In February 2004, Prof. Clayton Christenson of the Harvard Business School and Scott Anthony, a partner at Innosight published a white paper entitled “eLawforum: Transforming Legal Services.” On page 4 of a reprint of that article,a sentence casually throws law departments under the bus. “Most economists would argue that legal services should be outsourced because they’re not the core competence of corporations.”
Abstractly, or as an economist, that may be true, inasmuch as in an ideal world of business people, everything would be resolved between commercial agents and lawyers would be superfluous. In an ideal world.
But dare we note the cost element? Legal issues pop up, and inside lawyers who are productively busy cost less per hour than outside lawyers. So core competency yields to relative costs.
That is not the end, because if all an internal group of lawyers offers is cheaper labor, bean-counters and procurement pros can hack away at the gap through hard bargaining with law firms. No, the internal lawyers also know the company and its goals better, which lowers total costs even if not in an economically quantifiable way.