In-House Legal Departments

alanbryanfutureoflitigAs a law professor, I worry about my students’ job prospects.  One way to manage this worry is to study clients and to work backwards from their needs.  Opportunities tend to find lawyers who follow this discipline.

Yet, making generalizations on law clients in the year 2017 is surprisingly difficult. This point was recently driven home by the juxtaposition of two “voice of the customer” examples at the Ark New Spectrum conference in Chicago last month.  The first example came from Aric Press, longtime editor-in-chief of The American Lawyer, who now spends a good portion of his time doing client feedback interviews through his consulting firm, Bernero & Press.

Example 1

Do law firms need to embrace sophisticated tech-based solutions to retain their largest and most important clients?  Aric put some variant of this question to a senior in-house lawyer who controls tens of millions of dollars of legal spend at a client we’ve likely all heard of.  The response was surprising, even to Aric. “I only need two pieces of technology. Email and my phone. And both work fine.”  This same in-house lawyer praised the firm being reviewed for cultivating a relationship of trust that felt personal. That’s comforting feedback for the service providers.

Example 2

The second “voice of the customer” came from Alan Bryan, Senior Associate GC of Legal Operations and Outside Counsel Management at Walmart. Alan presented the chart above, which graphically summarizes some of his views on the evolution of litigation [click on image to enlarge].

Caveat:  Alan Bryan is skilled and careful legal operations professional, which means he understands the range of interpretations that lawyers assign to graphical information.  A major caveat Alan made during his remarks is that the arrows above “are not to scale” — i.e., they do not reflect the quantum of hours worked or dollars spent. The chart instead shows a likely directional change in the relative mix of service providers, including in-house counsel.  The growing green arrow includes, at least in part, non-traditional legal service providers of the type profiled in “Efficiency Engines,” ABA Journal (June 2017).

So what’s the takeaway?

The nature of legal work among the nation’s largest corporate clients is simultaneously changing significantly and not at all.

On one level, this is frustrating because it means any generalization is vulnerable to the killer counterfactual anecdote. Within firms, this means strategy setting can veer toward melee.  The broader “profession” will also struggle to plan and adapt.

On another level, however, these two voice-of-the-customer examples reveal large client segments that are operating on different time tables. Alan Bryan feels sufficiently strongly about the changing nature of law practice that next year he will be teaching the first second full-semester* “Introduction to Legal Operations” course at an ABA-accredited law school. The course will be offered at his alma mater, University of Arkansas-Fayetteville School of Law.

The legal world is changing, albeit unevenly and in ways that defy simple generalizations.  That said, I would be comfortable wagering that over the course of a 40-year career, taking Alan Bryan’s legal ops course will, in cumulative effect, open as many professional doors as a degree from Harvard Law School, albeit HLS appears to be hedging itself in a very prudent way.  See Underestimate Harvard Law’s New Admissions Strategy at Your Own Risk.  As a field, legal ops is disruptive because it focuses on measurable results. See Post 005 (discussing rise of legal ops and CLOC).  You either have the knowledge, skills and experience to deliver, or you don’t.  Credentials and pedigree can’t fill that gap.


 * Since the fall of 2015, legal innovator Ken Grady has been teaching “Delivering Legal Services” at Michigan State University College of Law.  This is a 2-credit course that functionally covers the terrain of legal ops, including, per Ken’s email, “project management, process improvement, technology, metrics, design thinking, and a few other topics.”  Since January 2016, Indiana Law has been offering a 1-credit Legal Operations course during our January Wintersession. If your school also offers a “legal ops” course, please let me know and I’ll amend this post.

What’s next?  See Example of Automating Private Placement Documentation (014)

Six Types of Law Firm Clients
Six Types of Law Firm Clients

As the legal market remains flat for law firms, the focus naturally turns to clients.  How they think. What they care about. How they spend their budgets. Etc.  Yet, to the extent that clients vary in significant ways, the generalizations aren’t particularly helpful.

Six Types of Clients

There are many ways to categorize clients, but by my lights the most useful is size and organizational structure of the in-house legal department. As shown in diagram above, this metric varies from zero for individuals (Type 1) and business owners (Type 2), to the equivalent of a specialized law firm embedded inside a large corporation (Types 5 and 6). Continue Reading Six Types of Law Firm Clients (005)

A lot. The trend is large and longstanding.  Over the last two decades, the number of lawyers working in corporations has more than tripled, growing from 34,750 in 1997 to 105,310 in 2016. The chart above shows the trendlines.

Most people working in the legal industry know that in-house legal departments have been growing, but has there been an accurate sense of the magnitude — 7.5x faster than law firms over the last 20 years?

It took a fair about of time to pull these data from the Bureau of Labor Statistics and put them into the right format to generate the above chart. Yet, the chart itself raises more questions than it answers.

  • Why are corporations in-sourcing a non-core function? During this same period, outsourcing of various business processes has been growing.  Why is legal treated differently?
  • How long into the future will this trend continue? What might curtail this trend?
  • What are the age demographics of in-house legal departments compared to law firms? Law firms are graying. Will in-house departments avoid this same problem, or will it hit over the next 5 to 15 years?

The orange “in-house line” is so far above the other two sectors that is obscures another unexpected finding.  Since the mid-2000s, government has been growing faster than law firms – what’s causing this rise?  Either the government’s been on stealth hiring binge, or law firm hiring has flattened out in a way that cannot be characterized as cyclical.

Subsequent posts will return to these questions.  Before doing that, however, I want to time build out a simple theoretical framework that we can apply to legal industry data. This framework in rooted in diffusion theory.

What’s next?  See What is the Rogers Diffusion Curve? (004)