Tuesday, October 31, 2006
Posted by Jeff Lipshaw
Steven Schwarcz (Duke) continues his marvelous series of empirical studies on lawyering with To Make or To Buy: In-House Lawyering and Value Creation, just posted on SSRN. Here is the abstract:
In recent years, companies have been shifting much of their transactional legal work from outside law firms to in-house lawyers, and some large companies now staff transactions almost exclusively in-house. Although this transformation redefines the very nature of the business lawyer, scholars have largely ignored it. This article seeks to remedy that omission, using empirical evidence as well as economic theory to help explain why in-house lawyers are taking over, and whether they are likely to continue to take over, these functions and roles of outside lawyers. The findings are surprising, suggesting that in-house lawyers may now be performing as high quality work as outside lawyers and that the reputational value of outside lawyers may be significantly diminishing.
The quote in the headline of this post does not appear in Professor Schwarcz's paper. That is a line I used (and I lifted it from somebody else) in an interview several years ago with a reporter from Crain's Detroit Business, when I was the GC of a large division of a large company, recently recruited from partnership in a big law firm. It was precisely what you don't say if you don't want to be quoted. As you might imagine, it endeared me no end to my former partners at Prestigious But Regional Large Law Firm, who nevertheless stifled their bile for as long as we kept sending business their way.
Oh, by the way, the statement was true, and Professor Schwarcz's survey results bear that out.