Evaluating Your Legal Fund Administration: Best Value Tips to Consider

Nov 12, 2019

| Back-Office Services | Legal Fund Administration

The fund administration industry is a complex world, and regulatory burdens seem to grow with each passing year. This specialized work can be daunting, even for larger investment firms that have internal legal departments. Investment professionals interested in outsourcing this work should consider letting legal fund administration professionals worry about the rules and regulations – so they can concentrate 100% on productivity goals and meeting the firm’s bottom-line.

For boutique investment firms, having skilled and knowledgeable partners are even more important so internal resources can be dedicated to clients and increasing the firm’s operational bottom line.

When it’s filing day and there is a last-minute question or an unusual situation develops, it’s critical that large and small investment firms can rely on a team of dedicated subject matter specialists.

Managing Current Trends
The trend over the last few years has been that larger service providers are outsourcing work to foreign countries to cut costs or eliminating that service altogether. So, it’s more important than ever for investment firms, managers and fund families to gauge the depth and experience of current legal fund administration resources to lower their cost of total ownership.

Reducing Workload
Whether you’re a boutique investment firm needing outside professions, or a larger investment group that’s looking to complement an internal department, a great legal fund administration team should help reduce the time internal resources are spending to complete legal tasks. A proficient outsourced team should have lawyers and paralegals with years of experience working on corporate governance and regulatory filing responsibilities. They should also be able to produce those deliverables more efficiently than current processes.

If you are considering making a change to the fund, your legal administrator should be able to outline the rules, highlight any common pitfalls, note areas that may need counsel’s input, explain the forms or paperwork that will be necessary, and then draft that paperwork and put it in front of your investment firm’s staff for review.

This type of service streamlines the entire process from beginning to end, and frees the firm from having to dig through a mountain of rules so they can then refocus on client-oriented and revenue-generating goals.

Does your current legal fund administration team just passively wait for the firm to provide direction, or expect the firm and your outside counsel to provide it with documents? Perhaps it’s time to consider whether current services are saving you any time or money at all.

Best Value Differentiator
A time-tested way for investment firms to secure best value is making sure that legal fund administrators work hand-in-hand with the firm’s counsel. An outstanding legal fund administration team should be generating templates, drafts and other documents for every project a fund undertakes including contract forms, registration statements, and quarterly filings. They should also present a detailed, finished document to your fund’s counsel and internal executives for review, and be available to answer questions about the purpose and contents of those documents. It’s an important time-saver, and can help reduce the fund’s overall cost of ownership.

Additionally, if the firm handles legal administration internally or expects your counsel to provide documents for filing, a skilled legal fund administration team can narrow the scope of counsel’s role to that of review, rather than paying full associate or partner rates.

Another avenue of value-add that is less obvious, but just as important – the degree to which legal fund administration interfaces directly with the fund’s counsel. A full-service legal administrator with skilled, experienced attorneys on staff is able to minimize counsel’s time spent on operational emails and phone calls. What may have been an extensive phone call could be expedited when handled directly between subject matter specialists. If your current legal fund administrator wants your firm to handle communications with counsel, it might be time to consider whether this hidden cost is silently inflating operating expenses.

Deep Bench: Delivering Best Practices
Another often overlooked benefit of a skilled outsourced legal fund administration team is the deep level of dedicated professional experience that attorneys and paralegals have with the Investment Company Act of 1940 (’40 Act). Even the most experienced firm attorney may split time working on fund issues, mergers and acquisitions (M&A), and general securities work. But a dedicated outsourced legal administrator only works on fund issues, bringing a wealth of knowledge to the table on the nuts and bolts of daily operational requirements.

Further, a skilled,outsourced team works side-by-side with the fund’s accountants, compliance staff, and operations teams. Beyond being a simple repository of regulatory knowledge, a professional legal fund administration team combines an understanding of fund mechanics, with an appreciation of the actual practical effects of the rules and regulations. For example, the firm’s fund counsel may be able to tell whether a certain action is permissible, but a skilled legal administrator will know to warn about operational headaches that the otherwise permissible action may cost the firm – knowledge gained from actually working through those same headaches in the trenches.

Solving operational issues is key and where a skilled outsourced legal fund administration team provides real value. Does your firm’s current resource sit back and wait for direction or utilize expensive consultants to solve problems? If so, it might be time to make a change to find a resource that proactively listens to your firm’s needs, and offers workable, practical solutions based on years of subject matter expertise.


Ultimus provides comprehensive legal fund administrative services with a highly-skilled team of 40’ Act attorneys, paralegals, and other professionals who focus specifically on helping clients avoid unpredictable billing hours. Click on the Registered Funds tab on our Website to learn more.

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