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In some companies, the legal function gets a budget, and is supposed to provide all legal advise within that budget.
In other companies, "routine" work like contracts and commercial transactions, advise on regulatory matters, and other general advise to the business, is managed internally.
Some companies use law firms for non-standard work (M&As, IPOs, fund-raising, disputes). Such events are one-offs and include a budget for professional advisors (tax, legal, consulting). There can be a long process to choose the advisor, and to formally provision a budget, but once this is approved internally, there are no prizes for cutting costs.
If there's a change to law that can affect the business (the RBI guidelines on e-mandates is an example that can impact streaming companies), we will recommend to our business that we engage a law firm to advise, because this is a significant legislation that can make or break the company. A law firm is more likely to have their ear to the ground, and are also able to speak with government officials on a no-names basis. The business normally pays for this one-off advise, and they have an incentive to scrutinize and review costs. There is an internal approval process, but once approved, the Legal Department does not get points for keeping costs below budget.
Coming back to the "routine" work, where there's a discretionary budget for legal advise- in companies, every department head gets assessed on many things, including whether or not they have controlled their budget. Cutting costs may be a small part of your performance review, but it's not the biggest factor at all. In fact, many in-house counsel are regularly asked to cut "routine" costs- by building in-house capacity, or by rate negotiations.
This means that if your budget for one year is 100, and you used up 85, you will be asked if you can manage the next year with 80 or 90. If you spent 120, there can be a review process to see if you could have spent lower amounts, or whether the extra spend was because of a non-standard event like a large arbitration.
The summary of this long post is that there is no direct monetary reward that is linked to cutting costs. It is part of your job as a senior manager at the company.
Different companies have different rules on equity. You cannot compare Unilever with Amazon with Zomato (to pick 3 names at different stages of their growth trajectory). The GC will get equity (ESOPs or RSUs or grants) in line with the other functional heads.
If lawyers are founding members (GCs, CLOs), can they get a chunk in the profits?