Private‑equity investors have lodged a formal complaint against the prevailing fee‑sharing model that lets fund managers bill back investors for the legal work that creates the vehicles. The Institutional Limited Partners Association (ILPA), representing pension and sovereign wealth funds, argues the practice pushes costs beyond reason and forces them to absorb fees that could otherwise be negotiated by 2022.

ILPA cites the explosive growth of the sector—from $550 bn in 2000 to roughly $8 tn in 2022—as the reason buyout groups no longer face the same financial constraints that once justified the model. It points to Kirkland & Ellis, which last year crossed $10 bn in revenue, as an example of how legal fees have ballooned alongside deal volume for investors worldwide.

ILPA proposes a cap on fund‑related legal, administrative and compliance spend—whichever is lower between $10 mn and 0.05 % of a fund’s target size. Above that threshold, it calls for an equal split between managers and investors, coupled with mandatory transparency on billing and a competitive selection process for counsel to reduce conflicts and protect investor interests across the industry.

By forcing a more balanced cost structure, ILPA believes fund managers will feel less pressure to inflate legal fees, potentially curbing the rise of law‑firm revenues that have surged alongside private‑equity fundraising. The proposal also aims to curb conflicts of interest after recent scandals over firms buying assets from themselves in a tough market for investors and regulators to ensure compliance.