My German Shepherd has a leg lump. Is it a cyst? What should I do?

Hi,
It looks to me as though Shadow may have a hygroma. This is a false bursa that develops over bony prominences, commonly the elbow, due to repeated trauma from pressure points while lying down on or hitting the elbows on hard surfaces. This repeated trauma creates an inflammatory response, which results in a dense-walled, fluid-filled cavity. Overtime, severe inflammation may develop, and ulceration, infection, even abscesses can form on the hygroma.
To prevent this from getting worse, provide plenty of soft padding and soft bedding for Shadow to have to prevent more trauma to the area. In minor cases even elbow pads can be bought for dogs.
For severe cases, surgeries can be performed to try to cosmetically fix the area after flushing, draining and repairing the areas.
Hope this helps!
-Dr. Gordon