His father was the U.S. consul stationed there in the mid 1960s. He was seven when they arrived and remembers living on Prospect Avenue and attending Sacred Heart Elementary Catholic School. His father’s many diplomatic posts helped lead the Dublin, Ireland-born, U.S. citizen to the top legal job at the world’s largest financial rescue organization.
“My father was in the foreign service, so that gave me an interest in international affairs. When I graduated from law school, I moved to New York for a year and a half before I went to Tokyo."
In the late 1980s, Japan and much of Asia was in a boom. Hagan found himself working for a law firm where he was in the rather ironic position of advising Japanese companies on aquiring American ones. He returned to Southeast Asia in the 1990s under dramatically different circumstances as the bust lead him to work in Korea and Indonesia.
He recalls a valuable lesson from that time and one that no doubt guides much of his work with the IMF today — a country’s laws are only as strong as the institutions that enforce them. “I remember doing work in Indonesia during the Asian crisis and they had a bankruptcy law that was derived from the Dutch bankruptcy law having been a Dutch colony. While, however, the Netherlands had a very good bankruptcy system, I think it is fair to say at that time the bankruptcy system in Indonesia was almost non-existent and the problem was not the design of the law but the implementation.
“That is why we are always concerned about making decisions on designs of law in the context of a crisis.”
The equation is a simple one, laws can be written very easily, but a decree is nothing without enforcement. If the systems are not in place, the people are not trained to work with the laws, then the decrees cannot be carried out.
“The implementation is critical . . . changes to the law can be effected relatively quickly, but enhancing the institutional capacity of a country takes much longer,” Hagan says.
The IMF works with its sister organization the World Bank. Hagan points out, the bank is a development institution that helps educate and train the people of a country creating institutional capacity.
There are 185 member countries in the IMF and the fund has three main functions. The first is proactive: monitoring economic and financial trends and developments, and giving advice. It provides funding to countries with balance-of-payment difficulties, and gives countries technical assistance and training. The overall goal is to strengthen each country’s financial system. Recently, a fourth counter-terrorism function has been added. The IMF looks into the financial systems of its member countries to help create systems that are safe from money laundering.
It is in times of crisis that the IMF makes, or rather, spends its money. Today’s global economic meltdown has seen the fund spring into action on a number of fronts. “It’s clear that the rhythm of the work has quickened,” Hagan says. “But this is what we do, this is what we feel we have a particular expertise in doing. We are trained to basically be the fire department and to respond quickly. You can imagine that we do contingency planning when we see potential [crises] brewing, therefore we are in a position to, not necessarily hit the ground running, but we’re not completely flat-footed.”
The team that he relies on to help stabilize economies is even more diverse than Hagan himself. “We have 185 members and we have staff from almost all of those members. The profile of lawyers in our department are people who generally have had experience either in private practice or in the public sector in international law. Because of the fact that we work on financial matters we are interested in lawyers who have a financial background.”
One of the upsides of having a group as diverse as the IMF legal team is the interaction of lawyers with different backgrounds that provide an interesting problem-solving mix. “One of the most fascinating things about my job is working with a team of lawyers from both [common] and civil law traditions. They have different ways of addressing crises and I enjoy that interaction.”
Hagan also has experience with common and civil law traditions. He did his JD at Georgetown University in Washington, D.C., his undergrad was at King’s College in London, before moving on to the London School of Economics where he did his master’s in international economic policy. While the background is great, the experience of having been on teams going into struggling countries to try and rehabilitate failing financial systems, is even more important.
“These countries are not necessarily interested in the views of me or my colleagues, but what the experiences have been with other countries. What we can tell them as to what other countries have done, common pitfalls, every country has differences but at the same time there are things to be learned . . . there [are] similarities in all things, it is the best practices and experience we have helping other countries that provides some value.”
It is still a legal department, and even though the work is unique, there are, as Hagan says, “similarities in all things.” This means the team at the IMF works on processes, writing contracts, language, advice, and all of the other issues a legal department would have. And consistency is the goal with the IMF team as it is with all of the best legal departments. “It is really important for an institution like the IMF to be, and to be perceived to be, as operating within a coherent legal framework, where there is a consistency in decisions, where there is transparency and accountability — all of those are principals that we take very seriously and it occupies a significant part of my work.And well it should, the IMF works with the very financial systems that hold countries together. It has to ensure that countries can repay loans without becoming destabilized. “Because IMF loans come with conditions,” Hagan says, “conditions that come with economic adjustment, it is natural that countries try to find their financing from other sources first.
“Often when they come to us . . . they are in relatively desperate straights. You can image the adjustment programs needed, the economic triage, so to speak, can be more painful. But we are obviously more cognizant of the need to, on the one hand, have an adjustment program that addresses these problems, but at the same time, to minimize the social costs.”
Today for Hagan a good social balance is more important. As a team member, he would be gone for weeks at a time to foreign locales, but now most days are spent in Washington, D.C., heading the team and looking for the next hot spot. As the head of the legal department, the father of three gets to spend more time at home and that suits him just fine.