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Legal Departments Keep Huge Percentage of Work In-House

Jennifer Williams-Alvarez Law.com

Nearly 75 percent of work for legal departments is handled internally, according to a recently released report. Keeping more work in-house has been the reality for in-house counsel for some time, and current and former in-house lawyers say it's a trend that's likely here to stay.

Control is also likely a reason work is kept in-house, said Michael Sachs, a partner at legal recruiting firm Major, Lindsey & Africa, who was formerly in-house at NBC Universal. He explained that, for a GC or CEO, it might be better to have someone working "two to three doors down" on a matter versus an outside firm, "because [then] you have some control over it."

And of course cost efficiencies are always a consideration, said Sachs. Some 89 percent of respondents in the Up-at-Night report cited cost and efficiency as the rationale for keeping work in-house.

"I think it's a vestige of the recession," Sachs said. "I think the big picture is ... companies are just a lot smarter about how they handle their budget. I think they're just smarter about what they give to outside firms versus what's kept in-house."

That's not to say there's no place for outside counsel, Sachs added. "The norm would be hiring inside counsel who can handle most day-to-day matters, most matters that sort of keep the company moving," he explained. "And [then] go to outside counsel for the most critical, sophisticated and time-consuming matters."

Clorox's Thackray said there are some matters outside counsel are typically considered for. "Both at Clorox and other companies, the things that get sent to outside counsel routinely are: litigation, particularly big litigation ... M&A deals almost always get some sort of outside counsel because they just require such a ramp-up in the number of people handling things," she said. "And then I think investigations of one sort or another."

Going forward, Sachs said the percentage of work that goes to alternative service providers is most likely to noticeably change. "I think that alternative service providers' pile is probably the one most likely to grow in the next five to 10 years," he explained. "If you look in 10 years, those first two numbers may not change radically, but I'd be really surprised if that alternative service provider number wasn't significantly changed."

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