Ropes & Gray chairman R. Bradford Malt and Republican presidential nominee have a two-decades-long friendship that has benefited both men.

By Victor Li Romney’s Lawyer

sk Ropes & Gray chairman R. Bradford Malt when he first thought that W. Mitt Romney could be president of the , and Malt will say that that impression was formed at one of their early meetings, 22 years ago. In 1990 Bain & Company looked ready to become a casualty of a stagnant economy and its Afounding partners’ hubris. Five years earlier, the eight founding partners had sold 30 percent of the consulting company to an employee stock option plan for $200 million. The plan borrowed from four banks to fund the . Then a recession and a scandal involving Bain & Company client Guinness p.l.c. struck, and the consulting firm ran into trouble repaying the loans. Consul- tants were fleeing from the sinking ship. With insolvency looming, the consulting firm turned to Romney, then 43. He had worked there before leaving in 1984 to form Bain Capital Inc. Romney knew he had a tough task in front of him. He had to convince banks to forgive some of the company’s debt. He had to persuade the founding partners to give back millions to the company. Most importantly, he had to inspire confidence so that the company’s lifeblood, its consultants, wouldn’t leave. That’s where Malt came in. Geoffrey Rehnert, then–general partner at Bain Capital, had met and befriended Malt through a mutual friend around 1988, and recommended him to Romney. Malt, just 35 at the time, recalls being immediately struck by how poised and confident Rom- ney was. In a Saturday morning all-hands-on-deck meeting right after Malt came aboard, Romney gathered everyone in Bain’s largest conference room and laid out his vision. Romney promised financial transparency, and vowed to arrive early and stay late every day. Romney implored everyone to give everything they had, Malt says, and offered to let anyone who didn’t want to make that commitment leave R. Bradford Malt, with no hard feelings. Only one person left. “The rest of us,” Malt says, Ropes & Gray Chairman, “were ready to follow Mitt off a cliff.” at right, wears two hats: From then on, says Rehnert, Malt, who had been selected largely for advising Romney and his experience in leveraged finance, was involved in every aspect of the managing the firm.

