Initially spurred by legal and regulatory requirements of investors such as public pension plans, the use of side letters has grown tremendously in the past 20 years. Prior to the pandemic, overall side letter leverage tilted toward managers, as markets boomed and investors encountered oversubscribed funds. Now, however, the tide has turned, as investors are acquiring greater leverage to request terms in side letters and managers are conceding points to obtain investments. This first article of a three-part series discusses the importance of effectively managing side letters and the challenges fund managers face in doing so, as well as the first step of effective management – forward-thinking negotiation. The second article will explore which functions or persons should be responsible for side letter management and how to effectively document obligations and triggers, plus the need for better technology to assist in those efforts. The third article will consider effective tracking systems; the need to test compliance; and the most favored nation election and monitoring process. See “HFLR Webinar Explores Business Issues Arising From Coronavirus Pandemic (Part Two of Two)” (May 21, 2020).