Translate legal spending into cents per share?

A senior lawyer in a law department spoke recently about how the litigation spend of his group amounts to “one or two cents per share.” That is a novel perspective for a legal benchmark. All legal costs could be divided by the number of shares outstanding.

The metric does not appeal to me because the shares available to the public of a company may change or be out of whack, such as before a stock split or after shares are issued for an acquisition, but it does have the advantage of being a denominator familiar to CFOs and other executives. Companies report on earnings per share (EPS), and indeed that is a signal indicator of whether a company or segment of a publicly-traded market is over or under-priced.

Someday, had we but time enough and data, I would like to calculate total legal spending per share and see how well that ratio correlates with total legal spending per unit of revenue.

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