AI is creating a new transparency challenge for legal services

Most discussions about AI and legal services focus on what law firms are doing. Which tools have been adopted? How much time has been saved? What do those changes mean for delivery?

But legal departments are contending with something different.

The performance measures most in-house teams rely on were built for a time when effort, cost, and output moved in predictable relation to each other. And AI is weakening those connections. Similar outcomes can now be achieved through very different combinations of technology, expertise, and resources, and clients rarely have sight of which approach their firm is taking.

That is where things start to get tricky. Legal departments are evaluating outside counsel performance with tools designed for a fundamentally different model of delivery, and most still cannot see what is actually driving cost and outcomes while work is in progress. 

Key takeaways:

• AI for legal is changing how legal work is produced, but most clients cannot see it.
• Traditional performance measures are still crucial. But they now provide a less complete picture of legal spend.
• More data does not automatically create more clarity. The challenge is identifying which indicators support better decisions.
• Legal departments are placing greater emphasis on continuous oversight of active matters than on retrospective performance review.
• The firms that help clients understand how performance is achieved, and what contributed to it, will be better placed commercially.

Why clients are asking different questions about legal delivery

According to the Harbor 2025 Law Department Survey, which captured data from 135 corporate law departments with a median revenue of $13 billion, the proportion expecting to increase outside counsel spend fell from 58% to 37% in a single year.

Legal leaders are being asked to demonstrate value from every dollar of external spend. At the same time, the information available to support those decisions is becoming harder to interpret. 

And that is sharpening the scrutiny applied to outside counsel performance. It is no longer enough to know that a firm delivered on time and within budget. Legal leaders want to understand what sat behind that result.

Needless to say, this legal spend tracking issue is not entirely new. In-house teams have always wanted to understand what they are paying for. But AI for legal is accelerating the pressure. When the same outcome can be achieved through fundamentally different delivery approaches, rate cards and final invoices stop being reliable guides to value.

So, legal leaders are becoming increasingly interested in understanding:

• What is driving differences in cost across similar engagements
• Why comparable firms deliver different financial outcomes
• Whether delivery aligns with the assumptions used to scope and price the engagement
• Which activities contribute most to cost and outcome
• How technology, staffing decisions, and working practices influence results

And digging into the research, it is clear that most legal departments cannot yet answer those questions with any confidence. The Thomson Reuters Institute's 2026 AI in Professional Services Report found that 68% of corporate legal professionals have no idea whether their outside law firms are using AI on their matters at all. Which means the starting point for most is not better analysis. It is basic visibility.

Leading legal teams are now focused on understanding performance drivers

Here is the core issue. Law firms are using AI to deliver work differently. And that is making it harder for legal departments to assess performance using the tools they have always relied on.

When effort, staffing, cost, and output moved in predictable relation to each other, invoices and budget reviews gave legal departments a reasonable picture of what happened and why. That view is becoming less reliable. When firms deliver the same outcome through different combinations of technology and resources, the invoice tells you what was charged. But it does not tell you how the work was actually done.

As a result, the way legal departments are approaching outside counsel oversight is changing. According to the ACC’s 2025 GenAI Strategic Value survey, 61% plan to push for changes in how legal services are delivered and priced by firms using GenAI. Less reliance on what the invoice says at the end. More focus on what is actually happening during delivery.

Here is what that new approach looks like:
 

Think about it this way. Two firms handle the same type of matter. One comes in under budget. One runs over. The invoices tell you the outcome. They do not tell you whether the overrun happened because the scope expanded legitimately, because a senior partner was deployed where a junior would have sufficed, or because AI compressed the early phases and created unexpected complexity later.

Legal departments that can see those differences while work is still in progress are in a much stronger position. They can have better conversations with firms earlier and build a more accurate picture of what outside counsel actually delivers across the panel over time.

That is what modern outside counsel management is increasingly demanding. Enough visibility during delivery to understand what is driving cost and performance, while there is still time to act on it. Tools like Apperio are designed specifically for that, giving legal and finance teams a continuous view of spend and outside counsel activity while matters are still active.

➡️Further reading: GenAI for legal teams: A smarter way to manage legal spend with continuous data

How law firms are responding to client scrutiny

The pressure from legal departments is landing. But the response from firms has been uneven.

Law firms are becoming more confident in their ability to explain the value of AI to clients. According to the Thomson Reuters Institute, 56% of law firm respondents believe they can do this effectively. And yet the same report found that 68% of corporate legal professionals have no idea whether their outside firms are using AI on their matters at all. Firms believe they are communicating. Clients are not hearing it.

