Make/buy and the 40/60 split of inside to outside counsel spending

Consistently, benchmark surveys tell us that law departments spend 40 cents of every dollar on their inside costs and the other 60 cents on outside counsel. Year after year, this median ratio holds true. Why?

If you knew nothing about law departments, wouldn’t you assume that the inside lawyers would do most of the work, and only turn occasionally to outside counsel? Wouldn’t you marvel that these expensive, talented groups have to buy still more expertise and manpower from even more expensive external counsel? Other staff groups don’t spend more outside than inside. Litigation accounts for a chunk of the explanation, as it swallows half of the outside fees. Even so, it troubles me in a way that I can’t pinpoint why law departments do less than they buy!

We welcome comments

Your email address will not be published. Required fields are marked *