Rees Morrison has consulted to more than 250 law departments (and several law firms) over 22 years to help them better manage themselves and their outside counsel. For more, visit reesmorrison.com, email me, or call 973.568.9110.

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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.

Posted on September 7, 2008 at 09:50 PM in Benchmarks | Permalink

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