What Private Equity firms need to tell Limited Partners about legal costs

These days, Private Equity investors are asking tougher questions of the firms they back. Returns remain under the spotlight, but LPs are now pressing just as firmly on fund governance. Legal costs have become part of that test. According to ILPA, 55% of Limited Partners (LPs) believe current reporting on fees and expenses does not provide the transparency they require. And with 2025 global Private Equity fundraising reaching $592 billion as of June, the lowest in seven years, competition for capital is only sharpening the focus.

For Private Equity legal and finance teams, pressure is high. LPs want to know that legal costs are being managed with the same rigor as any other fund expense. Too often, though, that evidence is hard to pull together. Data sits in different places across deal, legal, and finance functions, leaving responses pieced together after the fact rather than presented with confidence.

LPs expectations are changing and alignment between legal and finance is critical, but there are steps firms can take to deliver investor-ready reporting with confidence.

Why LPs scrutinize legal costs as part of fund governance

LPs have always examined management fees and carry, but the wider set of expenses charged to the fund is now under closer review. Private Equity legal fees stand out because they cut across the investment cycle, including fund formation, transactions, regulatory compliance, and disputes. For investors, these costs act as a test of how disciplined a firm is in managing the fund’s resources.

Two forces are driving this scrutiny. First, regulators are paying more attention to how expenses are allocated between the management company and the fund. LPs want assurance that these allocations are consistent and defensible. Second, with fundraising conditions tightening, investors are benchmarking governance standards more critically when choosing where to commit capital.

For sophisticated LPs, though, it goes further than totals. They want to see:

• Comparability across managers: Costs categorized by matter type, geography, or deal stage so that they can line up managers side by side.
• Predictability as a governance metric: Variance to budget is scrutinized; consistent accuracy is read as a sign of process maturity.
• Narrative control: LPs pay attention to how managers talk about legal costs in diligence. Proactive, data-backed answers build confidence; defensive explanations raise doubts.
• Early warning vs. retrospective accounting: Investors can tell whether spend is managed in real time or simply reconciled after the fact, and reward managers who demonstrate the former.

The risk for firms is not simply that legal fees are high, but that they appear opaque or unpredictable. Even modest overruns or unexplained allocations can undermine LP confidence if they suggest weak oversight. That is why legal spend management has moved from a back-office matter to a visible governance signal.

Why legal and finance leaders need reliable spend data to support fundraising and reporting

Fundraising conversations increasingly hinge on the quality of a firm’s data. LPs want confidence that costs are allocated fairly, budgets are credible, and variances are explained with discipline. Private Equity legal and finance leaders are expected to provide that evidence, but too often the underlying data is fragmented. Deal teams instruct counsel, legal tracks budgets, and finance reconciles the numbers.

Each sees part of the picture, but rarely the whole.

Without a single, reliable dataset, there are real risks. Allocations between the fund and the management company may be inconsistent, exposing managers to questions about alignment of interests. Forecast credibility also suffers. LPs often care less about the totals than about whether managers consistently meet expectations. Repeated overruns make managers look reactive, rather than in control. And that undermines fund governance narratives.

Investor relations teams see this first-hand. When data is scattered, responses to LP questions are stitched together under pressure. What should be a straightforward disclosure turns into a defensive exercise, eroding confidence at the very moment when firms are competing hardest for capital.

Reliable, real-time spend data resolves these weaknesses. LPs now expect:

• Audit-ready figures: Consistent across functions and defensible under scrutiny.
• Rigor equivalent to financial statements: Legal spend reported with the same discipline as core fund metrics.
• Integration with governance: Costs embedded in the wider framework, showing the PE can absorb disputes, overruns, or regulatory shocks without losing control.

In competitive fundraising rounds, this level of clarity is a differentiator. It reduces investor friction, signals maturity, and strengthens confidence that the fund is governed with discipline.

How collaboration between legal and finance can produce a clear, consolidated picture for LPs

LPs don’t care which function inside a firm holds the data; they care that the answers are consistent, timely, and defensible. That only happens when legal and finance leaders work together on a shared foundation. Today, many firms still rely on fragmented inputs and manual reconciliations. With a shared, continuous view of legal spend — the kind platforms like Apperio enable — those same processes look very different.

For LPs, joined-up reporting tells its own story. It demonstrates that governance around legal costs is structured and reliable, and that the PE firm applies consistent standards across all areas of fund oversight.

Practical steps to equip firms with transparent, investor-ready legal spend reporting

LPs need confidence and evidence that legal spend is monitored, allocated correctly, and reported with transparency. That confidence can’t come from reconciliations done months later. It depends on having data that is accurate and ready to share.

Step 1: Centralize visibility
Fragmented spreadsheets and matter updates passed by email cannot withstand diligence. A single source of truth, shared between legal and finance, gives firms one consistent record of spend to present to investors.

Step 2: Formalize allocation policies
Firms should clearly document which costs fall to the fund and which sit with the management company. LPs now ask for these policies directly, treating them as evidence of fairness and alignment of interests.

Step 3: Introduce rolling forecasts
With platforms like Apperio, firms can continuously track legal spend and address scope creep as it happens. Combined with PERSUIT’s structured scoping and performance data, this creates the level of oversight LPs expect in modern governance.

Step 4: Produce audit-ready reporting packs
Governance narratives are strongest when supported by reporting that integrates legal spend data into broader fund disclosures. For LPs, this shows that costs are not only tracked, but reported with the same rigor and format as the fund’s core financials.

With these practices in place, firms can answer investor questions with confidence and present legal costs as part of a broader governance narrative.

Moving forward with Apperio and PERSUIT

Apperio and PERSUIT together give firms the ability to meet these expectations in practice. Apperio provides legal and finance teams with a shared, real-time view of spend across all matters. PERSUIT adds structured outside counsel engagement, scoping, and performance data. Combined, they create an end-to-end governance framework that equips firms to answer LPs with confidence and transparency.

Learn more about how Apperio and PERSUIT can help your firm strengthen governance and deliver investor-ready reporting. Book a demo.