Charging the costs of stock options and restricted stock grants to the law department

It makes sense, setting aside the challenge of calculating their cost, to include equity awards in the budget, but few law departments do so. So, when I learned of a major law department that does include the costs, I realized I had stumbled upon yet another variable treated differently by law departments when they calculate their total legal spending.

Most departments exclude from their expenses the non-cash costs of equity incentive awards, but with Black-Scholes and other methods of determining the cost, it would be better to allocate those amounts to the total legal expenditure.

As I have often written, the fairest and most useful picture of total legal spending includes all law-related outlays. [See my posts of May 7, 2005 (internal litigation costs), May 30, 2005 (settlements and judgments), May 4, 2005 (TLS declining with company size.)]