The lawyer most summoned by governments in financial distress is retiring after over four decades at Cleary Gottlieb Steen & Hamilton, leaving many hedge funds breathing a sigh of relief.
Lee Buchheit, a senior partner at the pedigreed New York law firm, has been instrumental in resolving almost every sovereign bankruptcy that has occurred in the modern era, from Mexico and Russia in the 1980s and 1990s to Greece and Argentina more recently.
In an email to clients and contacts on Tuesday, Mr Buchheit announced that he would retire from Cleary Gottlieb at the end of March, after 43 years at the law firm.
“I am retiring from the firm; I am not retiring from life. I will continue closely to follow developments in the international financial markets,” Mr Buchheit said in the email to clients.
The Pittsburgh-born, Cambridge-educated lawyer – who at one point planned to become a philosopher before choosing something more practical – has left an indelible impression on the world of government debt beyond the restructurings he helped orchestrate.
After Argentina’s 2001 debt default and the subsequent messy battle between Buenos Aires and Elliott Management, the hedge fund, Mr Buchheit helped pioneer so-called “collective action clauses” as a partial remedy. These are embedded in government bonds to allow a majority of creditors to force minorities to accept a restructuring agreement. Such clauses have since become ubiquitous in emerging markets.
“It’s the end of an era,” said Paul McNamara, an emerging markets bond fund manager at GAM. “He’s been involved in every major restructuring I can think of. If he ever writes a book I’d buy it sight unseen.”
More recently, Mr Buchheit took advantage of a legal loophole to retroactively fit CACs into Greece’s government debt, helping the country to ram through a record-breaking €200bn debt restructuring in 2012. Since then, the eurozone has decreed that all countries in the bloc should issue debt with CACs embedded.
Although the lawyer has on occasion represented creditors – most recently in advising a group of London hedge funds that own Sudanese debts – he has always preferred working on the side of debtor governments, arguing that it is simply “more fun”.
However, that has made him the bête noire of some funds that specialise in sovereign distress, who have argued that his scorched-earth legal tactics are detrimental to the health of the world’s financial system. Some say the sighting of Mr Buchheit at a country’s airport can be enough to cause its bond prices to quiver.
“Lee is admired by many and detested by some …Some think he’s the devil incarnate,” Whitney Debevoise, partner at Arnold & Porter, and a former executive director at the World Bank, told the FT in 2013.
However, Mr Buchheit’s impending retirement might not mean that his hedge fund nemeses can now celebrate.
Current, ongoing mandates – such as for Barbados, which last year announced plans to try to tackle the world’s fourth-biggest debt burden – will remain with Cleary Gottlieb, and will be likely handled by partner Rich Cooper, another well-known restructuring lawyer. Yet Mr Buchheit is expected to take up a job in academia, and remain involved in the industry he has helped shape over the decades.
He has been a prominent voice in the debate over how to resolve Venezuela’s government debt default, for example, as well as on Italy’s debt problem.
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