Starting with data from 39 large US and Canadian manufacturing companies that participated in the General Counsel Metrics benchmark survey in 2010, I took their market capitalization and divided it by their number of in-house lawyers. At the median, those companies had about one-quarter billion dollars of market cap per lawyer (the average was $346 million).
The correlation between market value per lawyer and total legal spend as a percentage of revenue was a modest 0.39, which suggests softly that the higher the market values a company’s shares outstanding the more the company spends on internal and external legal costs. This finding belies my constant reference to economies of scale.
A negative correlation results between market cap per lawyer and lawyers per billion of revenue. That correlation was a very slight -.13: as market cap rises, in-house lawyer numbers decline a bit. Companies well regarded by the stock market do not scale up their lawyer ranks as their market cap swells – in fact, they need slightly fewer lawyers to support their increasing revenue.