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A Guide to Starting Your Hedge Fund by John Thompson, Erik Serrano Berntsen

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Chapter 6Laws, Contracts, and Lawyers

The first thing we do, let's kill all the lawyers.

Dick the Butcher in William Shakespeare's Henry VI

Don't Kill Your Lawyer

The well-known line about killing all the lawyers in Shakespeare's Henry VI is frequently misinterpreted as support for disdain of lawyers. In fact, however, when taken in the context of Henry VI, Shakespeare is actually demonstrating that without lawyers there would be no order and justice.

Shakespeare's nugget of wisdom also applies to starting and running an investment firm. Although you may feel like killing yourself at times, let alone your lawyer, while reviewing various drafts of agreements and contracts, a positive relationship with legal counsel will not only make your efforts in launching and managing an investment firm easier, but getting the proper legal framework in place early will allow for easier management of the firm during the various life events it may experience later.

Based on our own experience, partnering with quality legal counsel is invaluable. Given ever-increasing legal costs, fund founders may be tempted to spend a little less by relying on lawyers who are less experienced and/or established. We have found that any marginal savings to be gained by going cheaper are not worth the loss of expertise, practical advice, and relationships that respected fund lawyers have. Additionally, there is an implicit signalling effect when a fund associates itself with quality service providers that can ...

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