A shared-services law department has three hallmarks. The head lawyer reports to an executive who runs the shared-services organization, which typically includes other units such as human resources or accounting. Second, and more important, clients can choose to use the shared-service lawyers or they can turn to outside counsel. This choice, and the market-based competition it engenders, distinguishes the shared-service model.
Last, and following from the second hallmark, shared-service lawyers charge their time to their clients. In one variation, headquarters lawyers do company-wide work such as securities, corporate secretary, major M&A; shared-service lawyers handle services needed from time-to-time by business units while on the payrolls of the units.
A pure shared-service structure for a law department is rarely seen. Senior management of corporations probably feel that if they want to have what amounts to an internal law firm they might as well use external law firms (See my post of Dec. 17, 2006 on the sole inside lawyer of Advo.).