COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Consolidated Statements of Financial Condition. As of December 31, 2019, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of December 31, 2019 and December 31, 2018, the Company had aggregate unfunded commitments to invest in funds it manages or to support certain strategic initiatives of $387.4 million and $267.6 million, respectively.

Guarantees

The Company guaranteed loans provided to certain professionals to support these professionals' investments in affiliated co-investment entities, permitting these professionals to invest alongside the Company and its investors in the funds managed by the Company. The total committed and outstanding loan balances were not material as of December 31, 2019 and 2018.

Performance Income

Performance income is affected by changes in the fair values of the underlying investments in the funds that we advise. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, public equity market volatility, industry trading multiples and interest rates. Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest.

Senior professionals of the Company who have received carried interest distributions are responsible for funding their proportionate share of any contingent repayment obligations. However, the governing agreements of certain of the Company's funds provide that if a current or former professional does not fund his or her respective share for such fund, then the Company may have to fund additional amounts beyond what was received in carried interest, although the Company will generally retain the right to pursue any remedies under such governing agreements against those carried interest recipients who fail to fund their obligations.

Additionally, at the end of the life of the funds there could be a payment due to a fund by the Company if the Company has recognized more performance income than was ultimately earned. The general partner obligation amount, if any, will depend on final realized values of investments at the end of the life of the fund.

At December 31, 2019 and 2018, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax distributions, which may differ from the recognition of revenue, would have been approximately $233.4 million and $469.0 million, respectively, of which approximately $175.1 million and $364.4 million, respectively, is reimbursable to the Company by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. As of December 31, 2019, if the funds were liquidated at their fair values, there would be no contingent repayment obligation or liability. As of December 31, 2018, if the funds were liquidated at their fair values, there would have been $0.4 million of repayment obligations, which the Company recorded as a contingent repayment liability that is presented within accrued carried interest within investments and performance related compensation payable on the Company's Consolidated Statements of Financial Condition.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

Leases

The Company leases office space and certain office equipment. The Company's leases have remaining lease terms of one to 11 years. The tables below present certain supplemental quantitative disclosures regarding the Company's leases as of and for the years ended December 31, 2019, 2018 and 2017:


	Classification	As of December 31, 2019
Operating lease assets	Right-of-use operating lease assets	$	143,406
Finance lease assets	Other assets(1)	1,787
Total lease assets		$	145,193

Operating lease liabilities	Operating lease liabilities	$	168,817
Finance lease obligations	Accounts payable, accrued expenses and other liabilities	1,651
Total lease liabilities		$	170,468

(1) Finance lease assets are recorded net of accumulated amortization of $0.6 million as of December 31, 2019.


		For the Year Ended December 31,
	Classification	2019		2018		2017
Operating lease expense	General, administrative and other expenses	$	28,814	$	30,497	$	26,122
Finance lease expense:
Amortization of finance lease assets	General, administrative and other expenses	304		260		—
Interest on finance lease liabilities	Interest expense	39		39		—
Total lease expense		$	29,157	$	30,796	$	26,122


Maturity of lease liabilities	Operating Leases		Finance Leases
2020	$	30,314	$	504
2021	29,453		504
2022	30,618		471
2023	27,062		144
2024	23,913		122
After 2024	50,600		—
Total future payments	191,960		1,745
Less: interest	23,143		94
Total lease liabilities	$	168,817	$	1,651

As of December 31, 2019, the Company has entered into an operating lease for office space of $10.5 million that is expected to commence in 2020 with a lease term of eight years.


Lease term and discount rate	As of December 31, 2019
Weighted-average remaining lease terms (in years):
Operating leases	6.5
Finance leases	3.3
Weighted-average discount rate:
Operating leases	4.00	%
Finance leases	3.39	%


Other information	Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	31,509
Operating cash flows from finance leases	58
Financing cash flows from finance leases	311
Leased assets obtained in exchange for new finance lease liabilities	778
Leased assets obtained in exchange for new operating lease liabilities	49,833