The Rise (and Fall?) of In-House Counsel
Is the bubble set to burst on the buildup of law departments or is now the time to go in-house?
February 25, 2018 at 06:00 PM
12 minute read
Motion Graphic by Hyeon Jin Kim
DXC Technology's deal to outsource the bulk of its legal department to UnitedLex got us thinking. Is the buildup of in-house lawyers turning? Do companies no longer look at in-house lawyers as a way to save money on outside counsel but instead look at the legal department as a cost to be minimized through outsourcing?
The data suggest a more complex dynamic. Yes, the growth in the number of in-house lawyers has outpaced the broader market, as has the growth in their compensation levels, leading to swollen legal department costs. Naturally, companies are finding ways to lower this cost. Routine work was taken from Big Law and brought in-house to lower costs; now it's moving from in-house to “new law” outsourced service providers to reduce costs further.
This is only half the story. The data also show that the cost differential that drove displacement of work from Big Law to in-house has not diminished and that in-house lawyers can handle increasingly complex matters. Thus, we can expect the displacement from Big Law to in-house to continue and to center on work of greater sophistication.
With both displacements happening simultaneously, general counsel will increasingly operate ambidextrously: taking work from Big Law to execute in-house with one hand, while outsourcing work currently executed in-house to outsourced service providers with the other. This is a once-in-a-career moment for forward-thinking general counsel: push less-interesting work out, take more interesting work in, and earn plaudits from management for lowering the company's overall legal cost.
It's a less august moment for Big Law lawyers whose services aren't especially distinct from those an in-house lawyer might expect to perform. The opportunity for such struggling Big Law lawyers? Take the comp hit of moving in-house now rather than take an even bigger hit as part of the wave of partner departures that will accompany the next market downturn.
The Rise of In-House Departments
Let's start with some data on in-house lawyers. Figure 1(a) shows the actual number of in-house lawyers by year from 1997 through 2017 contrasted with the number there would have been had growth tracked that of the overall economy. The number of in-house lawyers today is almost twice what could have been expected based on economic growth.
This growth has not been smooth; rather, the year-to-year changes in the number of in-house lawyers have moved as an exaggeration of changes in real U.S. GDP, see Figure 2. This is evidence of law's strong cyclicality and an evergreen reminder that, just as the leaders of law firms during the last downturn weren't all idiots, leaders of firms enjoying today's ebullience aren't necessarily all geniuses.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllQuinn Emanuel Has Thrived in China. Will Trump Help Boost Its Fortunes?
Trump's SEC Overhaul: What It Means for Big Law Capital Markets, Crypto Work
From ‘Deep Sadness’ to Little Concern, Gaetz’s Nomination Draws Sharp Reaction From Lawyers
7 minute readGlobal 200 Firms Gaining Deal Share Amid Race to Build in India
Trending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250