Editor’s Note: Thomson Reuters’ 2026 Report on the State of the US Legal Market is examined through a focused operational lens—specifically, what its findings mean for cybersecurity, information governance, and eDiscovery professionals. Rather than pausing at revenue and rate headlines, this perspective traces the “fault lines” the report highlights: shifting demand away from the highest-priced firms, a rapid buildup in tech and talent costs, and the growing tension between AI-enabled efficiency and the persistence of hourly billing.
For practitioners focused on digital evidence, data protection, and compliance workflows, the report serves as a forward-looking map of where legal data work is likely to reside in the coming decade. It outlines how economic and regulatory volatility are accelerating the move toward discovery platforms, managed services, and embedded cyber/IG capabilities—and why these functions are increasingly central to both law firm and corporate legal strategies.
The result is practical guidance on framing value, refining pricing models, and strengthening security posture at a moment when the legal market may be approaching another inflection point. For professionals operating at the crossroads of law, technology, and risk, this is less about industry observation and more about actively shaping what comes next.
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Industry News – eDiscovery Beat
Fault Lines Under Big Law: What the 2026 Legal Market Report Means for Data-Driven Providers
ComplexDiscovery Staff
Profits in Big Law are climbing like a rocket, but the launchpad is cracking beneath lawyers’ feet. For cybersecurity, information governance, and eDiscovery professionals, that instability is quickly becoming a rare opening—and a stress test.
The 2026 Report on the State of the US Legal Market, released by Thomson Reuters and Georgetown Law’s Center on Ethics and the Legal Profession, portrays a profession enjoying record demand and profits even as its economic foundations shift under pressure. Since 2019, profits per lawyer in Am Law 100 firms have risen 53.7%, fueled by a 2025 demand surge that averaged 2.5% growth for the year and peaked at 4.4% in July—among the strongest showings since the global financial crisis. At the same time, law firms have poured money into their cost base: technology investment rose 9.7%, knowledge management spending climbed 10.5%, and direct lawyer compensation increased 8.2% year over year.
The report makes clear this performance is not built on calm economic expansion. Demand is being driven by regulatory upheaval, policy swings, trade frictions, and geopolitical risk. Corporate law departments are managing rising exposure with budgets that are flat or shrinking in real terms. General counsel sentiment has turned cautious, with outside counsel spending expectations drifting toward lows last seen during the pandemic and forecasts suggesting the possibility of contraction by mid‑2026. That tension between record law firm results and tighter client wallets is exactly where alternative legal service providers and cyber–IG–eDiscovery specialists are stepping in.
Shifting demand and the new legal supply chain
One of the clearest patterns in the report is where demand is flowing. In 2025, midsize and Am Law Second Hundred firms captured the bulk of growth, while portions of the Am Law 100 struggled to keep pace and, at times, saw contraction. With standard rates at the largest firms crossing the $1,000 threshold and comparable work available at firms closer to $600 an hour, many general counsel redirected routine and mid-complexity matters downstream. The report has tracked this “mobile demand” trend for several years; in 2025, it hardened into a defining market feature.
A similar redistribution is happening beneath the law firm layer. Data-heavy, process-oriented work—enterprise discovery, investigations, contract operations, and compliance remediation—is increasingly sourced wherever technology leverage, playbooked workflows, and price discipline come together. Budget-pressed in-house teams do not begin by asking which global brand should run an ESI‑intensive internal matter; they ask who can deliver a defensible outcome faster and with less risk. Cybersecurity, information governance, and eDiscovery providers who can answer that in specifics—turnaround times, error rates, incident reductions—are the ones who move from vendor status into the circle of essential partners.
ALSP growth viewed through an eDiscovery lens
The report itself highlights how progressive firms are quietly pairing alternative pricing, automated services, and ALSP partnerships into integrated offerings. Separate work from the Thomson Reuters ALSP 2025 study shows that a clear majority of corporate law departments now engage ALSPs directly, especially for eDiscovery, litigation support, contract management, and legal operations services.
Independent U.S.-focused market research from Research and Markets (separate from the Thomson Reuters/Georgetown report) adds another layer. That study places the US alternative legal service provider segment at about $7.37 billion in 2022, with revenues projected to exceed $23 billion by 2028 at a 20.9% compound annual growth rate, and eDiscovery-related offerings expected to grow at roughly 23% annually, leading the investigation and litigation support category. Viewed through the lens of ComplexDiscovery’s global eDiscovery market size mashup—which estimates combined software and services spending at about $16.89 billion in 2024, rising to approximately $25.11 billion by 2029—these US ALSP projections underscore how central eDiscovery-centric services have become to both the ALSP ecosystem and the broader legal technology landscape.
For providers, this is more than a market-sizing curiosity. It is a cue to sharpen how offerings are framed. In practical terms, that means presenting managed review, digital forensics, or IG remediation services in the language general counsel and firm partners already use internally: budget relief, risk reduction, and outcome reliability. One practical move is to bring short, matter-specific playbooks to the table—two or three paragraphs that show, for a familiar matter type, how your workflow will shorten timelines and reduce exposure. That kind of specificity travels well into internal budget discussions in a way that generic claims of “efficiency” never do.
