Promoting a lawyer from within has the advantage of letting you promote or reassign others at the same time. Like adding a chair to the musical game, you create choices regarding other members of your department. If you bring in someone from outside to fill a vacated slot, no one else needs to move or has the opportunity to move. On the other side, a reshuffling of your staff, even if just one person, gives a bit of meaning to the hoped for “career path.” It breaks the logjam.
Another salutary result of an upward promotion is that it encourages you to think about the roles and careers of the other lawyers who are potential moves or promotes. It fuels succession planning. Finally, morale surely improves when lawyers see that the department builds and elevates its own talent.