Oops, I have egg on my face. I divided numbers of lawyers by 5 instead of multiplying by .05. Big oops.
So the original header said "40,000" but should have said "10,000". I will deal appropriately but sternly with my fall-down-on-the job staff of fact checkers!
Data from 2004 compiled by the Council of European Lawyers showed slightly more than 620,000 lawyers in the 17 countries covered. Taking that number as current, assume five percent of them practice as employees of corporate entities (conservative, since UK and US data suggest a percentage closer to 7), and further assume that law departments in those countries average three lawyers (since roughly half of the members of the Association of Corporate Counsel are 3 lawyers or less), it produces an astonishing estimate of 40,000 European legal departments.
There is no shortage of methodological issues with this estimate, but these admittedly gross metrics (total European practicing lawyers, the percentage of them in-house, and average in-house lawyer numbers) may still be directionally correct. If anyone can point me to better data, or if there are more sound assumptions to make, I would welcome hearing from them.