115,770 versus 107,209

Above is a graphic that shows the increase in the number of employed lawyers broken down by sector.  The takeaway is that in-house is growing much faster than the government and law firm sectors.

This graphic was originally published in Post 003 (through 2016).  Thus, I thought it was time for an update.

From1997 (the first year of comparable data from the BLS) to 2020, the number of lawyers employed in-house has increased from 34,750 to 115,770 — a 3x increase. Yes, the rapid pace of growth is noteworthy, but equally significant is the relatively large size of the in-house sector.  As a point of comparison, there are 145,600 lawyers (partners, associates, and other attorneys) working in a domestic office of one of the nation’s 500 largest law firms (NLJ 500). (Another 28,100 NLJ 500 lawyers work outside the U.S.)

The NLJ 500 is a ranking of US law firms based on total lawyer headcount.  It includes all of BigLaw plus a lot of the middle market serving organizational clients, ranging in size from #1 Baker McKenzie (4,699 lawyers, HQ in Chicago) to #500 Cades Schutte (74 lawyers, HQ in Honolulu).

If we assume that “BigLaw” is limited to firms in the AmLaw 200 (ranking based on total revenue), the number of BigLaw lawyers working in the U.S. is 107,209.  Under this fairly reasonable definition, the in-house sector (115,770) is a larger employer of lawyers than BigLaw.

As suggested in Post 231, it is likely that a division of labor is taking root in which operational and commodity work is performed in-house while more specialized work continues to be sent to outside counsel. This would explain the explosive growth of the in-house sector and the slow growth but continued high profits of BigLaw.  Cf. Post 216 (Jae Um documenting high BigLaw profits amidst low growth in the volume of legal work). Yet, it also has significant implications for the sourcing and development of legal talent.

The structure of the legal profession is changing much faster than our perceptions, which means that many of our implicit assumptions may be outdated and wrong.  As a self-regulated profession, it’s time to catch up.