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An estimate law departments in of publicly traded companies based on world market capitalization

We make the estimate by multiplying lawyers per billion dollars of market value against the world-wide total of market capitalization and then dividing by the average number of lawyers in law departments. Perhaps the result is directionally correct.

From four posts on this blog, let’s loosely estimate lawyers per billion dollars of market capitalization to be three (See my post of June 4, 2007: Rio Tinto and 1.6 lawyers per billion in market cap; July 2, 2007: about 2.1 lawyers per billion of market capitalization among 35 large US companies in 2005; Nov. 19, 2010: among US manufacturers, about 3 lawyers per billion of market cap; and Feb. 15, 2011: using General Counsel Metrics data, about 4 lawyers per billion.).

The NY Times, Aug. 6, 2011 at BU3, informs us that total world market capitalization as of Dec. 31, 2010 was $35.5 trillion: US ($14.3 trillion), Europe ($8.6), East Asia ($6.4) and Other ($6.2). If the US ratio of three in-house attorneys per billion of market value holds everywhere, the 35,500 billion in market cap suggests 106,500 attorneys – in the publicly traded companies only. Dividing by an average of three lawyers per department, that means 35,500 law departments in floated companies. The next step needs a ratio of publicly traded companies with law departments, which I assume to be close to 100 percent, and the ratio of privately held companies with law departments to publicly traded companies with law departments. Then we tack on government law departments!

Other posts have commented on market cap (See my post of July 25, 2005: Merck and its Vioxx-related loss of market capitalization; May 26, 2007: market capitalization as a benchmark denominator; May 27, 2008: market value in relation to intangible assets of a firm; Jan. 7, 2009: market cap growth as possible benchmark metric; and Jan. 14, 2011: national market capitalization as a percentage of GDP.).

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