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Twenty solicitors and 30 legal executives will lose their jobs at Lambeth Council if proposals to outsource all legal work are approved next month.
The council has decided it should voluntarily hand over its legal work to the private sector just six months after its own legal team won a contract under compulsory competitive tendering.
The move is one of the most radical outsourcing projects to be undertaken by an in-house legal team.
In 1994 Conservative-controlled Croydon Council cut the number of its solicitors to six, and a handful of other Tory councils have also exceeded the Government's quota for contracting out legal services.
At Lambeth, however, Labour and the Liberal Democrat councillors, who share power, made the running.
Under the plan all day-to-day work will be outsourced with a core team of four legal staff remaining. The existing staff are expected to transfer automatically into the private sector.
Lambeth's borough solicitor, Gerard Curran, said: "Lambeth's problems are well known and there is a general suspicion that some of the legal work wasn't done as effectively as it should have been.
"If we can develop a mature working relationship with the private sector we should be able to to achieve a high level of work at a reasonable price."
Lambeth Council, tagged as 'Loony Left' for many years was accused of fraud and mismanagement in a report last year by Elizabeth Appleby QC.
The outsourcing proposals, drawn up by the board of management and council leaders, will be voted on in July.
They coincide with the Government's proposals to increase the amount of legal work put out to compulsory competitive tendering.
A consultation document said councils had exposed less work to competition than had been expected and claimed that local authorities were frustrating competition "by any means at their disposal". It also demanded a review of the current procedure.
The document has caused a furore amongst local government lawyers who will have to revise their own CCT procedures as well as overseeing the changes forced on other council departments.
Among metropolitan authorities there were only 1.4 bids for each legal services contract and 98 per cent of the contracts were awarded to in-house legal departments.
Jane Ramsey, head of legal services at the London Borough of Merton, said that the review would have a "retrospective affect on existing contracts".