A hydraulic circuit supplies pressurized hydraulic fluid to and from a torque converter that is operatively associated with a lockup clutch. The torque converter is disposed upstream of an outlet regulator that maintains a predetermined pressure in the torque converter. Power transmission in a powertrain can be directed through the torque converter during a hydrodynamic mode and can be directed through the lockup clutch during lockup mode. To switch between the hydrodynamic mode and the lockup mode, the hydraulic circuit includes a diverter valve to selectively direct pressurized hydraulic fluid between the torque converter and the lockup clutch. When operating in the lockup mode, the diverter valve further diverts hydraulic fluid discharged for the torque converter to bypass the outlet regulator disposed downstream of the torque converter.