A publicly-traded company’s market cap is “perhaps the most important single measure of size and economic relevance. The market cap directly affects a company’s ability to control its own strategic destiny and is highly correlated with its total net income.” (Lowell Bryan in the McKinsey Quarterly, 2007, No. 1 at 63).
Bryan’s assertion makes me wonder why we do not calculate such benchmarks as lawyers per billion dollars of market capitalization or total legal spending as a percentage of market cap. Since the most-used denominator for non-financial company’s law department benchmarks is revenue, if revenue is closely correlated to market cap, perhaps we will not learn much more from the new metric.