Wall Street Journal, Cut the Law Firms, Keep the Lawyers:

Companies used to depend on elite law firms to train new lawyers they could bring in-house years down the road.

Now, some are just doing it themselves, hiring directly from law-school campuses rather than recruiting lawyers who had previously spent a few years at a major firm. These companies are growing weary of paying high hourly rates for inexperienced law-firm associates. …

Billing for work by junior lawyers at law firms has long been a major profit center for law firms. The average hourly rate for a non-partner associate lawyer at a law firm rose to $378 in the second quarter, from $338 three years earlier, according to data from Peer Monitor, a unit of Thomson Reuters. The current average hourly rate for first-year associates at law firms is $283, it says.

In the past, a lawyer coming to work at Pfizer was usually one who had been practicing law for at least seven years at a law firm. But the pharmaceutical company, which employs an estimated 300 attorneys in its in-house legal department, recently recruited three third-year law students from Harvard Law School and Yale Law School, as part of a pilot program that it plans to repeat this fall.