Executive Lawyers: Gatekeepers or Strategic Officers? / Adair Morse, Wei Wang, Serena Wu.

Format:

Book

Author/Creator:

Morse, Adair.

Contributor:

National Bureau of Economic Research.

Wang, Wei.

Wu, Serena.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22597.

NBER working paper series no. w22597

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Executive Lawyers

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Lawyers now serve as executives in 44% of corporations. Although endowed with gatekeeping responsibilities, executive lawyers face increasing pressure to use time on strategic efforts. In a lawyer fixed effects model, we quantify that lawyers are half as important as CEOs in explaining variances in compliance, monitoring, and business development. In a difference-in-differences model, we find that hiring lawyers into executive positions associates with 50% reduction in compliance breaches and 32% reduction in monitoring breaches. We then ask whether firms' optimal contracting of lawyers into strategic activities implies less lawyer gatekeeping effort. Using a design comparing executive lawyers hired from law firms to lawyers poached from corporations, we find that lawyers hired with high compensation delta (indicative of the importance of strategic goals in compensation contracts) do less monitoring, preventing 25% fewer breaches than are typically mitigated by having an executive gatekeeper. Reassuringly, lawyers do not compromise compliance.

Notes:

Print version record

September 2016.