Accession

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A much under-estimated trick, especially in the negotiation world. To “accede” to a contract is to agree to be bound by the terms of an existing contract mutatis mutandis as if it applied to you, without all the tedious mucking about replicating it, formatting it, and generally having to produce 45 pages of brand-new, but basically identical-to-the-last one, guff.

In modern investment management the same fellow may make similar arrangements on behalf of a number of different funds, clients or subdivisions of itself, depending on how its investment management operation is set up. Notwithstanding that everyone knows it is all “between us girls”, the investment manager will, on the record, hotly deny this and insist, for the sake of optics, that each contract is utterly distinct, sacrosanct, and that for example, Hackthorn Capital Partners III LLP cannot possibly know of or be in any way associated with the legal terms binding Hackthorn Capital Partners IV, even though the directors, agents, depositories, portfolio managers, swap counterparties and brokers for each will be exactly the same. We must allow our masters of the universe their comforting fictions.

Most managers just have their poor negotiators generate mountains of replica documents, with all their foibles, idiosyncrasies, pedantries, and avoidances of doubt. As that sacred covenant navigates the vicissitudes of life it will inevitably require amendment, and the more iterations of Hackthorn Capital Partners fund there are, the greater the clerical job of keeping them all up-to-date and consistent with each other will be.

For those fund managers not wedded to the idea of some kind of spooky quantum entanglement — and many are — the idea of accession can relief the suffering of their documentation unit. This is simply to create a single set of master documents to which all funds, brokers and counterparties can “accede”, and agree to be bound by as they are from time to time amended, perhaps by countersignature for good order. This keeps the ongoing paper war at a minimum.

Nonetheless, the attractions of accession still seems to elude people in the industry whom you might think would know better. For, them the JC has devised the following analogy: imagine you are in the restaurant scene from When Harry Met Sally, and your contract is the menu. To “accede” to a contract is to say “I’ll have what she’s having”.