To Fairfax County officials, it seemed like a good idea at the time: Hire a local law firm to collect $200 in back taxes from a recalcitrant construction company and save the bother of having to do it themselves.

But when they got the bill from the firm hired to make the delinquent real estate tax collection, some county officials were stunned -- the total cost came to $2,087, more than 10 times the amount of taxes owed.

Sedam and Herge, the law firm that collected tax debts for the county, attributed the price tag to an inordinate amount of work the case required involving unclear land titles and extra hours.

Not long afterwards the county decided to start collecting delinquent taxes itself, and the savings were substantial. Sedam and Herge had collected about $7 for every $1 it charged the county during its last year's work. During their first year of collections, two county attorneys collected $43 for each $1 they cost the county in salary and benefits.

"We were tossing out too much money," said Dean Tistadt, the county budget analyst who recommended the switch. "We can do it better."

For governments in the Washington area, coping with an increasingly complex and constantly growing list of legal problems has become an expensive proposition in recent years. As disgruntled taxpayers, dissatisfied developers and unhappy parents discover that the best way to fight city hall is to sue it, legal costs have skyrocketed.

"Local governments are wrestling with an explosion of . . . cases," said Matthew B. Coffey, executive director of the National Association of Counties. And, he adds, as a result of the budget trade-offs governments are making to accommodate escalating legal costs, "attorneys are getting wealthy" at the expense of important government services.

It is not only government that must bear the high cost of counsel. The legal bills of large corporations are larger than many city budgets. In just its preparations for the mammoth antitrust "supercase" that led to its breakup, for example, American Telephone and Telegraph Co. spent $293 million.

But the use of increasing amounts of taxpayer's dollars for legal expenses has larger implications. Counsel Decisions Mirror Politics

Because the issue involves lawyers, government and lucrative fees, deciding who gets legal work is a process that usually involves more than simple principles of sound public administration. How a jurisdiction handles its legal work -- whether to rely on its own staff lawyers or hire outside firms -- is often an accurate mirror of the subtle differences in the way politics is practiced in the Washington area.

With the exception of the District, every jurisdiction in the area contracts out significant amounts of legal work, but each does it in its own way.

In Fairfax, befitting Virginia tradition, an old boy network persists, with long-established county firms gaining much of the work. In Montgomery, county officials regularly make use of Maryland's most prestigious and expensive firms, while in neighboring Prince George's an openly political system exists based on the theory that, as one leading lawyer bluntly puts it, "the people who fund government" -- i.e., campaign contributors -- should be given preference when it comes to awarding legal work.

Government officials and lawyers argue that legal services cannot be treated as a commodity put out to bid. The result is that while tight controls and oversight are standard for virtually every other aspect of public spending, few if any regulations govern who should get legal work and how much it should cost.

A Montgomery County school system study of its legal services conducted in January found that "essential elements of any management system . . . are largely missing in the legal services area."

In the fiscal year that ended June 30, Fairfax County budgeted $1.5 million for outside legal work, more than it allotted for drug and alcohol abuse treatment programs. Prince George's County spent more than $1 million for outside counsel, more than it spent on library books, and Montgomery County paid out $941,142 to private firms, more than it paid out for the Economic Development Office.

And the District, which parcels out only a small percentage of its legal work to private firms, spent $5.3 million last year for in-house, non-criminal legal work and the 101 lawyers who did it.

The sophisticated population served by Washington area governments is one major factor in rising legal costs. In many cases, jurisdictions are targetted for suits in emerging areas of law that have never before been tested in court.

In Montgomery County, the school system's legal bills have more than doubled in the past six years, from $213,839 in fiscal 1979 to $443,646 in 1984, partially due to an increasing number of appeals filed by parents protesting administrative decisions such as the placement of students requiring special education. Every year, the school system has required a supplemental appropriation to pay for cost overruns ranging from 13 to 150 percent over original budgets.

Concerned about those escalating costs, the school board this year created a half-time management position to monitor all of the private lawyers -- eight firms this year -- working for the school system, the fees they charge and the bills they submit.