Photograph By Shawn G. Henry

50 June 2012 | americanlawyer.com The American Lawyer | May 2009 51 restructuring. He helped convince the Fed- parts company Gilbert Engineering Co. Inc. experience growth in both profits per partner Products Inc. to L.P. in 2005, Lake City Winter Olympics. Things looked giving him sole discretion over investment deci- eral Deposit Corporation to for- after Bain’s usual outside counsel, Kirkland & and head count between 2007 and 2011. (The Ropes represented both Butler and Apax, with bad when it was revealed that Romney had sions for his blind trust. (A blind trust removes give nearly $10 million in debt and persuade Ellis, had a conflict. Bain invested just $3 mil- others were Jackson Lewis, McGuireWoods, Malt making sure that each side was walled off filed his taxes as a part-time resi- investment decision making from officials’ founding partners to give back nearly $100 lion of its own money and partnered with Oak Paul, Weiss, Rifkind, Wharton & Garrison, from confidential information about the other. dent in 1999 and as a nonresident in 2000, and hands, shielding them from conflict-of-interest million to the firm, while implementing a re- Industries Inc. to buy 85 percent of Gilbert in and Williams & Connolly.) Ropes’s revenue “That’s highly unusual,” says Butler. “But that’s received a $54,000 tax break on his Utah home allegations.) “Mitt and his wife have total faith capitalization plan that in the end forced the a worth $100 million. Four increased every year during the recession ex- how much we trusted him.” (Apax owns a ma- because he classified it as his primary residence. and trust in Brad,” says White, now a volunteer founders to give up control of the company. years later, Bain turned a hefty profit, selling cept for 2009, when it declined by less than 1 jority stake in ALM Media LLC, publisher of Malt and Montgomery worked round- on Romney’s presidential campaign. “Otherwise, its interest to Oak for $125 million. percent. Today, the firm has nearly 1,000 law- The American Lawyer.) the-clock to prepare for the hearing before they would not have given Brad full control over Within a few years of the Gilbert deal, yers; 2011 gross revenue ($903 million) and Malt’s talents didn’t go unnoticed at the the Massachusetts board of elections. “We their finances.” Bain Capital had become one of Ropes’s profits per partner ($1.54 million) were both firm. At 39, Malt was the youngest Ropes part- basically had to encapsulate Romney’s entire Still, Malt’s performance as trustee has come most important clients. Ropes had been at firm record highs. ner to be tapped for the powerful policy com- life into three weeks and look at everything, under criticism. In January, after the campaign a -centric, 288-lawyer firm with “We could have not opened in new geogra- mittee. A decade later, he assumed the chair- including his money,” says Montgomery. He released Romney’s 2010 and 2011 tax returns small offices in Washington, D.C., and phies, especially since it takes a while to ramp manship. (Previously, the most senior position and Malt prevailed by arguing that Romney’s amid public pressure, Malt defended Romney’s Providence in 1992, according to National up,” says Malt. “We could have not hired laterals. was managing partner; but Malt and John tax preparers at PricewaterhouseCoopers LLP Swiss bank account and Cayman Islands invest- Law Journal’s NLJ 250. But by the mid- We could have cut associates, and that would Montgomery split those duties, with Malt had made a mistake. They produced moun- ments, among others, emphasizing that both 1990s, half of Bain’s deal work was going have resulted in a better number. But we chose taking the more senior role as chairman and tains of financial records to make their case, were legal, standard components of a high-net- to the firm, and Ropes & Gray was on its to invest in ourselves. And it’s paying off now.” Montgomery becoming managing partner.) and put Romney on the stand for four hours. worth investor’s portfolio. way to becoming a national powerhouse. Montgomery also prevented the state Demo- also faulted Malt in The firm opened offices in New York in cratic party from getting a full look at Rom- January for what reporter Floyd Norris called 2001, in 2002, Silicon Valley What has been the payoff for Romney, as Malt says his friendship with Romney ney’s finances, convincing the state Ballot Law a mistake in the Romneys’ 2010 returns. Norris he has turned again and again to Malt? Rom- was really cemented in 2002, during a crisis Commission to limit the scope of the investi- said the Romneys’ capital gains were overstat- ney declined to be interviewed for this article. that nearly derailed Romney’s gubernatorial gation to the 1999 and 2000 tax returns. “Brad ed, leading the couple to pay more in taxes than LEFT: Ropes & Gray opened Via a spokesman, he called Malt “a longtime bid. Massachusetts law requires that candidates helped plan the overall strategy and was the they owed. “It’s ironic that The New York Times a office in 2007. trusted adviser to my family but, more impor- for governor live in the state for seven years main person coordinating with Mitt,” recalls can’t decide whether it thinks Governor Rom- BELOW: left to right, tantly, a good friend to Ann and me. I value prior to running. Democrats had challenged Robert White, a former cofounder of Bain ney paid too much tax or too little tax,” says then–Lieutenant Governor his friendship as much as his good advice and Romney’s Massachusetts residency because he Capital and chair of Romney’s transition com- Malt. “I hired an expert team at a Big Four ac- Kerry Healey, Brad Malt, and sound judgment.” But in a 1995 American had spent three years in Utah in the late 1990s mittee after his election as governor. counting firm to prepare the tax returns. They then-Governor Romney. Lawyer article highlighting Malt’s legal prow- helping to turn around the troubled 2002 Salt Afterwards, Romney named Malt trustee, did a good job, and I relied on their work.” ess [“45 Under 45,” December 1995], Romney said, “Brad could take out Bain & Company ultimately avoided bank- your liver, if he needed to ruptcy. “Brad and his team did a terrific job on save your life, and you’d Consistent Strength the restructuring,” says Rehnert, who left Bain never even know it.” Since 2007, Ropes & Gray has been one of five firms to maintain growth in profits per partner and head count each year; gross revenue to start Audax Group in 1999 and asked Malt A hint of what Malt dipped slightly in 2009, but has otherwise been in an upward trend. to represent his new company. “He won Mitt’s brings to the table comes confidence, as well as that of my colleagues.” from Peter Lamm, who Malt’s confidence in Romney was likewise was general partner of Gross Revenue revenue per lawyer profits per partner forged in the crisis. “Mitt is a true leader and the investment partner- is someone who can deal with the intractable ships managed by Butler Ropes & Gray Ropes & Gray Ropes & Gray Am Law 100 Average Am Law 100 Average Am Law 100 Average problems this country has,” says Malt. But the Capital Corporation and rescue of Bain & Company was just the start. a protégé of company 1,000 1,000 2,000 The bond between the two men helped propel founder Gilbert But- Malt into the chairmanship at Ropes & Gray, ler. Lamm recalls that it while the Bain relationship has been a trans- was Malt who prevented 800 800 formative one for the firm. In the past year the Lamm’s departure from 1,500 relationship has evolved still further, with Malt in 2005, and in 2008, according to the Butler’s firm in 1994 from turning ugly. Lamm taking an increasingly public political role as NLJ 250; it acquired New York says Malt got them to realize that an acrimoni- the trustee for Romney and his family’s trusts. firm Reboul, MacMurray, Hewitt & Maynard ous departure that played out in the papers or, 600 600 If Romney succeeds in his presidential bid, it’s in 2003 and IP boutique Fish & Neave in 2005. worse, in the courtroom was not in their best likely that he would turn to his most trusted More recently, the Bain relationship has interests. Instead, Malt helped them draft let- 1,000 inner circle of advisers, where Malt has long taught Ropes the importance of going global— ters together to Butler’s investors and to final- been a mainstay. and of taking some risks. When Bain and other ize Lamm’s separation agreement. “It definitely 400 400 private equity firms started to expand to Asia a could have gotten ugly,” says Lamm. “But Brad MILLIONS OF DOLLARS decade ago, Ropes’s management realized that has an amazing but subtle gift of knowing how THOUSANDS OF DOLLARS THOUSANDS OF DOLLARS

