A foundational decision for a general counsel: to make or buy legal experience

Some law departments pride themselves on handling as much legal work of their company as possible (See my post of Feb. 23, 2008: company handles most litigation in-house.). Other departments stay small and buy the services of law firms for most of their legal needs (See my post of Dec. 17, 2006: ADVO directs most work to outside counsel.).

A pervasive, recurrent deliberation for every general counsel comes down to the venerable, yet still vital, make-buy decision. Can we satisfy this need for legal counsel or work by our internal efforts or do we also need to retain an outside lawyer? No one can claim a single best answer to the question (See my posts of July 2, 2007: companies take different views; and Feb. 10, 2007: a core, strategic decision.) and some even argue that “inside or outside” is a misguided inquiry (See my post of June 5, 2006: wrong question — “should this project be done by inside or outside counsel?”).

A typical law department distributes its workload, when measured by amounts spent, more toward outside counsel than toward inside (See my posts of June 28, 2005: usual 40 inside/60 outside ratio; March 19, 2006: application to Canadian data; and May 26, 2007: Canadian data on shifting work inside to control costs.). Even that simple ratio that monetizes make vs. buy conceals the complexity of how you realistically measure the balance of work (See my post of Dec. 11, 2006: how to measure work kept inside and work exported to outside counsel.).

The make-buy decision — repeated many times every year — touches on too many aspects of law department management to list. Some of them include lawyers per billion of revenue; who should do routine, commodity legal work; support staff; technology; structure a legal function and virtually every aspect of a law department. This post cannot cabin that discussion (See my posts of Aug. 16, 2006: why law departments retain outside counsel, and brains outside versus brawn inside; and July 2, 2007: guidelines for when a law department lawyer should or may retain.).

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