"We have a very litigious population in Montgomery," said Tom Fess, the school system's ombudsman, who serves as a government liaison with the public. "They love their rights and they love to sue."

In Fairfax, the number of lawsuits pending against the county has doubled in the past four years.

"We've had to go beyond the traditional roles of defending land use cases to handling everything from antitrust to telecommunications suits," said Fairfax Supervisor Thomas M. Davis III.

The county is now battling some of Northern Virginia's most powerful developers in almost three dozen related court cases that will determine how one-fourth of the sprawling suburban county will be developed. Six staff attorneys have dedicated virtually all of their time during the past year to work on the Occoquan cases and the county budgeted $575,000 to pay outside consultants who provided expert testimony in the cases. That cost is almost one third of the county's budget for outside legal services for all of 1984.

Proponents of in-house attorneys argue that they are more accountable to local government officials and can provide the same services at far greater savings. Others argue that staff attorneys will never have the expertise to compete against well-paid counterparts, especially in big cases.

Rapid turnover and relatively low pay have left the D.C. Corporation Counsel's office, the city's legal arm, with a cadre of inexperienced lawyers who don't have the time or expertise to handle complex cases, according to present and former employes.

And some Fairfax County officials criticized the county board of supervisors' decision to use its internal staff to fight the county's most prestigious and powerful land-zoning attorneys in the Occoquan cases.

Although the county has the largest in-house staff of attorneys of any suburban Washington area government -- 25 lawyers -- it still spent about 42 percent of its total legal budget last year on outside attorneys fees, county records show.

"There are some subject matter areas . . . . in which we don't have the time to build the expertise," said Fairfax County Attorney David T. Stitt, citing the $208,300 paid to the firm of Walstad, Kasimer, Tanney and Ittig for technical construction litigation involving contractors who built the county courthouse. "We had to go outside."

Montgomery County has invested $379,192 since 1982 in defending a lawsuit resulting from construction problems in several county buildings. County officials say the county could be forced to pay out $19 million in damages if it loses the suit, which has not yet gone to trial.

"It's more cost effective to go in-house," said Montgomery County attorney Paul McGuckian. "But if you go out, you should pay for the best. It's not cost effective to scrimp on your lawyer." Reasons for Going Outside

Prince George's County officials, however, have taken the opposite route. They are resisting efforts to build up the county's staff and are encouraging the use of outside lawyers.

"Since we're trying to watch every penny, why have a large staff with specialists in Economic Development, and in the Housing Authority?" said County Executive Parris Glendening.

One legal specialty almost always reserved for private attorneys is bond counsel -- the lawyers who draft the questions that go on ballots and the details for selling the millions of dollars in bonds sold each year to finance the building of schools, roads, parks and other government services.

Maryland Attorney General Stephen H. Sachs said that despite his own belief that full-time government lawyers should do all government work, the Wall Street firms that process bonds "wouldn't accept" the opinion of an in-house lawyer in this area.

Northern Virginia's local governments have used the same New York bond counsel firm for more than 20 years, paying the firm a percentage of the multimillion-dollar total of each bond sale.

"It's a highly specialized area," said James McDonald, deputy county executive for finances in Fairfax County, which expects to pay out between $100,000 and $200,000 in fees to bond counsel for setting up the county's recent $109 million bond referendum and for selling the bonds. "It's like open heart surgery. You can't make a mistake."

Putting a price tag on such work is frequently difficult.

"It's tough," said Stitt. "It's a judgement call . . . to a certain extent you have to rely on their good faith."

Alexandria City Council member Connie Ring is more skeptical: "The trouble with government is, you're not spending your own money. The tendency is not to look at it the same way a private litigant would. It's easier to spend someone else's money."

Sachs argues that the issue is not just dollars and cents.

"The bottom line is not cost," he said. "The bottom line is the professionalism of the public law office. I don't think you can expect to have the kind of reputation you want to have as a first class law firm representing the people if everytime there's something tough or complicated you have to go to the private market.

"It's also public accountability," he added. "If you have private lawyers, in what sense are they accountable?" Tomorrow: No appointments in heaven