Malt’s successful handling of the Bain it needed to increase its global footprint, too, to manage a process to make sure it doesn’t get 500 crisis was a coup for Ropes & Gray, which had opening an office in Tokyo in 2007, then in to that place where it gets ugly.” When Lamm 200 200 previously handled only low-level employment , , and . In March looked for a private equity attorney to repre- law work for Bain Capital. As the recession of the now 977-lawyer firm announced plans for sent his new venture, Fenway Partners, he says the early 1990s eased, Bain Capital turned to an office in Seoul, its eleventh overall. there was only one name on the list: Brad Malt. Malt to handle a number of major deals. In his Expanding at the height of the financial Butler, for his part, says that he trusted 0 0 0 first leveraged buyout deal for Bain in 1992, crisis was a gamble, but it turned out to be a Malt to protect Butler Capital’s interests. In 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Malt helped the firm take over cable television good one. Ropes was one of only five firms to fact, when Butler sold Contech Construction fiscal years fiscal years fiscal years

52 June 2012 | americanlawyer.com The American Lawyer | June 2012 53 Road Trip Daniel Feheley, the tax private equity leader have moved to the right in recent years. Malt reform law, which contains many of the same Since meeting in 1990, Ropes & Gray chairman R. Bradford Malt and Massachusetts governor and presumptive presidential nominee at PwC who prepared Romney’s tax returns, rebuffs the notion that Romney’s political posi- features that President Barack Obama used in Mitt Romney’s professional lives have been closely linked. Here’s a look at some of their career highlights. declined to comment on the returns, but he tions are a moving target. “The reason I have his health care reform law, as an example of praised Malt’s work as trustee. “Brad’s not a had to sell investments from time to time is be- how Romney is good at solving the unsolvable. tax lawyer, but he knows a lot about taxes,” cause third-party discretionary asset managers Within the firm, Malt is likewise low-key 1977: Mitt Romney, 30, joins Bain & Company. says Feheley. “I’d explain a tax issue to him, bought new assets, or because companies in the about his close professional and personal re- and he’d start asking me questions where, at portfolio have entered new businesses or geog- lationship with Romney. His forty-seventh- first, I’d think he didn’t understand, only for raphies, or because Governor Romney has ar- floor corner office inside Boston’s Prudential 1992: Romney returns to 1979: Brad Malt, 25, Bain Capital, tapping Malt on me to realize he understood and was actually ticulated a position on an issue,” Malt says, “not Building is as full of tchotchkes as a flea mar- joins Ropes & Gray. an LBO of Gilbert Engineering five steps ahead. He was asking questions I because of any change in political views.” ket, but it contains just one piece of Romney Co. Inc. By the mid 90s, Ropes hadn’t considered yet.” memorabilia: a blue campaign placard from was handling nearly half of Malt’s closeness to Romney has also raised Romney’s 2002 run for governor. Evidence of 1990: Romney Bain’s U.S. work. returns to Bain & questions about a potential conflict of inter- At first glance, the two men would seem to his relationship with Bain and other private Company Inc. as CEO; est. ABC News pointed out in December that be polar opposites. Romney, 65, is athletic and equity clients, however, is readily apparent. hires Malt to help 1987: Malt under federal law, only a financial institution telegenic. Malt, 57, but looking the elder of the Dozens of deal toys and trinkets from Bain stave off bankruptcy. becomes a that has not done business with the federal of- two, is the lanky and bespectacled lawyer who Capital line the window sill. partner at ficeholder can serve as trustee. The Romney majored in applied mathematics at Harvard Colleagues at the firm say they appreciate Ropes & Gray. camp conceded to ABC that Romney’s blind University. Romney has a reputation for being that Malt doesn’t wear his political involve- 1984: Romney leaves trust did not meet the federal requirement, ments on his sleeve. “Brad Bain & Company to but it pointed out that the trusts were okayed is incredibly respectful and co-found Bain Capital. by Massachusetts’s State Ethics Commission understands that while we all when Romney became governor. The Romney have different opinions, we campaign confirmed that Romney will comply need to work together,” says with the stricter federal rule, if elected. Malt, diversity committee head Di- for his part, said that he would have to step ane Patrick, whose husband romn ey:F 1977,R omn ey 1994: Malt named to policy down as trustee in that event. is Massachusetts Governor committee, the youngest Questions have also been raised about , an unabashed member to take the position. whether the trust is really blind when it comes Obama supporter. The two to removing decision making from the Rom- lawyers have never spoken 2002: Romney, in his Massachusetts gubernatorial neys. In April, the Times reported that Ann about their politics, she says. bid, enlists Ropes to fend off Democratic attack on Romney’s state residency. Post-election, Malt Romney’s blind trust invested $10 million in Malt’s coleader, John Mont- amil becomes trustee for Romney’s blind trust. Solamere Capital LLC, a PE fund started by the gomery, is also a Democrat.

