The Investment Management & Private Funds Practice Group counsels investment advisors, private fund managers and institutional investors on the ever increasing range of complex structural, financial, legal and regulatory issues that impact their businesses. Our goal is to leverage our depth of experience to provide timely, practical, and cost-effective solutions to individuals, institutions and businesses throughout the financial services industry.
Hirschler Fleischer is honored to have been selected by HFMweek Magazine as a finalist in the category of “Best Onshore Law Firm – Client Service” for the past three years—the only regional U.S. law firm to have achieved this distinction. Several of the partners in our Group have been recognized by their peers in Best Lawyers in America.®
Our Group brings a multi-disciplinary approach to our work for investment management clients—including expertise in investment advisor regulation, other securities laws, tax planning for both non-profit and taxable organizations and ERISA compliance. Additionally, the Group enlists the services of other Hirschler Fleischer attorneys with specialized expertise in mergers and acquisitions, joint ventures, employment law, business succession planning, estate planning and bank and broker-dealer regulation to assist our clients with related matters.
Registered Investment Advisors
We routinely assist registered investment advisory clients to navigate state and federal rules on compliance issues arising in start-up phases and day-to-day operations. Our clients include a sizeable number of independent advisors with assets under management exceeding $1 billion. Our regulatory advisory services address a host of issues covering topics such as custody of client assets, agency cross transactions, performance advertising, conflicts of interest practices and disclosures, solicitor arrangements, personnel trading policies and soft dollar practices. Our lawyers have provided representation to registered investment advisors and their personnel in investigations and disciplinary actions, as well as obtaining interpretive guidance, no-action letters and other exemptive relief from the SEC and state securities agencies.
We counsel clients in matters such as:
- Preparing traditional investment management agreements, crafting hybrid arrangements such as model portfolio agreements, and developing innovative structures for investment advisors seeking to provide customized investment portfolios for participant-directed ERISA plans, with the advisor assuming full ERISA fiduciary responsibility.
- Structuring investment management and plan consulting agreements with both conventional ERISA pension plans as well as 401(k) plans and other participant-directed ERISA plans.
- Assisting investment advisory clients that are combining with or acquiring other financial services firms, or investment professionals transitioning between advisory firms.
- Counseling advisory firms regarding compensation arrangements with key personnel, including carried interest participation and other profit sharing arrangements.
- Advising registered broker-dealers in converting to registered investment advisor status and in becoming dual-registered.
- Advising a registered investment advisor traditionally focused on high net worth accounts in developing an outsource chief investment officer (OCIO) division to service institutional investors.
Private Fund Managers
One of our core areas of expertise is assisting registered and non-registered investment managers in the formation and operation of alternative investment funds. Our clients range from multi-strategy funds of funds to private funds with specialized investment strategies in asset classes from real estate and natural resources to commodities and traditional long-short equity. We also have experience with offshore blocker and feeder structures favored by tax-exempt and foreign investors, and with special investor arrangements, including co-investment funds, separately managed client accounts and client investments in the manager.
Through extensive contacts with regulators at both the federal and state levels, we assist fund managers in meeting their business objectives more efficiently. We also enjoy strong relationships with accountants, administrators, third-party marketing firms and compliance consultants serving the fund industry.
We have counseled clients in matters such as:
- Representing an emerging hedge fund manager in structuring and negotiating an investment by a “first loss” hedge fund sponsor.
- Advising real estate funds and funds of funds in their formation and capital raising, including investment advisor registration for several of the fund managers.
- Representing a subsidiary of a national bank in developing a private equity pledge fund in compliance with Volcker Rule restrictions on bank sponsorship of private funds.
- Representing a global private equity manager in negotiating a separately managed account agreement for the management of private equity assets for a top US public pension plan.
Endowments and Other Institutional Investors
Our Group services the unique legal needs of large institutional investors—endowments, pension plans, fund of funds and family office. As an example, we provide cost-effective legal due diligence particular to areas of contractual, tax and fiduciary risk faced by institutional investors’ investing in private equity and hedge funds, as well as direct ownership and development of investment real estate. Our institutional investor clients have invested approaching $1 billion in the past two years across all asset classes in reliance on our reviews and negotiations of investment documents. This representation gives us unique insights among law firms as to current trends and best practices in the investment terms being offered by fund managers.
We counsel clients in matters such as:
- Negotiating side letter agreements with fund managers tailored to the institution’s needs—which may range from avoiding or minimizing unrelated business taxable income (UBTI) to receiving enhanced financial transparency and reporting to obtaining special withdrawal rights.
- Advising institutional investors electing to invest on a separately managed account basis both in the U.S. and abroad, including negotiation and preparation of the relevant legal documents on their behalf and provide legal due diligence on the manager.
- Assisting institutional investors’ hedging and portfolio management activities, including negotiating ISDA and other prime brokerage agreements as well as third-party administration agreements.
- Developing Investment Policy Statements and other operational documents for investment committees to manage and clarify their fiduciary responsibility.
Our Group has developed significant expertise in secondary transactions involving alternative investment funds, including funds investing in venture capital, private equity, real estate, real estate operating companies and natural resources. Our representation in this area is focused on identifying contractual risks and other areas of exposure in selling and buying secondaries, and how those liabilities are most appropriately apportioned between buyer and seller. We also have worked with numerous fund managers on their transfer and admission agreements for substitute investors. We strive to work efficiently with and respond promptly to other participants in these transactions, understanding that these transactions are time-sensitive and require multiple parties to coordinate their efforts in order to successfully close.
As part of our focus on the private equity secondary transactions, we assist in organizing an annual panel discussion on trends in the secondary industry as part of the University of Virginia Darden Private Equity Conference.