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DXC Technology’s deal to outsource the bulk of its legal department to UnitedLex got us thinking. Is the buildup of in-house lawyers turning? Do companies no longer look at in-house lawyers as a way to save money on outside counsel but instead look at the legal department as a cost to be minimized through outsourcing?

The data suggest a more complex dynamic. Yes, the growth in the number of in-house lawyers has outpaced the broader market, as has the growth in their compensation levels, leading to swollen legal department costs. Naturally, companies are finding ways to lower this cost. Routine work was taken from Big Law and brought in-house to lower costs; now it’s moving from in-house to “new law” outsourced service providers to reduce costs further.

This is only half the story. The data also show that the cost differential that drove displacement of work from Big Law to in-house has not diminished and that in-house lawyers can handle increasingly complex matters. Thus, we can expect the displacement from Big Law to in-house to continue and to center on work of greater sophistication.

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