What is funds law?!
Funds are pools of money that come from investors. These funds are managed so that they are invested in a way that makes those investors more money! Funds lawyers will form these funds (usually formed as a limited liability partnership) and manage them for the investors (by representing the fund when it buys and sells the investments).
There are lots of different investment funds that exist. The most common are private funds such as private equity funds, venture capital funds and infrastructure. Other funds include real estate funds, listed funds, retail funds and hedge funds.
Private Equity Funds
Private equity firms (usually set up as a limited liability partnership) will raise money from investors (usually high net worth individuals) and pool that money into a fund - which is known as the private equity fund (the "Fund"). The Fund then buys private businesses that the private equity firm believes it can improve by restructuring it. The Fund then sells the business (hopefully) at a profit (making the investors of the Fund money!).
Venture Capital is a part of private equity where investors put money into start ups. It is hoped that these start ups will be sold or taken public eventually and such investments are high risk due to the uncertainty around whether the start up will succeed. However, if the start up is successful, it can reap very high rewards for the investors!
A hedge fund is also a pooled investment structure. A hedge fund manager will raise money from investors and invest those funds according to whatever strategy they've promised to use. Hedge funds invest in a variety of markets with the hope of making a profit.
What do funds lawyers do?
Funds lawyers tend to work in smaller teams - it's a niche area. The work of a funds lawyer includes:
advise and prepare the legal documents to set up the fund in the first place such as companies house forms and a partnership agreement to form the LLP, preparation of a 'private placement memorandum' and 'investor subscription agreements';
advising clients on how to structure funds and negotiate the terms on which investors will invest in those funds;
act on behalf of the fund when it comes to buying and selling investments;
advise and prepare documents on behalf of clients throughout the fund-raising process - documents include: offer materials, partnership agreements, management and compensation arrangements and closing fund formation documents;
conduct due diligence exercises; and
advise clients on regulatory and compliance issues connected to the funds and any issues relating to performance.