The CFO’s perspective on legal spend management

Every finance leader has had some version of this conversation. Legal is over budget. (Again.) The explanation involves complexity, unexpected developments, and a matter that ran longer than anticipated. It is delivered with confidence. But there is no data behind it, no early warning that it was coming, and no clear account of where the money actually went.

For a CFO, that is a problem. Legal work is often unpredictable. But every other major cost category has found ways to manage that unpredictability. Consulting engagements run to scope. Marketing budgets are tracked in real time. IT projects have milestones, escalation points, and financial controls built into delivery.

Legal has largely operated outside that discipline. And as outside counsel rates continue to climb — averaging 9.6% in 2025 alone, with senior partners at some firms now billing $2,000-$4,000 an hour — finance leaders are running out of patience with that exception.

Finance leaders are paying close attention. And legal departments are being asked to explain themselves in terms the rest of the business has used for years.

Why Finance leaders are scrutinizing external legal costs

Legal has always been expensive. What has changed is the level of visibility finance leaders expect in return.

For a long time, the way legal spend was managed made reasonable sense. Work was scoped, firms were engaged, invoices were reviewed on arrival. The process was familiar, and for most organizations, the costs were manageable enough that the absence of real-time oversight rarely became a pressing issue.

That has become harder to sustain:

• 46% of legal departments expect to increase spending on external experts in 2025, driven by rising regulatory complexity and growing business demand.
• In-house workloads have increased by 25% over three years, while hiring has not kept pace.
• More work is flowing to outside counsel, with 42% of CLOs reporting an uptick in litigation volume, and 60% are experiencing increased litigation expenses, reflecting both higher activity and more complex matters. 

At that scale, finance leaders need more than an end-of-matter invoice. They need the same level of forecasting and reporting from legal that they expect from every other area of the business.

How legal spend compares with other professional services 

Ask a CFO to pull up spend data on consulting, marketing agencies, or IT contractors, and they can usually do it quickly. Vendor by vendor. Project by project. Tracked against budget, with a clear view of what was delivered.

Ask the same question about outside counsel, and the answer is rarely that straightforward.

Law firms account for a substantial amount of external legal budgets, yet for many organizations that spend sits outside the procurement frameworks that govern every other major vendor relationship. The contrast with how other professional services are managed is significant.

On top of this, nine in ten legal dollars still flow through standard hourly billing arrangements, which is a model built on trust rather than transparency, at a time when CFOs are expecting both. 

What Finance teams expect from financial forecasting and reporting

CFOs are not asking legal to become a finance function. They are asking it to behave like a managed cost center. One that can forecast what it expects to spend, report on how that spend is tracking, and explain the difference when the two do not align.

That is standard practice everywhere else in the business. And for most finance leaders, the expectation is straightforward.

Research from Deloitte’s 2026 Finance Trends report shows that finance leaders are strengthening scenario-planning capabilities and building more agile governance models to improve oversight and respond faster to changing conditions. Legal spend has often remained difficult to manage within that environment because costs develop while work is underway, but financial visibility typically arrives later through invoices and retrospective reporting. Matters run over. Invoices arrive without context. And by the time finance has a clear view of what was spent, there is little opportunity left to influence the outcome. 

What CFOs are looking for from legal is this:

Budgets at matter level. Not a single annual figure, but a view of what each engagement is expected to cost, updated as the work develops.

Accruals that reflect reality. So that finance can account for work in progress, rather than being surprised by invoices that represent weeks of prior activity.
Forecasts that move in real time. Continuously updated analysis that shows whether spend is tracking to budget, and flags an overrun while there is still time to act. 

Reporting that can be defended. Spend by firm, by matter type, by practice area (the kind of breakdown that allows finance to understand not just what was spent, but where and why).

According to Workday's research into how the CFO role is changing, the focus across finance has moved away from backwards-looking quarterly reporting toward forward-looking, real-time insight. Legal is being asked to move in the same direction. The departments that are doing it well are finding that it changes the conversation with finance entirely. 

↪Further reading: The CFO’s playbook on legal e-billing: How to make legal spend predictable

How Legal operations leaders are adapting to CFO expectations

The good news is that legal operations leaders are responding. The harder truth is that most are still in the early stages of making that response meaningful to a CFO.

