Arbitration Award in Connection with an Unceremonious Departure from Oaktree Capital Management Precludes Legal Malpractice Claim Against Attorney Retained to Advise on Departure

The partnership agreements and similar governing documents of many hedge fund management companies provide that disputes among partners will be subject to mandatory arbitration, sometimes with a potential appeal to court.  But that potential appeal often turns out to be a right with little force: arbitration awards are rarely overturned on direct appeal, and – as this article discusses – can even have preclusive effect in collateral litigation.  See, on the former point, “A Prime Broker that Fails to Diligently Investigate the Sources of Funds in a Hedge Fund’s Margin Account May Be Jointly and Severally Liable, with the Fund and Its Manager, for Fraud by the Manager, to the Extent of Funds in the Account,” Hedge Fund Law Report, Vol. 3, No. 47 (Dec. 3, 2010).

To read the full article

Continue reading your article with a HFLR subscription.