That is a significant disconnect, and it is starting to affect relationships. As the Thomson Reuters Institute noted, some corporate legal departments have suggested their outside counsel may be reluctant to discuss legal AI because of concerns about quality and accuracy. One even suggested that firms may feel commercially threatened by the conversation. Meanwhile, 85% of clients say firms should disclose AI use. And nearly half call it extremely important.

The firms responding well to this are not simply disclosing more. They are building AI governance into the fabric of how they work, and communicating that to clients proactively. As William Sadd of Debevoise told our recent webinar, clients want to understand which firms are taking AI for legal work seriously, setting aside high-risk use cases, investing in supervision, and actively looking for ways to use AI to support better outcomes on client matters.

Needless to say, that bar is only going to rise. Within two to three years, AI governance documentation is expected to become a baseline expectation in RFPs and outside counsel guidelines. The firms building that capability now will be better placed when it does.

How legal pricing is changing the commercial relationship 

And there is a commercial side to this that is worth being direct about. When efficiency gains are absorbed into a firm's margin rather than reflected in what clients are charged, the relationship starts to feel off. And clients are noticing.

63% of corporate legal department leaders expect to see cost savings when their outside counsel uses AI. Most are not seeing it in their bills.

But digging into how firms are actually thinking about this, the picture is more complicated. William Sadd of Debevoise & Plimpton told a recent Apperio webinar that translating efficiency gains into pricing is still an open question:

"It's a little premature… a lot of firms and clients are studying this very closely. I think we are all trying to understand it."

The savings exist in parts of the workflow. Working out how they flow through to what clients are charged is still being figured out on both sides.

The firms that will come out of this period with stronger client relationships are not necessarily the ones using AI most extensively. They are the ones that can explain how they are using it, what it means for how work is resourced and delivered, and back that up with data while the matter is still active. As Lindsay Capeder of Taft put it in the same webinar:

"We want to make sure that our applications, our processes for evaluating these tools, onboarding them, are in alignment with what our clients are requiring."

That alignment is becoming a baseline expectation in panel relationships.

And that is the transparency challenge in its most commercial form: whether legal departments have enough visibility into what is happening during delivery to hold firms to the expectations agreed at the outset.

➡️Further reading: AI, law firms, and legal spend: The questions clients should ask in 2026

Where AI is taking outside counsel management 

Legal departments are under more pressure to demonstrate value from external spend than ever before. And the firms they rely on are using AI to deliver work in ways that most in-house teams still cannot see.

That combination is pushing the client-firm relationship into new territory. The conversations that used to happen at the end of a matter, about cost, value, and whether delivery reflected what was agreed, are being pulled forward. Legal departments want those conversations to happen during delivery, while there is still time to act. And the firms that can support that are building stronger, more commercially grounded relationships as a result. 

The legal departments that handle this well will not be the ones that wait for better reporting. They will be the ones who build enough visibility into their outside counsel relationships to understand what is happening during delivery, have better conversations with firms while work is still active, and make commercial decisions based on what is actually occurring rather than what the invoice eventually says.

That is where outside counsel management is heading. And for the legal departments that get there first, it is becoming a real commercial edge.

Getting ahead of the transparency challenge with Apperio and PERSUIT 

This is where Apperio, from PERSUIT, can help.

PERSUIT is the legal procurement and outside counsel management platform that helps legal departments take control of outside counsel selection and pricing before work begins. With 4,800+ law firms competing for work on the platform and average savings of 26% across all matters, it gives legal departments a stronger commercial starting point for every engagement — clearer scope, competitive pricing, and delivery expectations agreed upfront.

But getting the right firm at the right price is only part of it. Once a matter is underway, those expectations need to be actively maintained. Staffing decisions change. Scope creeps. Costs accumulate in ways that only become visible when the invoice arrives weeks later. By that point, the opportunity to do anything about it has passed.

As part of PERSUIT, Apperio gives legal and finance teams a continuous view of legal spend and outside counsel activity while matters are still active, so that changes in delivery become visible while there is still time to act on them:

• Emerging spend trends: Flag cost development before it reaches budget thresholds, giving teams time to act rather than react
• Staffing and resource changes: Changes in how work is being resourced become visible as they happen, so teams can assess whether delivery still reflects what was agreed
• Cost drivers across engagements: Leaders can see which areas of activity are pushing spend up and why, across the whole portfolio
• Unusual billing or delivery patterns: Surface anomalies that warrant a direct conversation with the firm, before they compound
• Performance indicators across the panel: Teams can understand what is driving differences between firms, practice areas, and matter types, rather than relying on invoice comparisons
• Natural-language access to spend data: Teams can ask questions and get answers in seconds, reducing reliance on manual reporting and analyst time
   

From competitive procurement through to live spend oversight, PERSUIT and Apperio give legal departments the continuous oversight that modern outside counsel management increasingly demands. Get in touch to find out more.