GenAI, hourly billing, and data risk
The report’s most pointed warnings come at the intersection of AI, billing models, and client expectations. Technology and knowledge-management spend grew at rates several points above inflation in 2025, with advanced AI and generative AI absorbing a rising share of that investment. Firms are deploying tools that can draft, summarize, classify, and analyze content in ways that compress work that once took days into hours.
Yet, according to Thomson Reuters’ analysis of Legal Tracker data, roughly 90% of legal dollars still flow through standard hourly arrangements—the same structure that has dominated since the mid‑20th century. Every real efficiency gain, therefore, creates a revenue dilemma for firms: either raise rates sharply to offset fewer hours or accept lower top-line growth. Corporate law departments, meanwhile, are experimenting with GenAI for internal research, contracts, and policy work and are increasingly aware of what faster, cheaper workflows look like inside their own walls.
Cybersecurity and information governance concerns sit at the center of this tension. Corporate legal teams remain wary of data leakage, model hallucinations, and opaque AI training sources. eDiscovery and cyber providers that can embed concrete guardrails—mandatory multi-factor authentication, encryption as a default posture, granular logging, and structured validation workflows for AI‑assisted coding—gain a real advantage. A straightforward step is to treat major client onboarding as a joint tabletop exercise: walk legal, IT, and security stakeholders through exactly how data moves, how access is governed, and how your logs and reports will support their regulatory and evidentiary responsibilities.
Security, discovery, and the expanding attack surface
The report draws a sharp line back to the global financial crisis, when layoffs pushed Big Law talent into corporate legal departments and permanently shifted power toward better‑equipped in-house teams, suggesting to industry observers that a similar rebalancing could occur if a downturn converges with accelerating GenAI adoption and tighter client budgets. In that scenario, corporate departments armed with both former Big Law lawyers and mature technology stacks may move entire categories of repeatable work—such as certain investigations, early case assessments, or data‑cleanup programs—into blended legal–IT–security teams.
This possibility is already hinted at in current threat patterns. Attackers increasingly target law firms, ALSPs, and discovery vendors because they hold dense volumes of time‑sensitive client data. Cyber insurers have responded with stricter underwriting and more pointed questioning of vendors’ security postures. For eDiscovery and cyber teams, aligning your external story with the language of those questionnaires—privileged access models, patch cadences, incident response processes, independent assessments—turns your security posture into a sales asset rather than a hurdle.
Why the report matters so directly to cyber, IG, and eDiscovery teams
At its core, the 2026 State of the US Legal Market report is about how legal value is created, priced, and delivered in a period of instability. For cybersecurity professionals, that translates into defending rapidly growing volumes of legal‑adjacent data moving through cloud platforms and AI tools. For information governance leaders, it means reconciling retention, privacy, and cross‑border rules with a delivery model that leans more heavily on ALSPs and shared services. For eDiscovery practitioners, it is a live question of who controls the workflows that turn raw digital evidence into decisions, and under what pricing and risk frameworks that work is done.
Because the legal market’s fault lines run straight through these data-intensive workflows, the individuals who design and manage them will exert outsized influence on the next phase of legal service delivery. A discovery provider that can show how a managed service approach stabilizes spend across cycles will look very different to a CFO than a firm that still frames each engagement in pure hourly terms. A cyber–IG team that builds AI‑aware data maps and clear escalation paths will give its organization a quieter incident response story and a stronger hand with regulators and counterparties.
Taken together, the Thomson Reuters report and the surrounding ALSP and eDiscovery research point toward a bifurcating market. At one end, elite firms continue to concentrate on ultra‑premium mandates, relying on technology and tightly held talent to preserve high margins. At the other end, midsize firms, ALSPs, and specialist vendors compete on a blend of subject‑matter depth, process excellence, and disciplined cost structures. In between sits a growing class of in‑house teams that treat themselves as operational hubs rather than passive buyers, ready to reallocate work quickly as conditions change.
For cybersecurity, information governance, and eDiscovery professionals, the practical question is simple: in that evolving system, will your offering be treated as a replaceable component, or as infrastructure that both law firms and clients rely on when the ground shifts?
As the legal industry heads into another uneasy stretch—with AI maturing, regulations tightening, and client patience for inefficiency wearing thin—how will your organization choose to shape the next version of legal work: by watching demand move, or by helping decide where it lands?
News Sources
- Legal Industry Experiencing Tectonic Shift: Technology, Talent and Demand Prompting Law Firms to Evolve (Thomson Reuters)
- 2026 Report on the State of the US Legal Market (Thomson Reuters Institute)
- Thomson Reuters’ State of the US Legal Market Report: Record Profits and Increasingly Unstable Ground (Legal IT Insider)
- Alternative legal services providers face diverging market, new report shows (Thomson Reuters Institute)
- US Alternative Legal Service Providers Market Size, Share & Trends Report (Research and Markets)
Assisted by GAI and LLM Technologies
Additional Reading
- Complete Look: ComplexDiscovery’s 2024-2029 eDiscovery Market Size Mashup
- Confidence Meets Complexity: Full Results from the 2H 2025 eDiscovery Business Confidence Survey
Source: ComplexDiscovery OÜ

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