Larger law departments may have more legal expertise and thus lower costs

Results from a survey with 84 law-department respondents, published in PLCLaw Dept. Quart., Vol. 3, Jan.-March 2007 at 24, tell us that the majority of work sent to outside counsel is because of a lack of specialized expertise in-house. About 20 percent of work is sent outside because the in-house team has the expertise but not the time to handle it.

These findings reinforce why larger companies, and their usually larger law departments, have lower total legal costs (See my post of Aug.21, 2008: total legal spending as a percentage of revenue (TLS/Rev) with 9 references and one metapost.)

More lawyers means it is more likely that someone inside has enough experience in an area of law to handle the matter competently or to oversee outside counsel efficiently. By oversee efficiently I mean that the inside experienced lawyer can direct external counsel as to what issues to delve into and how deep. An inexperienced in-house lawyer might give the firm freer range and costs will increase.

Another inference from this data is that insufficiency of in-house time and resources, which was the second leading reason to retain outside counsel, overlaps with expertise. Given some time to educate themselves about an area of law or legal issue, the inside lawyer might do perfectly well at handling the matter.