Good news for general counsel who dream of one day sitting in the king’s seat: the ABA Magazine says there is a new trend of corporations tapping lawyers to become top executives:
Nine of the Fortune 50 companies now have a lawyer as chief executive, up from three just a decade ago. In December, Bank of America and Continental Airlines became the two most recent publicly traded corporations to do so. Also in 2009, Citigroup named Richard Parsons, another lawyer, as its chairman, which is separate from the CEO.
Business leaders and corporate headhunters agree that the JD is once again an alternative to the MBA as the degree of choice for CEO candidates, and that the trend is very likely to increase over the next decade.
Woo-hoo. Maybe law school grads will start kicking biz school grads to the curb. Vanderbilt’s management school dean goes so far as to call the J.D. a “renaissance degree.”
According to the ABA Magazine, one law school is particularly successful in sending its grads off to lead a company instead of doing bet-the-company work….
A third of the lawyers currently at the top of Fortune 50 companies hold law degrees from Southern Methodist University:
Of those nine top-level lawyers turned CEOs, three received their law degrees from SMU in Dallas, two from Harvard, and one each from Duke, Notre Dame, Columbia and Emory.
Corporate management analysts and headhunters point to SMU law school’s long-standing emphasis on business law, especially international business law, and Harvard Law’s general prestige and focus on public policy as reasons their graduates seem to populate the corporate management ranks.
Says one SMU grad, David Dillon, who is now CEO of the grocery company Kroger:
“I went to law school not to be a lawyer but to study how society operates and to learn why we don’t kill each other. The rule of law has a lot to do with that.”
Murder bad. Profits good.
So why is the J.D. suddenly experiencing a renaissance in the Wall Street world? It seems to have a little something to do with our economy being in shambles. “Trial and error” has led corporate boards to try out a new kind of CEO:
“For many years, lawyers were overlooked for the chief executive spot because they were viewed as being too risk averse,” says E. Allan Lind, an expert on management leadership at Duke University’s Fuqua School of Business. “But now risk management is highly valued. So there’s a thinking that what we tried before—namely people with a finance background—didn’t work, so we need to try something else.”
It’s helped that general counsel increasingly have a more visible role at companies. Thank you, Sarbanes-Oxley!
Steiner says that the expanded role of general counsel due to increased legal and regulatory issues has raised the profile and visibility of those lawyers within the corporate setting.
“You may be the most capable person in the world, but if the board doesn’t know your name, you don’t have a chance at promotion,” Steiner says. “There are three people who are always at every board meeting—the CEO, the CFO and the GC.”
Of course, that means GCs are working a lot harder than before. While it’s still generally cushier to be in-house instead of Biglaw, the cushions get taken away if you’re head of the in-house department.
Of course, being CEO is no picnic either. One of the Harvard Law grads turned CEO mentioned in the article is Lloyd Blankfein of Goldman Sachs. It appears he hasn’t been quite risk-averse enough.
CEO, Esq. [ABA Magazine]