According to a global study of 530 senior legal decision-makers conducted by The Harris Poll and commissioned by Axiom, 49% of legal departments have already changed their budget models in the past year, with another 36% planning further changes in 2026. But changing a budget model and delivering finance-grade visibility are two different things.

That tension shows up even among teams that consider themselves well aligned. Despite 89% of GCs rating their relationship with their CFO as excellent, 77% have reported that they’ve experienced tension with their CFO in some way. That usually comes down to one thing: legal and finance are not looking at the same numbers at the same time.

Legal operations leaders who are making progress tend to be doing a few things differently.

Consolidating outside counsel relationships

Fewer firms means spend that is easier to track, govern, and report on. The 2025 ACC Law Department Management Benchmarking Report found that the median number of law firms used by companies has declined from 14 to 10 in the past year. A tighter panel is also a more defensible one. When a CFO asks why a particular firm is being used, the answer should be straightforward. 

Moving toward value-based engagement

For a long time, outside counsel set the terms. Firms proposed, clients accepted, and the invoice was the first real test of whether the cost made sense. Leading legal departments are moving away from that. They are defining scope, agreeing pricing upfront, and holding firms accountable to both.

Apperio from PERSUIT is built specifically to support that, combining finance-grade visibility into work-in-progress spend with structured engagement, competitive pricing, and outcome-based accountability from the point of instruction. 

Legal and finance teams are also using benchmarking data to understand what work should cost before engagement begins. PERSUIT’s benchmarking insights help assess proposed rates, staffing, and fee structures against wider market data, giving CFOs confidence that spend is commercially justified before invoices arrive. 

Investing in real-time visibility

The CFO conversation changes entirely when legal can show not just what was spent, but what is being spent right now, against what was agreed. That is what Apperio delivers: finance-grade visibility into work-in-progress legal spend, so that legal and finance are always working from the same position.

What Financial maturity looks like in modern Legal departments

The most telling sign of a financially mature legal department isn’t the size of its budget. It is how well it can account for what that budget is doing at any given moment.

For a long time, maturity in legal was measured by the quality of the work. Whether the right firms were engaged, whether outcomes were favorable, and whether risk was well managed. Those things still matter. But finance leaders are now adding a second set of criteria. Can legal forecast accurately? Can it report in real time? Can it explain a variance before the invoice arrives?

According to PERSUIT’s analysis of alternative fee arrangements, 82–84% of corporate legal teams say they prefer AFAs over hourly billing, yet only 23% of legal work is actually priced that way. This reflects a longstanding operational challenge. Moving to value-based pricing requires clearer scoping, stronger benchmarking data, and better visibility into how work is delivered and managed as matters progress. 

The departments that are further ahead tend to share a few characteristics.

They measure outcomes (alongside activity)

Tracking hours billed and invoices paid tells you what happened. Mature departments are building the reporting frameworks to show what that spend actually delivered, and presenting that to finance in terms that do not require translation.

They engage outside counsel differently

The same Harris Poll research found that mature organizations allocate 24% of their legal spend to alternative legal service providers, compared to just 9% for less developed departments. That reflects a more deliberate approach to how work is sourced, priced, and managed. 

They give finance a seat at the table earlier

The CFO does not want to be informed after costs have been committed. The legal departments that have the strongest finance relationships bring finance into conversations about outside counsel spend before matters are opened, rather than after they close.

↪Further reading: Maturity curve: Legal spend management

The CFO conversation has changed. Legal spend management needs to keep up

Finance leaders are raising the bar on accountability across every cost category. Legal is no exception.

That means forecasting with enough accuracy to be useful. Reporting in real time rather than in arrears. And giving the CFO a clear line of sight into outside counsel spend while work is still in progress, rather than weeks after it has concluded.

For legal operations leaders, meeting that standard requires the right infrastructure. The ability to agree scope and pricing upfront, track spend as it builds, and surface variances before they become invoices.

Apperio from PERSUIT gives legal and finance teams a shared view of spend as it develops. Work in progress becomes visible. Forecasts become defensible. And outside counsel engagement is structured around value from the point of instruction, rather than assessed against it afterwards.

When both teams are working from the same position, the conversation changes. Less time reconciling what happened. More time planning what comes next.

Want to see what your legal spend looks like in real time? Talk to the team.