e Sc hia y/c orbis ;1990/92,J ustin e Romneys’ eldest son, Tagg, in 2008—months af- In fact, Malt is known ter Romney dropped out of the GOP presiden- more around the office for tial race. Malt told the Times that he invested in his pranks than his politics. Solamere without the Romneys’ knowledge and There was the time that Malt, 2004: Malt that he did it because he trusted the founders. awkward when he tries then an associate, sent out a memo on manag- becomes chairman Romney and of Ropes & Gray. “I had confidence in their talents, integrity, and Malt in 2010. to be funny. Malt’s ing partner’s stationery listing everyone who intellect,” he told the Times. sense of humor within failed to attend a firm event and castigating Malt says that he has done his job without his firm is so legend- them for not showing up. “There was a line

v o / g e tt y any influence from the Romney family. “When ary that he’s been compared to Ashton Kutcher out the door of people who wanted to apolo- Mitt wasn’t in office or running, I felt my fidu- during his Punk’d days. Romney and his wife gize to [then–managing partner] Truman Cas- ciary duty was to make prudent, diversified in- have four cars, including a pair of Cadillacs. ner,” recalls Malt. One time, as a partner, he imag e s ;2002, vestments,” says Malt. Malt doesn’t own a car and walks to work every hid a summer associate’s suits so that the asso- In the year since Romney announced his day, even when it rains. Malt is an oenophile, as ciate had to wear his biking outfit around the presidential bid last June, Malt has worked to well as a coffee drinker who tries to buy from office for about half an hour. keep his trusts free of politically toxic assets. Bain Capital–owned Dunkin’ Donuts as much What will happen if Romney wins in No- brian “When [Romney] decided to run, I felt my duty as possible. Romney, a devout Mormon, ad- vember? Presidents often bring lawyer friends

sn y d e r /c orbis ;2011/12, was to make prudent investments that were con- heres to the religion’s ban on both beverages. to the White House as advisers: Obama sistent with his political views,” he says. Malt has Still, the two have a lot in common, start- tapped Valerie Jarrett, former president of 2011: Romney announces divested from pharmaceutical firms that make ing with the way they approach problems. a Chicago real estate development firm, as a second run for president drugs related to birth control or abortion or “Both Brad and Mitt are extremely intelligent senior White House official. George W. Bush of the United States. that are engaged in embryonic stem cell re- and highly analytical, but they are also both brought lawyers Harriet Miers and Alberto 2012: In February, search, and has unwound bets on Chinese cur- very aware of human nature and what makes Gonzales into his administration. Malt meets the press rency. In early 2011, he sold investments relat- people tick,” says Rehnert. Malt says he’s not interested. “I have a

to explain Romney’s ri ck tax returns and his ed to Fannie Mae and Freddie Mac after they Malt declined to talk about his personal stewardship obligation to leave the firm in the role as trustee. fri e dman / n ew s c om came under fire for their role in exacerbating political views, except to identify himself as a best possible position for the next generation Illustration by William Rieser the recent financial crisis. traditional Massachusetts Republican. And he of partners,” he says. But if a President Rom- Ironically, in shifting investments, Malt won’t comment on Romney’s shift toward more ney asked Malt to come to the White House, draws attention to one thing Romney has tried conservative views on hot-button issues like would he really say no? to deflect attention from: the fact that some of abortion, gun ownership, and gay marriage. He his positions on issues like abortion appear to defends Romney’s Massachusetts health care E-mail: [email protected].

54 June 2012 | americanlawyer.com The American Lawyer | June 2012 55