In 2023, there were approximately 1.33 million active lawyers in the U.S.—up slightly from 2022 at 1.32 million. In 2008, the number was 1.16 million.[1] While the number has been in the same ballpark for the last 15 years, the proportion of lawyers practicing in-house has increased dramatically.
There are currently around 130,000 in-house lawyers in the U.S. Between 2000 and 2022 in-house ranks grew by 77%. In fact, the number of lawyers who are in-house is almost equal to the number of lawyers across the nation’s top 500 law firms.
It’s well documented that the legal industry is morphing as companies bring more legal work inside. This applies not only to large corporations; but more start-up companies are hiring their first general counsel, and earlier in their growth trajectory. This is also true of private equity groups and hedge funds who typically outsource legal to keep fixed costs low. They are now more inclined to hire a general counsel to run point as part of the portfolio - in addition to instructing outside firms.
There are several reasons for this trend. For many work-life balance is a primary driver. That said, most in-house lawyers I know work as many evenings and weekends as their law firm colleagues (the difference being that they know if it’s a genuine emergency or not – an important distinction). More often what I hear now is that people want to be closer to the business and see the long-term impact of projects. Or they want to understand how businesses operate, with the opportunity to build something, and collaborate with colleagues across multiple departments or have the opportunity take on roles outside of legal.
Volume and Quality of Work
In-house legal work is more complex and demanding than ever, largely due to the globalized world we live in. The general surge in M&A and IPO activity in addition to growing industries like tech, life sciences, healthcare, AI and renewables, necessitates the need for more in-house lawyers. With increased regulation, litigation and complex technologies, companies have continued to hire more specialized roles internally.
The sophistication and quality of legal talent has enhanced both the quantity and complexity of legal work a company can undertake. Coupling this with the fact that business leaders are more experienced in providing training, mentorship and progression for their teams - lawyers can see a long and rewarding career in-house.
Increased Expectations
Many companies are recognizing that having dedicated legal resources not only helps reduce costs, but risks. Boards of directors, executive teams, and investors’ expectations have increased over the years, and general counsel are often the primary legal (and sometimes) business advisor to their clients. We have seen a significant rise in the influence of the general counsel in the executive ranks.
We saw this rise in influence during the pandemic where the general counsel (walking hand-in-hand with the CEO and CHRO) was relied upon heavily to navigate an array of novel issues from remote work, RIFs to safety in the workplace and subsequent the hiring surge that followed in 2021 and 2022.
This new influence has also manifested itself in the general counsel’s budget. Making a case for increased headcount is no longer solely a conversation about dollars and cents, but more about managing risk and compliance, improving company culture, retaining talent, improving client service and driving revenue.
Moreover business teams expect tailored advice from their lawyers. They want input as it relates to their specific business, their specific products and their specific situation. “Which opportunity should we pursue and how can we make it happen? How do we get to ‘yes’ on this?” They don’t want a catch-all memorandum about risks incorporated with taking path A, B or C.
Note that risk in this context is not simply about avoiding litigation or drafting tighter contracts; it’s about surveying the horizon, spotting incoming threats and seizing opportunity in a competitive environment. Path A, B or C might all be perfectly viable options, but picking the right path that puts your company ahead is more important than ever. This is one way legal can pivot from being viewed as a cost center to a revenue generator e.g. choosing path A generated an additional $50 million for the company - thanks, legal!
The Numbers
Despite this significant growth it’s worth noting that the majority of in-house teams are still very lean. A team of between one and three lawyers is common.
A recent survey of 427 legal departments found that the median number of team members is six - though larger companies with more revenue feature far bigger legal teams. Those with up to $1 billion in revenue typically have three legal team members; companies with up to $5 billion, average 15 legal department staff. On the high end, companies with between $5 billion and $20 billion in revenue have a median of 59 staff and the largest companies with more than $20 billion in revenue average 98 staff (with lawyers making up two-thirds of total legal department personnel).
Prediction
The swell of in-house legal teams will no doubt continue but at a considered pace. Companies will of course continue to invest in technology to improve efficiency, in addition to adding headcount. Technology will not replace the work or people in my view. There will always be a flow of legal (and business) matters needing attention from lawyers. Technology will however help us achieve more at a faster pace and increased data analysis I feel will improve overall decision-making.
As new fields open, we know that the next cohort of employees will have jobs that don’t even exist yet. Does that mean that fewer graduates be interested in becoming lawyers? Perhaps, but I expect we are at least a generation away from this. For now, I think the steady march of lawyers will be through company doors.
What are they calling the generation after Gen Z anyway?
[1] According to data published by Statista Research Department.
