Over the last two decades, the legal industry has been experiencing a profound transformation. One of the most significant changes has been the shift in the makeup of the legal workforce, where the number of in-house lawyers has more than doubled, growing at a rate far surpassing that of their counterparts in Big Law, which has increased by less than a third. This shift reflects the changing dynamics of the industry as clients increasingly choose to bring in-house work that would have typically been outsourced to external counsel. The transformation is being driven not just by technological advancements, but also changes in business models and client needs. You can find more details here at law.com.
As illustrated in Figure 1, the trajectories of in-house lawyers and those at Am Law 100 and Second Hundred firms have diverged significantly since the mid-2000s. Back then, the number of in-house lawyers was roughly equal to the number at Am Law 100 firms. However, since 2010, the number of in-house lawyers has grown by 77%, while the Am Law 100 has added just 23%. The Second Hundred firms have experienced slower growth still, at 10%.
Looking to the future, generative AI could further disrupt the legal industry, potentially doing the work that would normally fall under the purview of equity partners in Big Law. However, the real impact of this technology on the legal profession and how it will reshape the dynamics in play between in-house and big law remains to be seen.