The 2026 state of the industry report, recently released by the Corporate Legal Operations Consortium (CLOC), has revealed a structural shift in the legal function and stressed the need for law departments to rely on operational discipline, technology, and governance.
Based on the 2025 Harbor law department survey, conducted in collaboration with CLOC, the 2026 report reflected insights from the leaders of 135 legal departments across more than 15 industries and organizations with median revenues of US$13 billion.
According to CLOC’s news release, the 2026 findings showed that regulatory compliance (63 percent) and cybersecurity (58 percent) spurred significant increases in workload demand.
“Demand is accelerating in areas like regulatory compliance and cybersecurity, yet budget and staffing growth are not keeping pace,” said Oyango Snell, CLOC president and chief executive officer, in a news release.
CLOC highlighted a structural productivity gap, with demand outpacing resources. Snell noted that legal departments have been facing different economic limitations than in previous years.
The 2026 report revealed that expectations regarding budget and headcount growth have flattened. Among legal departments polled:
- 47 percent expected increases in inside legal spend, a decline from 65 percent in the prior year
- 37 percent expected higher outside counsel spend, down from 58 percent the year before
- 32 percent expected increases in lawyer headcount
“The shift away from relying on outside counsel as a pressure valve signals a deeper transformation, one grounded in intentional design, data-driven decision-making, and long-term capability building,” said Lauren Chung, survey editor, in the news release. “Legal operations is increasingly positioned as a central driver of how legal departments operate and evolve.”
“Legal operations has become the strategic lever that allows departments to close this productivity gap by applying financial discipline, technology strategy, and governance to deliver more without proportional resource increases,” Snell added.
“The latest data poses a paradox: accelerating AI adoption comes at the same time that hiring and spending are leveling off,” said Kevin Clem, Harbor’s chief growth officer for corporations, in a blog post.
Of law departments surveyed, 85 percent had dedicated AI oversight or resources. Survey respondents identified technology strategy (80 percent), financial management (72 percent), and outside counsel and vendor management (62 percent) as priorities.
Clem highlighted this decisive shift from AI experimentation to enterprise-level deployment.
“Increasingly, legal ops professionals are relying on AI to help support workflows, accelerate research, and drive efficiencies,” Clem said in the blog post.
Webinar
In connection with its 2026 state of the industry report, CLOC shared its plan to host an exclusive webinar for members at 2 p.m. ET on Thursday, Mar. 5, to discuss the survey results and delve into the ways law departments have tackled the productivity gap and scaled AI responsibly.
The panel includes Snell, Clem, and Chung, who is Harbor’s practice group lead for strategy and transformation.
“This year’s survey findings show that legal departments are not retreating in the face of rising complexity, but are redesigning for it,” Chung said. “We’re seeing organizations respond to sustained demand and constrained budgets by investing in smarter operating models, stronger AI governance, and more disciplined financial management.”
Laura Dieudonné, CLOC chair and Delta Air Lines’ legal operations and administration director, described the report as a reflection of how its members have used focus, discipline, and shared learning to meet rising expectations.
“By grounding these insights in real operating experience, we help leaders understand where the function is today and how it continues to strengthen its role across the enterprise,” Dieudonné said in CLOC’s news release.
Global institute
In its news release, CLOC noted that the publication has coincided with its preparations for the 2026 CLOC Global Institute. In May, the global institute will take place in Chicago for the first time, with the theme of “Stronger by Design.”
CLOC is a global membership organization for the global legal operations community, while Harbor is a provider of professional and technology services to the legal industry. Harbor’s annual law department survey assesses in-house legal department performance, investment, and operational maturity.