US Treasury general counsel Robert Hoyt says that effective deployment of his legal team has been key to managing the workload during the financial crisis. Marisa McQuilken reports
It is 7am on 18 September and Robert Hoyt, general counsel at the US Treasury Department and the busiest lawyer in Washington DC, sounds chipper as he barrels through the laundry list of crises he has helped manage during the last several weeks.
He’s praising his team, running down some of the nuts and bolts of the work he has handled and chatting about his old days at Wilmer Cutler Pickering Hale and Dorr. The tone is light for a lawyer who has just managed the legal work on the biggest corporate bailouts in US history.
At 7:29, however, his press aide breaks in. It is time to go – now. Within a minute, Hoyt is off the phone and, presumably, back to work.
Within 24 hours, the Treasury would announce that it would prop up the US financial system with a sweeping plan to buy out bad mortgages from faltering banks. For all the lighthearted conversation, Hoyt is clearly up to serious business. Since March Hoyt, the top legal adviser to Treasury Secretary Henry Paulson, has led the department’s legal team as it has crafted bailouts for Bear Stearns, Fannie Mae, Freddie Mac and American International Group.
The 44-year-old former WilmerHale partner and associate White House counsel might be forgiven for betraying strain as his workload and the panic over the financial system have mounted. But colleagues who have worked on the deals say Hoyt has been a calming force as dozens of lawyers from federal agencies and private law firms have worked to stem the crisis.
Over a chaotic weekend of meetings earlier this month, complaints and arguments festered as lawyers and key executives for Fannie and Freddie met with government lawyers and officials to review details of the bailout plan. “There was mass confusion on the other side,” says Edward Herlihy, one of the partners who led the 17-lawyer Wachtell Lipton Rosen & Katz team working with the Treasury. “Bob was the guy that got in the centre of it and directed things and made them happen. He was working around the clock. He never slept. He was always in his office, but he was always calm and reflective, and very cool under pressure.”
Fannie’s general counsel, Beth Wilkinson, who worked across from Hoyt during the Oklahoma City bombing trials a decade ago, says knowing his work helped her during the tense discussions over Fannie’s future, and she considers him to be thoughtful and a good listener. He became her main point of contact during the crisis. “He was always accessible, and he would return my calls if he needed to,” she says. “When you are in this very pressured, quick, volatile situation, from a lawyer’s perspective that is very meaningful.”
Hoyt’s situation is a novel one for a Republican lawyer in an administration that, until recently, was not known for aggressive regulatory action. In some ways, the bailouts are turning eight years of policy upside-down. But friends and colleagues say that although he is conservative, Hoyt does not let political leanings trump common sense.
WilmerHale partner Reginald Brown, a former special assistant to President George Bush and associate White House counsel who recommended Hoyt for the political post, says his former colleague “was someone who believed in the President’s agenda, but is not the kind of guy who would let ideology get in the way of sound legal reasoning”.
When asked how he is managing the crisis, Hoyt sounds a bit like a consultant wielding an organisational chart. “When you get to some of these extremely busy times, it is very much a divide-and-conquer strategy,” he says. That means, he likes to delegate: for the financial crisis, he is relying on a core senior team that includes deputy general counsel John Knepper, counsellor to the general counsel Stephen Albrecht, and assistant general counsel for banking and finance Laurie Schaffer.
Meanwhile, the department – which includes 2,000 lawyers, if all agencies that are under the Treasury umbrella are counted – still has to complete its work on other issues, including counter-terrorism, foreign investment in the US, and routine litigation. “Some of us get very focused on what the immediate, pressing issues of the day are,” Hoyt says, while others have been asked to stay on top of the everyday responsibilities of the department.
The organisational challenge of deploying so many lawyers is something Hoyt says he enjoys. “I very much like the management. A lot of lawyers don’t. A lot of people will tell you that lawyers are lousy managers.”
He became experienced in management early on in his career: he was one of the youngest-ever members of WilmerHale’s management and executive committees when he was at the firm: “It is something I enjoyed, the business of law.”
When it came to the financial meltdown, however, Hoyt reached outside for extra help. He decided to bring in the Wachtell team to help on the Fannie and Freddie bailout, saying he needed lawyers with expertise in scrutinising securities contracts. “That is not a skill set you would expect to find in the Government,” he says.
Wachtell’s expertise has helped with what Hoyt says has been a major task: designing the new financial structures of the embattled corporations and understanding how the Treasury’s and the Federal Reserve’s actions will impact on the companies’ securities.
Hoyt says he chose Wachtell because he has worked with some of the lawyers before and has “great confidence in the firm”.
It is unusual for the Treasury to bring in private outside counsel, and Hoyt says this is the first time he has done so during his time there. Wachtell partner Harold Novikoff, one of the partners leading the Wachtell team, says the firm is charging the Treasury “less than 1%” of what it would normally charge and has described the work as pro bono.
During his Senate confirmation hearings in November 2006, Hoyt told the Senate Finance Committee that maintaining the integrity of the markets was one of the Treasury’s most important roles. Now, as some critics say federal bailouts are undermining that integrity by helping those who do not deserve it, he defends the steps the department has taken.
“I guess I would say this, which is that I do not think any corporation would look at Bear Stearns’ situation and set out purposely to go on that course,” he says.
Hoyt, an Ohio native, got his bachelor’s degree at Cornell University and his JD at the University of Pennsylvania. He joined WilmerHale as a summer associate in 1988, made partner at 33, and by 40 was in management. He and his wife, Alysia, a lawyer at the Drug Enforcement Administration, have an eight-year-old son. He left WilmerHale in 2005 to become associate counsel in the White House and spent about a year there before President Bush nominated him to be the Treasury general counsel.
Despite his recent workload, he has made time to have lunch with friends such as Gorelick and to spend time with his family. He admits to overseeing the family grill, although on other kitchen matters, he defers to his wife – “a tremendous chef”.
“Sometimes I wonder if he has a clone,” says Brown, the WilmerHale partner.
A clone – or several – would be handy right now.