The role of in-house counsel has changed dramatically over the last five years, especially in the Alternative Asset Management industry. When these organisations are looking to appoint their first in-house lawyer, they are not just looking for a company lawyer but a business partner, someone who is expected to manage risk but who is also able to provide commercial, business advice on a broad range of issues that may arise in this complex industry.
Role of the lawyer in Alternative Asset Management
- Transactional support: Most in-house counsels are, by background, transactional lawyers (Corporate M&A, Private Equity, Fund Formation, Capital Markets, Debt Finance, Structured Finance, and Credit). These individuals will be able to run transactions from start to finish as well as manage external law firms to reduce costs.
- Regulatory advice: the regulatory landscape in Alternative Investment has been subject to a lot of change over the last five years, AIFMD was implemented in 2014 and now MIFID II is next in line. These changes have increased the cost of outsourcing, especially in an institution where there is no in-house legal and regulatory support.
- Day to day: A lawyer with a certain degree of experience will be able implement governance and best practice processes internally; they will also look at any issues that may arise in the company on a day-to-day basis. Some of these issues can be resolved internally (cost reduction) or externally with better managed legal spend.
- A dedicated transactional lawyer who is brought in-house will manage risk but also advise the business from a commercial perspective and therefore help the business to reach its goals
- A regulatory advisor will ensure compliance with all regulations and is also a trusted advisor who liaises with all regulatory bodies. This will help the business to attract new investors who are looking for a well-structured organisation where legal and compliance support is integrated into the business.
- A trusted advisor who can answer or find an answer to any issues that may arise in a business environment.
- An experienced in-house lawyer will be able to manage external legal costs and ultimately reduce these costs for the firm. Managing some of the work in-house does not remove the need for external legal support, however it does mean that the external legal spend and quality is better managed.
- Assets Under Management (AUM) have reached a level that justifies an in-house legal budget, typically from $500 million plus in AUM.
- Increased number of employees.
- New fund launch or fundraising.
- The company deals with high volume, complex and multi-jurisdictional transactions and needs to liaise with regulatory bodies in different countries.
- The cost for external advice has become substantial.
For more information about the current legal and compliance market please do not hesitate to get in touch.
Emanuele is a Senior Consultant at FRS who specialises in in-house legal recruitment in the UK and internationally. He has successfully completed mandates on behalf of investment banks, traditional/alternative investment firms including hedge funds, private equity firms and venture capital funds.