Thread by @cppinvest

1/ Why I Hate Lawyers

with apologies to all you lawyers.

Back in the day there were really just two big off-the-shelf Order Management Systems (OMS) that most mid-sized shops used. Big firms often have their own customized solution. We used one of the two big ones.

2/ These things ain't cheap: $200k/yr for us for the Full Monty (compliance, accting etc.). These systems are 28(e) eligible (soft-dollar safe harbor in '34 Act), so we paid using commission credits. And in our heyday, we'd generate $300-400k annually in soft dollar credits.

3/ You have to keep track of soft-dollar credits carefully lest you run afoul of Johnny Law. It was almost a full-time job. And there are portals from other software vendors the allow you to track and pay invoices in one central location, which we used. Thank God.

4/ So our large, pricey software OMS vendor took their sweet time moving us to a web-based solution which sucked for me because it meant that we had to manually kick off the end-of-day and start-of-day file transfer process. Literally needed to man the machine to hit a button

5/ so we could send trade files to custodians and make sure our books matched. If you didn't know, in the institutional world, if there is a trade error and the manager is in the wrong, the manager reimburses the fund or client. Believe me, I've had some sweaty moments

6/ over the years when I thought we might be on the hook. Like for seven figures. So, operationally you always want share counts to match and trades to settle in a timely manner and at a shop with multiple strategies (us) you only do this through an OMS.

7/ Moving to a web-based OMS meant no longer needing to man the desk every day at 4:15 to kick off the file transfer. Because we were deemed too small, we were not high on the priority list for getting the new web app. So I went shopping for another vendor and found a great one

8/ We exercised our 90 day exit clause and notified the big bad OMS vendor we were leaving. Which triggered an avalanche of 57,000 incoming "why are you leaving?" and "let us work with you" emails. Literally up until day 89. They were relentless.

9/ On Day 1 with new OMS vendor (one of the great small businesses of all time), they put out a "welcome" press release where I was quoted as being "thrilled" to be a client of new OMS-co. Well. . . nasty old OMS company switched from trying to win me back to. . .

10/ threatening to sue me out of existence. Which they actually did. And here was their logic: "Your 90 day notification was off by two days. So technically, you triggered your automatic extension and you are now on the hook for the full next year's billing." Not kidding.

11/ They sue me for $375,000, next year's bill plus some old invoices. And here is where it gets fun. The second reason we fired these clowns was because they never accounted for their payables properly. We were always fighting over credits and what had been paid and

12/ what was double-counted etc. Like, I would spend hours every month reconciling where we were in terms of outstandings. Suffice it to say, I was on top of things. They hire a contingency lawyer thinking we'll crumble and settle for half. I use my regular attorney and we

13/ gear up for the initial meeting between the sides. I generally tell my lawyer my view of things - not only did we meet the deadline but they had ample opportunity to challenge the exit and never did until after (their prerogative) and kind of that we don't owe them anything

14/ on past bills. I leave it at that. Meanwhile I start reconciling and literally put a spreadsheet together that clocked every payment from every broker to them over a six year period. Invoice by invoice, dollar for dollar. Turns out, they owe me $143,000.

15/ I keep that to myself and we walk in to the OMS vendor's conference room to meet with smug CFO (in Allbirds), geeky accounting intern and slimy contingency lawyer. Slimy lawyer lays out why we are wrong on the anniversary date termination and

16/ why I owe them next year's invoices and the overdue amounts. I ask him calmly if he can show me the accounting on why he thinks we are overdue on anything. Geeky intern starts talking and gets the first nine things wrong. I say nothing. My lawyer is starting to sweat.

17/ He thinks I lied to him and we're about to get crushed. I pull a Dr. Rosen Rosen from Fletch and open my backpack and proceed to deliberately spill all my spreadsheets on the table. I gather up the papers, go through year by year and say "your math is wrong,

18/ you owe me $143,000." Dead silence. Slimy lawyer looks at sweating intern and gets the dead trout look. He turns to me and says "Um, we need some time to review your findings." Take all the time you need champ. I have all day. We leave. Weeks go by. We trade emails.

19/ They question one or two of my accounting entries which I swat away with solid backup in three seconds. Another month goes by, more emails, I find another $25,000 they owe me and say nothing. Slimy contingency dirtbag requests another meeting to "try and settle things."

20/ At the "settlement conference" he thinks $150k for his client will clean things up. I let him know I found another $25k and tell him we're not paying and we plan on telling the world how shitty their bookeeping is and how we will happily fight the termination notice.

21/ A week goes by, slimy realizes he will have to work and fight for his check and decides it isn't worth it. My lawyer proudly announces this to me thinking I'm going to be thrilled and I say "Great, where's my $170k?" And my guy seriously said "That's an uphill battle."

22/ Uphill battle? I have them dead. They screwed us with their incompetence and indirectly hurt our funds and clients and tried to damage our reputation. And my guy wants no part of this fight. Didn't even want to try. "They could win on the 2-day notification miss."

23/ So a firm whose accounting is so bad they lost $170,000 of my dollars is going to argue we missed a deadline by two days and did nothing to assert that for 89 days straight and I could lose that? Okay. I'll take my chances.

In the end I dropped it under the time better spent theory. But how come the nasty lawyers always show up against you and are never with you? Where are they?