Do you dream about heading up a big U.S. company? Consider law school. Yes, law school. According to an article titled CEO, Esq., in the May 2010 issue of ABA Journal Magazine, “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.”
Just when you thought Law Firm Land was your only option! (Though you’ll probably need to spend some time in a private law practice if you want to be a CEO).
“The law degree is today’s renaissance degree,” James Bradford, dean of the Owen Graduate School of Management at Vanderbilt University tells the ABA Journal. Bradford is also a former practicing lawyer and ex-CEO of United Glass Corp. and AFG Industries Inc., two large glass companies.
Is there a growing trend in corporate America to looking for leaders in law schools? This month’s ABA Journal points to the following stats in making the case:
• “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.” David Dillon is the chief executive officer of the Kroger Co., the largest grocery store chain in the country, according to Fortune, with revenues of $76 billion. He is a 1976 graduate of Southern Methodist University’s Dedman School of Law.
• 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.
The reasons for this trend? Those interviewed by the ABA Journal identify the following as some of the reasons:
• “Many of the best and the brightest over the past 30 years have gone to law school, so they are natural candidates,” according to Chad Holliday, a former CEO of DuPont and now a member of the Bank of America board of directors. “It is all about the feeder pool of candidates.”
• The Sarbanes-Oxley Act, requires top management officials in a public corporation to sign off and take personal responsibility for the accuracy of the company’s financial reporting, so top corporate officials with legal expertise is a plus.
• 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.
• There is increased value of risk management skills of lawyers, according to E. Allan Lind, an expert on management leadership at Duke University’s Fuqua School of Business.“For many years, lawyers were overlooked for the chief executive spot because they were viewed as being too risk averse, 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.”
• There are certain industries, such as those in highly litigious fields or with significant governmental regulatory oversight, where having a lawyer as CEO is logical, including the pharmaceutical industry (“Wall Street analysts applauded in 2006 when Pfizer Inc. promoted its general counsel, Jeffrey Kindler, to CEO, citing his management of the pharmaceutical giant’s expansive and burdensome litigation docket and its success in shepherding projects through the massive bureaucracy that is the U.S. Food and Drug Administration.”); financial industry (“On Dec. 15, 2009, Bank of America stunned Wall Street by naming Brian Moynihan as its top executive. Moynihan was a Boston corporate securities lawyer who went in-house for his client, Fleet Bank, in 1993 and then helped Fleet merge with Bank of America.”); insurance/benefits (“In 2007, WellPoint Inc., the nation’s largest health benefits company, named Angela Braly as its CEO. Just eight years earlier, Braly had been a partner at a St. Louis law firm before being named as WellPoint’s general counsel.”)
• “Corporate management analysts say they knew the lawyer-turned-CEO trend was legitimate when it expanded beyond the financial, pharmaceutical and insurance industries to other fields, such as airlines, retail sales, health care, global shipping and garbage disposal.”
• The CEOs say the skills learned in law school and developed in legal practice (constantly breaking down problems and analyzing issues are the core of a decision) can be applied in any profession or industry.
• “The private corporate law practice requires the lawyer to be an expert on the industry of their clients,” so Law Firm Land provides fertile training ground for the eventual move in-house.
Something to think about, if you’re considering law school, and if business is your thing. To hear about this topic, check out our podcast, Deciding Whether to Pursue a JD or an MBA: When it Makes Sense to Go ‘Two for One’.