Page 85 - 2019 - Leaders in Legal Business (q)
P. 85
How Departments Insource, Determine What Departments Outsource
Historically, law departments were created to provide some services to the company
directly, and to select, retain, and manage outside counsel who performed the majority of the
company’s legal work (“majority” referring to the proportion of budget spend, the number of
lawyers deployed, and hours worked). Thus, the organizational premise selected by corporate
management for most law departments is an “outsource” model. Of course, there are and always
have been exceptions to this rule, with some solo practitioner law departments providing pretty
much all service through their single in-house lawyer (because the legal agenda is minimal), and
some very large law departments that, in spite of hiring outside firms to handle litigation or
specialized work, for instance, internally provide most of the work required by the client in-house
via the hundreds of lawyers they keep on staff.
Even though the ACC (Association of Corporate Counsel), the ABA (the American Bar
Association, the IBA (International Bar Association), and national bars conduct regular census
surveys of their members, there is no definitive understanding of the actual number of in-house
counsel or law departments practicing in any particular jurisdiction or globally. Many law
departments literally operate below radar; they are not visible outside the company and little is
known about their structure. Even less is known about aggregates of how law departments are run
in terms of shared common practices; unlike the business models of law firms, which are usually
not terribly different from firm to firm within segments of the profession (solo practices, mid-tier
firms, boutiques, BigLaw, global firms, etc.), the business models of law departments can be as
diverse as the companies they serve. Since they are not in the business of practicing law to make
money, their drive is to deliver the services that their particular client needs in real time … and so
they are often a reflection of the management style or the industry in which their management
teams work.
This means that while most departments outsource more work than they insource
(regardless of their department size), they may choose to outsource different kinds or work, or
select different kinds of providers or products in a manner that defies easy categorization. Low-
tech companies may have the most tech-savvy departments, and there are lots of finance-,
information-, and technology-based companies whose legal teams are relative tech Luddites. Some
departments are in relentless pursuit of lower costs, and others may choose to hire the most
expensive providers in the marketplace without much regard to the financial health of their parent
companies.
It’s Not What Vendors Want to Sell, but What Clients Want to Buy …
Here are some categories of products and services that are most common in legal
departments (in no particular order):
1. Outsourcing legal work to law firms:
Law firms are retained either to be an extension of the in-house department that doesn’t
have enough hands to get work done, or they are retained to provide services or expertise that the
law department doesn’t have and doesn’t wish to hire folks to provide internally on an ongoing
basis.
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Historically, law departments were created to provide some services to the company
directly, and to select, retain, and manage outside counsel who performed the majority of the
company’s legal work (“majority” referring to the proportion of budget spend, the number of
lawyers deployed, and hours worked). Thus, the organizational premise selected by corporate
management for most law departments is an “outsource” model. Of course, there are and always
have been exceptions to this rule, with some solo practitioner law departments providing pretty
much all service through their single in-house lawyer (because the legal agenda is minimal), and
some very large law departments that, in spite of hiring outside firms to handle litigation or
specialized work, for instance, internally provide most of the work required by the client in-house
via the hundreds of lawyers they keep on staff.
Even though the ACC (Association of Corporate Counsel), the ABA (the American Bar
Association, the IBA (International Bar Association), and national bars conduct regular census
surveys of their members, there is no definitive understanding of the actual number of in-house
counsel or law departments practicing in any particular jurisdiction or globally. Many law
departments literally operate below radar; they are not visible outside the company and little is
known about their structure. Even less is known about aggregates of how law departments are run
in terms of shared common practices; unlike the business models of law firms, which are usually
not terribly different from firm to firm within segments of the profession (solo practices, mid-tier
firms, boutiques, BigLaw, global firms, etc.), the business models of law departments can be as
diverse as the companies they serve. Since they are not in the business of practicing law to make
money, their drive is to deliver the services that their particular client needs in real time … and so
they are often a reflection of the management style or the industry in which their management
teams work.
This means that while most departments outsource more work than they insource
(regardless of their department size), they may choose to outsource different kinds or work, or
select different kinds of providers or products in a manner that defies easy categorization. Low-
tech companies may have the most tech-savvy departments, and there are lots of finance-,
information-, and technology-based companies whose legal teams are relative tech Luddites. Some
departments are in relentless pursuit of lower costs, and others may choose to hire the most
expensive providers in the marketplace without much regard to the financial health of their parent
companies.
It’s Not What Vendors Want to Sell, but What Clients Want to Buy …
Here are some categories of products and services that are most common in legal
departments (in no particular order):
1. Outsourcing legal work to law firms:
Law firms are retained either to be an extension of the in-house department that doesn’t
have enough hands to get work done, or they are retained to provide services or expertise that the
law department doesn’t have and doesn’t wish to hire folks to provide internally on an ongoing
basis.
70
