Hey companies, want to avoid litigation? Hire a lawyer as CEO. Want to make bold moves? Look elsewhere.
In recently published research about how lawyer CEOs differ from nonlawyer CEOs, law professor M. Todd Henderson and colleagues sifted through data on 3,500 CEOs at nearly 2,400 publicly traded companies over a 20-year span.
The researchers found that companies run by lawyer CEOs face much less litigation, and when they are sued, they win more in court and settle less often. However, only companies in litigation-heavy fields like pharmaceuticals can see a net positive in the end from having a lawyer CEO. On the flip side, a lawyer CEO’s cautious approach might harm low-litigation industries like publishing by steering a company away from risks that turn out well.