask isn’t whether to keep or bring more work in-house. It’s to ask what you’re going to do with that work once it’s there. If you're sitting with that question right now, let’s talk. It's the conversation we're having with legal leaders every week.

Axiom’s 2027 In-House Legal Budget Study surveyed 510 in-house legal and finance leaders across six countries on this topic, with 64% at enterprise organizations with revenues of $1B or more. Be among the first to get the report by signing up here.

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