ILPA Model LPA Seeks to Empower LPACs and Increase GP Accountability for Fiduciary Duties (Part One of Three)

PE investors often feel like they have little leverage to negotiate the terms of their fund commitments, but the Institutional Limited Partners Association (ILPA) is aiming to change that with its release of a model limited partnership agreement (Model LPA). Drafted by a task force composed of more than 20 attorneys from law firms, investors and asset managers (LPA Task Force), ILPA hopes the Model LPA will provide a starting point to empower limited partners (LPs) in future negotiations. The Model LPA is not without controversy, however, as it seeks to upend a balance of power that has traditionally favored general partners (GPs). To understand where the Model LPA fits relative to market norms and its potential impact on the PE industry, the Private Equity Law Report interviewed an ILPA representative, several LPA Task Force members and multiple attorneys representing GPs about the document. This first article in a three-part series examines the Model LPA’s provisions relating to a GP’s fiduciary duties and the scope of authority granted to the LP advisory committee. The second and third articles will discuss the Model LPA’s economic terms and its potential impact on negotiations in the PE market. For more on ILPA guidance, see “ILPA Makes Recommendations for LPs Participating in GP‑Led Secondary Fund Restructurings” (Jul. 9, 2019); and “How Managers May Address Increasing Demands of Limited Partners for Standardized Reporting of Fund Fees and Expenses” (Sep. 1, 2016).

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