John Schumacher '80This Q & A is the complete version of the one that appears in the Fall/Winter 2011 issue of Nexus.

John Schumacher, JD 1980, East Coast Fund Management co-founder: on luck, entrepreneurship and making the world-and the law school-a better place.

Nexus: How's business these days?

JS: We've been operating for about 2 years. We launched our first fund in April 2010. Two weeks later, Greece started to wobble, and ever since then we've been dealing with the same issue of Greece wobbling from a trading/investment standpoint, because that's what we do. We've just been dealing with same shaky fiscal European situation. So that's made investors nervous, and raising money is tricky. But having said that, everything's settling quite well.

Nexus: Is it a tough time to be a hedge fund manager in a post-Madoff world?

JS: The post-Madoff effect has a lot to do with regulatory oversight and surveillance, which is verging on oppressive for a smaller business like ours. It really does take a tremendous amount of time to get all the regulatory, supervisory and audit requirements, especially to the extent you do business in the US. It's actually quite onerous. It's not that I have trouble with new regulations, but they never seem to take away any of the old ones. It's just a continuous layering of new ones.

Nexus: How do you think your company stands out from others in the industry?

JS: I think we stand out because of our 50 years of [combined] experience that [co-founder] Mike McBain and I have had in managing trading rooms. The main part of the business is certainly making money through prudent investments, but the context within which that takes place is a very risky market. So risk management is a very strong number 2 to the number  1 of making money.  Mike and I are very, very experienced risk managers. That's what sets us apart.

Nexus: How did your law background help you in the market side of your career?

JS: The main benefit of my legal background in my career is that I was never intimidated about legal things. You walk in a room with a bunch of lawyers and legal documents and it can be intimidating. And a lot of lawyers play on that. But I've never had to deal with that. I could read documents, whether it was mathematical, science or legal. I didn't have to sit and take instructions. And I didn't get railroaded.

Nexus: You're back at the law school for an LLM. Why?

JS: Intellectual stimulation. Law school was my favourite part of my 10 years in university, because I was around really smart people, remarkable classmates and professors. My criminal law prof was Marty Friedland, that first-year course in criminal was my favourite course that I ever took. And Bruce Dunlop was my torts prof. Torts answers all those questions. You find out what everything is: negligence, nuisance and trespass, it explains everything. Ralph Scane was my property prof, that's a whole other topic about stuff that you wondered about and never understood, and it all gets revealed. The people were so smart.

Nexus: Any advice for our upcoming JD/MBA grads?

JS: I think you have to distinguish yourself, and have someone think for a moment about you, rather than put your CV in the garbage pail. It isn't enough to have all these degrees. Just like Mike and I say we're great risk managers. We have all these credentials but we're great risk managers. We have lots of people come through this office, and they're all qualified….it's almost like a branding or marketing task, which I never had to deal with.  I have an JD and an MBA, and at one time, that was good enough. But that isn't good enough anymore.

Nexus: So what is it you're looking for when you're hiring people?

JS: Something that distinguishes them. It could be sports, or an interesting thing in their background. We hired a young fellow who played for the Lebanese National Rugby team. Once you see that on the resume, it's very easy to break the ice and have a conversation.

Nexus: Is entrepreneurship everything you'd thought it would be?

JS: It's harder, but also a lot more satisfying than I thought it would be. Harder because you have to do everything yourself. When you have thousands of people working for you, a new packet of Post-It notes shows up on your desk. When you're running your own business, you have to actually go down to Business Depot to buy them.  And that's difficult and time-consuming.  Managing the business is quite extensive. But on the other hand, the great thing about entrepreneurship is that everything is yours, and you're not working for a bunch of shareholders. You're actually creating value for the company. And that has a good feeling to it.

Nexus: Making a $1 million gift to the Faculty of Law must be a good feeling too. What do you hope that will accomplish?

JS: I had the benefit of having a successful career, and I chose to give back to my two graduate schools, Ivey School of Business and the U of T Faculty of Law. If I had to direct it, I would buy new windows for Falconer Hall. In case you haven't noticed, they need to be painted…there's a lot of tired stuff at the law school. I hope my gift makes a bit of difference in a big budget.

Nexus: What other causes do you support?

JS: My wife started up a charity called the Attachment Association of Canada. Attachment disorder is a very common disorder affecting children who were raised in orphanages... But increasingly it's viewed as also affecting kids in very big families with parents who don't have enough time to dedicate to their kids. It's becoming more well-known and understood, and we have set up the national organization in Canada for raising awareness, identifying, training and then accrediting therapists.  The other charity is called Orphan's Hope, which focuses on financially assisting parents who wish to adopt, because it's an intense and expensive process. We have four children and our youngest is adopted.

Nexus: If you had to do it all over again, would you change anything?

JS: No.  I was fantastically lucky to get involved on a trading floor, which, at that time, was not a very common job for a JD/MBA to take. But I was always curious about the markets and it was just a very, very good stroke of good luck. I had a fantastic career and I wouldn't change that for the world.

Nexus: Desert island album?

JS: Led Zeppelin 2

Nexus: Favourite junk food?

JS: St. Louis Chicken wings. It's really the only junk food I ever eat. One hour later I regret it, but while I'm eating it's fantastic.

Photo: Jeff Kirk