Fund managers rarely complain that their lawyers are wrong. They complain that they’re slow, expensive and unwilling to say what they would actually do.
For a fund without an in-house legal team, that matters. Every week a deal drags on costs momentum, and legal fees come straight out of fund returns. Good deal counsel should help deals close faster, not be a cost the team works around.
Here are six standards worth holding your lawyers to.
1) A clear recommendation, not just a list of risks
An investment committee has to make a decision. A long memo that sets out every possible risk without saying which ones matter doesn’t help it do that.
Good advice tells you:
- what the risk is
- how likely it is to happen
- what it would cost if it did
- what the lawyer would do in your position
Experienced counsel has seen how deals like yours play out. That judgment is what you’re paying for.
2) Due diligence scoped to the deal and the mandate
A full-scope review isn’t always proportionate. A follow-on investment in a company you already know doesn’t need the same depth as a first investment in a new sector.
Before diligence starts, agree:
- which risks matter most for this deal and this mandate
- which areas need a full review and which need a red-flag check
- what the report will look like and when it’s due
- what triggers a deeper look
A focused red-flag report the investment team can read in an hour is usually more useful than a long one nobody finishes.
3) Investment documents that don’t start from a blank page
If your term sheet, subscription agreement and shareholders’ agreement are drafted from scratch on every deal, you’re paying for the same work repeatedly.
A fund-specific document set should include:
- standard term sheet and investment agreement templates
- your preferred positions on key terms, such as board rights, information rights, pre-emption and anti-dilution
- agreed fallback positions, so negotiations move quickly
- a short guide to which terms are negotiable and which aren’t
This shortens negotiations and keeps your terms consistent across the portfolio.
4) Specialist reviews run in parallel, with one person accountable
Most deals need input from several specialists: corporate, tax, regulatory, employment and sometimes competition law. Run one after the other, these reviews add weeks.
Run them side by side instead, with one lawyer responsible for:
- coordinating the specialists
- spotting where findings affect each other
- pulling everything into one summary for the investment team
You should never have to be the one joining up advice from different lawyers.
5) Portfolio protection built into the documents
The hardest legal moments for a fund often come after the deal closes. A portfolio company stops reporting, a founder resists change, or the business needs emergency funding.
Investment documents should already deal with:
- clear reporting obligations, with a simple template and realistic deadlines
- board appointment rights and reserved matters
- good leaver and bad leaver provisions that can actually be enforced
- the process for removing or replacing a CEO
- bridge funding and emergency decision-making
It’s much easier to agree these terms at investment than to fight over them in a crisis.
6) Fees you can budget for
Open-ended hourly billing makes it hard to manage fund costs, and harder to explain them to your own investors.
Ask for fees agreed per deal phase:
- term sheet
- due diligence
- transaction documents
- closing and post-closing
If the scope changes, the fee conversation should happen before the extra work, not when the invoice arrives.
A practical way to start (before your next deal)
We recommend putting together a simple fund legal playbook:
- your standard investment documents and preferred positions
- a due diligence scope template by deal type
- a portfolio governance checklist (reporting, board rights, leaver terms)
- a list of specialists you can call on, and who coordinates them
- agreed fee ranges per deal phase
With a playbook in place, each new deal starts from your standards rather than from scratch, and your counsel can focus on what’s actually different about this one.
Bottom line: the right deal counsel makes deals faster, cheaper and easier to defend to your investors. Expect clear recommendations, proportionate diligence, consistent documents and predictable fees, and hold your lawyers to it.
