Stan Druckenmiller, one of the top- performing money managers of the past three decades, discovered a hard truth when he started investing in other hedge funds: Most don’t treat their clients fairly.

Partnership agreements frequently leave investors on the hook for legal fees associated with the misconduct of fund employees, or allow managers to unilaterally suspend redemptions for any reason, Gerald Kerner, Druckenmiller’s lawyer since 1997, wrote in a paper presented yesterday to a group of endowments and foundations.

Now Kerner is fighting back, pushing for changes in an industry where managers wield clout with their investors and typically charge the highest fees in the asset-management business. He is urging investors to push for contract changes and refuse to invest with funds that won’t agree to change their terms.

The unfair provisions “can cost investors many millions of dollars down the road if not remedied,” Kerner wrote in the 14- page paper titled: “Hedge Funds: Problems Under the Hood.”

Paula Volent, senior vice president for investments at Bowdoin College presented that paper yesterday at the NMS Management Inc. conference in Scottsdale, Arizona. She’ll also talk about it on Jan. 29 at Morgan Stanley’s hedge-fund conference at the Breakers in Palm Beach, Florida.

Top Performer

Kerner declined to comment beyond the contents of the paper, as did Druckenmiller, 60, who managed part of the endowment of Bowdoin, his alma mater, for many years. Druckenmiller, a former chief strategist to billionaire George Soros, managed one of the top-performing hedge funds in the industry at Duquesne Capital Management LLC, gaining an average of 30 percent annually from 1986 to 2010.

“I prefer to give investment dollars to sponsors whose documents match their good character so that in the unlikely event down the road that the contents of the documents matter, they provide the protection that I want to have,” Kerner wrote.

Kerner wants documents changed to make clear that managers are responsible for any legal fees that result from employee misconduct, even if the manager did nothing wrong himself, because that “comes with the territory of being in charge and being paid fees to be in charge,” he wrote.

Suspending Withdrawals