History of Waterdeep - Age IV, The Return of the Lords:

One day to the Courts of the Lord Magister came two people masked and robed as the Lords of Waterdeep of old. Where they came from no one knew, but they appeared in the Castle's Great Hall where the Courts were, and commanded the Lords Magister to leave the city forthwith. Laughing, the Lords Magister refused, whereupon the shorter of the masked intruders (the lady Shilam, apprentice to Ahghairon and his undeclared heir as first Lord of the City) blasted them with lightning and fire, and their very thrones were shattered and toppled.

The taller of the two intruders (Baeron) then called for the heads of the noble houses to come to them, or leave the city forthwith and forever, if they cared not to come by nightfall. All in the Courts heard, and the news was cried in the streets.

The surviving nobles came, reluctantly and with bodyguards, expecting such a summons to be a trap. Baeron spoke to them and the crowd of curious townsfolk that had also come, saying, "this must not happen again." If Waterdeep was to be safe once more, he told them, all must support what he and his fellow Lord now planned, as they had supported Ahghairon in the past. The two would choose others to be Lords as before, he said, and they would rule in secret, as before - save for himself. He removed his mask, and said, "I am Baeron. I would be Lord as Ahghairon was before. I would be safe in this my city again." And the folk of Waterdeep there agreed. Shilarn, still masked, commanded that the houses of the Two Lords Magister be Outcast. There was protest, and she raised her hands that had blasted the thrones, and it was still again. And the house of Gildeggh and of Zoar were outcast.

Peace returned to the city, and Waterdhavians to their labors. To inhibit discovery of who the Lords were, Baeron selected certain men of character whom he knew well, and appointed them Magisters ("Black Robes," they were soon called, from their robes of office) under the Lords, to judge and apply the laws of Waterdeep in daily affairs. These Magisters he paid well, to raise them from temptation, and gave lodgings to those who feared for safety to dwell among the people. To so serve, he told the city, was a burden, not a proud misuse of authority, and if any wished to no longer serve, or were found wanting, they were not to be vilified, but accorded respect. And over the Magisters the Lords sat in their Court, to correct and overrule the judgments of the Magisters. Baeron told the people that none were to decry or belittle any judgments of Magisters that the Lord saw fit to alter or cast aside. If any thought ill of the offices or those who held them they could turn back to the rule of sword and whim, and perish as had those before them. Before the Lord's Court Baeron encouraged people to speak freely for the length of a short candle's burning, without fear of chastisement or reproach from the Lords for anything said, as long as they spoke openly and answered questions or opposing views put to them by any there. Thus, he held, just grievances of folk would be heard, no matter how small the matter or lowly the speaker. And so it was. Slow to take hold, until people knew it for careful justice, but enduring beyond Baeron's time, and beyond Shilarn's time, and beyond the time of their daughter Lhestyn "The Masked Lady," who wed Zelphar Arunsun of Neverwinter, and was mother to Khelben "Blackstaff' Arunsun, a Lord of Waterdeep today, who knows the secrets of long years as Ahghairon did. And as the years have passed, Waterdeep has grown in size and variety, flourishing with good trade under the tolerance and protection of strong defenders and good government. The years passed not without troubles, varying from the Godswar (when Waterdeep played host to gods dying and ascending) to such occurrences as a green dragon assailing the Field of Triumph (part of a plot by the Knights of the Shield to overthrow the Lords' Rule), but the city and her peoples survived and prevailed against all strife. The Lords' Alliance provides continued safety for all the settlements of the northern Sword Coast and those inland, with Waterdeep as the heart of the alliance. Though it can be matched in size or commerce, there is no city the Realms over that compares to the sheer variety of life and experiences found in fair Waterdeep, Crown of the North.