A team of experienced and committed hedge fund lawyers play a vital role in guiding hedge fund managers through their various responsibilities and helping managers avoid devastating mistakes.
Choosing the right legal team can mean the difference between an emerging hedge fund’s success or failure. A hedge fund attorney is usually the initial point of contact for startup fund managers. The hedge fund managers work closely with the attorney to develop the fund’s structure and terms, in light of the fund’s investment strategies.
structuring the fund
The hedge fund attorney advises the managers on applicable regulatory obligations, including required filings, examinations and registrations. Once the fund’s terms and regulatory structure are defined, the hedge fund attorney will begin preparation of the fund’s offering documents (including the PPM, partnership agreement, subscription agreement, and certain regulatory filings).
Further, the hedge fund attorney will refer managers to other service providers, including administrators, prime brokers and auditors.
Ongoing legal support
After the offering documents have been finalized, the hedge fund attorney will act as an ongoing resource and will assist the fund on an as-needed basis with the legal and operation issues. Among the ongoing services that the hedge fund attorney will provide include the following:
- review marketing and promotional material;
- provide answers to investor questions;
- prepare amendments to fund offering documents as needed;
- prepare side letter agreements for strategic investors;
- answer structural and operational questions;
- assist managers with modifications to the fund; and
- advise managers on the eligibility of certain investors.
choosing legal counsel
Choosing a hedge fund legal advisor is among the most important decisions that an emerging manager will face. Prospective fund managers should seek for fund counsel with substantial knowledge of the hedge fund industry from both a regulatory and business perspective. It is also vital that the hedge fund attorney be committed to working directly with the fund manager through all aspects of the fund formation process.
In addition to experience, the cost of legal startup services is a key consideration when selecting counsel. Legal startup costs are typically born by the fund, and can cause substantial drag on the fund’s reported performance. Choosing a reputable and experienced boutique law firm can help keep formation costs manageable and provide direct access to the firm’s partners.
INSTRUCTIVE RESOURCES
Capital Fund Law Group has authored numerous investment fund publications, including instructive eBooks, white papers, blog posts and sample offering document excerpts with illustrative footnotes. These complementary downloads are dedicated to helping fund managers understand the legal fundamentals of launching and operating an investment fund.
Forming and Operating a Hedge Fund | an eBook
Written by the managing partner of Capital Fund Law Group, Forming and Operating a Hedge Fund provides an in-depth guide to assist emerging hedge fund managers through the process of successfully structuring, launching, and raising capital for a domestic or offshore hedge fund. Throughout the eBook, it highlights pitfalls that fund sponsors should watch for and suggests best practices to safely and effectively navigate the process of forming and operating a hedge fund.
ABOUT CAPITAL FUND LAW GROUP
Capital Fund Law Group is a boutique investment law firm focused on advising emerging and established investment funds on all aspects of formation and operation. We provide predictable flat-fee services for most of our engagements. Our legal team has extensive experience advising hedge funds, real estate funds and private equity funds throughout the United States in various structures and strategies. We also prepare debt and equity private placement offerings for companies in all major industry sectors.
FORMING A FUND
Call 212-203-4300 or email us to schedule a consultation with one of our attorneys to discuss the costs, timeline and regulatory considerations involved in forming a fund.
