Bye-Bye, Buy Side: Legal and Compliance Departures Spike Over Past Year

HFObserver tracked the moves of about 300 hedge fund and compliance professionals over the past 12 months.

Higher pay, less internal face time, no more sleep lost over insufficient client billable hours, and making the move from the at-your-beck-and-call service provider role to the coveted client buy side. These reasons generally make a decision to transition from a law firm to the buy side a very reasonable choice.

But over the past 12 months, the number of hedge fund legal and compliance professionals leaving the buy side — specifically, hedge funds — has more than tripled versus a year ago.

And most, including several hedge fund general counsels and senior compliance officers, have resurfaced at law firms. Other destinations have included investment banks, specialty financial service and risk/compliance firms, academic institutions, U.S. government/NGOs and asset management/private wealth management firms.

Hedge Fund Professionals Joining Law Firms (past 12 months)
Current Firm Current Role Prior Firm Prior Role Employee
Duffield Law Principal Citadel Attorney Clara Duffield
Lowenstein Sandler Partner Claren Road Asset Management Co-General Counsel Benjamin Kozinn
Fried Frank Senior Counsel D.E. Shaw Group General Counsel John Liftin
Simpson Thacher & Bartlett Staff Attorney Eton Park Capital Management Legal & Compliance H. Brendan Lee
Kirkland & Ellis Associate Fortress Investment Group Compliance Officer Giselle Sedano
Kirkland & Ellis Partner Highbridge Capital Management General Counsel Joshua Cohen
Latham & Watkins Associate Millennium Management Legal Associate Alena Thomas
Sheppard, Mullin, Richter & Hampton Attorney Och-Ziff Capital Management Legal Operations Frank Dal Lago
Shearman & Sterling Legal Perry Capital Legal Katina Gallo
Simpson Thacher & Bartlett Associate Two Sigma Investments Counsel Samuel Francis

Source: HFObserver Industry Moves Database, data sample.

Likely reasons for this trend at the senior level are strict noncompetes and not that many open GC and CCO roles. Generally, there is not as much turnover in these roles compared to other front office/investment roles.

Also many firms are looking to reduce overhead given lackluster performance. And several large hedge funds have started leveraging technology and machine learning techniques to automate nonsenior compliance roles.

Overall there are more lawyers and compliance professionals entering rather than leaving hedge funds, at a rate of approximately 4-to-1, and AQR Capital Management, Citadel/Citadel Securities, Man Group, Millennium Management, Och-Ziff Capital Management and Two Sigma Investments were among the most active legal/compliance hirers.

But the largest proportion of those accepting legal and compliance roles were sourced from other hedge funds, creating a musical chairs effect and muting the net inflow of legal/compliance talent to the hedge fund sector.

Meanwhile, very few lawyers and compliance personnel are ending up at fintech, healthtech, crypto-currency and other in-vogue start-ups and tech giants as compared to their front-office counterparts, especially those with quantitative and software development experience. Hedge fund lawyers and compliance professionals have developed investment expertise that is not needed outside of hedge funds.

Still, a few have found their way to health care, life sciences and blockchain solutions start-ups, with some even shedding their former lawyer titles as they take on business development roles.

Two Sigma senior compliance officer Alexander Rakitin joined life sciences firm Perceptive Advisors as chief compliance officer. Bridgewater Associates deputy chief governance officer and associate general counsel Erik Zwicker joined Roivant Sciences/Roivant NEXT as a principal. Och-Ziff Capital Management former assistant general counsel Emily Schultz is now a business development manager at blockchain solutions firm Axoni.

The HFObserver Industry Moves Database is compiled daily from publicly available sources and information sent to HFObserver (click here to access full listing of monthly job moves — subscription required). This report includes only nonadministrative full-time investment management roles, except with Citadel which shares some operational resources with its separate market-making business Citadel Securities. This report does not distinguish between voluntary and involuntary departures.