The compliance seat: Why compliance culture is harder to build than it looks

Ask a GC at a scaling private markets fund whether their legal and compliance function has a seat at the table, and most will pause before answering. Not because the answer is no. But because the honest answer is: it depends on the day, the deal, and who's in the room.

For me, that pause is telling, and has become something I look for. It describes a function that is valued in principle and marginalized in practice—brought in when things get complicated, consulted after commercial decisions have already been shaped, and associated in the minds of deal teams with friction rather than momentum. It is a pattern that shows up across funds of all sizes, but it becomes structural at scale. And once it is structural, it is very hard to reverse.

Building a legal and compliance function that is genuinely embedded in how a firm operates has always been one of the defining challenges of the role. It does not get easier as firms grow—if anything, the pace of deal flow, the expansion of teams, and the pressure to move faster all make it harder to maintain. What separates the functions that sustain it from those that struggle is rarely intent. It is design.

The tension between legal and commercial teams is a structural feature of how investment firms operate, reflecting genuinely different incentives and timelines. It does not go away. It gets managed—and managed well or badly depending on how the function is built and how it behaves.

The seat is earned, not assigned

There is a version of legal and compliance that the best GCs describe in similar terms: a function that deal teams pull into conversations early, not because they have to—but because they want to. A team that understands the commercial context well enough to ask the right questions rather than issue the right warnings. A culture where compliance is experienced as part of how the firm operates, not as a checkpoint at the end of a process.

“A good compliance program is the integration of compliance across the board—the flow of information and communication across teams.”

—Haris Vrahliotis, principal compliance director and counsel, TowerBrook Capital Partners

What is striking about this version is how rarely it comes from formal authority. The GCs who describe it do not point to reporting lines or governance structures as the reason it works. They point to relationships, consistency, and presence. Their teams were in the room early enough to shape decisions rather than review them. They communicated in commercial terms as well as legal ones. They built a reputation for making things move, not for finding reasons they couldn't.

That reputation is the compliance seat. And it is earned through a sustained pattern of behavior, not through a single initiative or a new operating model.

Why timing shapes everything

The most persistent challenge for legal and compliance functions is not the quality of their work. It is when they get involved. A function brought into a deal early can shape, redirect, and add genuine value to the outcome. The same function brought in late can only review what has already been decided—and any concern it raises at that point is experienced as friction rather than input, regardless of how well-founded it is.

This is a dynamic most GCs and in-house counsel recognize. It is not usually the result of deliberate exclusion—deal teams are not trying to marginalize legal and compliance. It is the result of momentum. Deals move fast, early-stage conversations feel provisional, and the instinct is to involve legal when there is something concrete to show. By the time that happens, the commercial logic may have already formed and the window for genuine shaping has narrowed.

The firms that have shifted this tend to have made involvement structural rather than discretionary. Legal and compliance are part of deal pipeline conversations from the start—not because every early-stage opportunity needs legal input, but because the relationship and context that enables genuine value-additive contributions as the opportunity progresses are built during those earlier stages.

"In my experience, Legal is the team that is involved at the earliest point of any central operation, and you will be there right until the end. The responsibility of treading that line between facilitating deal teams and keeping the platform safe sits squarely with legal."

—Stuart Swift, general counsel, Carta Law

The internal brand question

Every legal and compliance function has a reputation inside the firm. In the best cases it is actively shaped—through consistent behavior, clear communication, and a track record of engaging as a partner in finding solutions. In other cases it accumulates through the interactions that deal teams remember most, which are rarely the smooth ones.

This is not a criticism of legal teams. It is a reflection of how reputations form in high-pressure environments. The moments that stick are the ones where something felt slow, or where a concern arrived late and without a clear path forward. The good news is that the same dynamic works in reverse: a small number of interactions where legal was visibly useful, responsive, and commercially aware can shift the perception significantly.

The GCs and compliance leads who have made real progress on this tend to be deliberate about those moments. They treat the first interaction with a new deal team member as an opportunity to establish the relationship before it is tested. They communicate the reasoning behind their interventions, not just the conclusions. And they are consistent—because inconsistency, more than anything else, is what erodes trust in a legal function over time.

"So much of it is how people perceive you in your role and how you operate and build relationships. If you are perceived as someone who can unblock things and explain why something is a red line—and then offer up what to do instead—you will get far more respect and traction than if your default response is to say ‘no.’ Over time, people will proactively seek you out as a sounding board."

—Stuart Swift, general counsel, Carta Law

Investment firms are idiosyncratic places. People join from different backgrounds and bring with them their own experience of working with legal functions—some of which will have been more enabling than others. That context shapes how they approach the legal and compliance function from day one. The GCs who navigate this well tend to meet people where they are, understand where their prior experience comes from, and build the relationship from there rather than assuming a shared starting point.

Proximity is not optional at scale

At smaller funds, proximity tends to happen naturally. The GC or deal counsel is in most conversations by default because everyone is. Legal and deal teams share context informally, problems surface early, and the relationship between commercial ambition and legal caution is managed through conversation rather than process.

Scale breaks this. As AUM grows, teams expand across jurisdictions, deal flow accelerates, and the informal channels that kept legal close to the business start to thin. The GC who was in every conversation at $5 billion is now leading a team of eight across three geographies, and deals are moving without them until something comes up that requires a legal view. By the time legal or compliance is involved, the commercial framing has hardened. The question is no longer, "How do we structure this?" but "Can you clear this?"—and the answer to that question, however carefully delivered, is experienced as obstruction or approval. There is no longer room for the kind of early, shaping input that makes legal genuinely valuable.

This is why the firms that maintain strong compliance cultures at scale make deliberate choices about proximity. Not just who attends which meetings, but how legal and compliance are woven into the standing rhythm of the business: deal pipeline reviews, investment committee preparation, onboarding processes for new counterparties. Presence in those forums is not about oversight. It is about staying close enough to the commercial reality that legal input remains useful rather than procedural.

How scale changes the challenge

The tension between legal and commercial teams is present at every fund size. What changes at scale is that the mechanisms which manage it naturally at smaller firms have to be consciously maintained. At a smaller fund, proximity compensates for a lot. The GC is across most deals, the relationships are personal, and the informal channels that keep legal connected to deal flow are part of how the firm operates day to day.

As AUM grows, those channels require active investment to sustain. Teams expand across geographies, deal flow increases, and new members of both deal teams and legal functions join without the shared history that underpins trust. The compliance culture that existed at $5 billion does not automatically survive the journey to $20 billion or $50 billion. It has to be carried deliberately—through onboarding, through governance structures, and through the choices senior leadership makes about where legal sits in the business.

"It definitely helped being on the same desk as deal teams. You are seen as approachable; going to speak to Legal is not something you have to go out of your way to do. Once you earn people's trust and show that you can provide an answer that helps rather than hinders, they bring you in earlier."

—Stuart Swift, general counsel, Carta Law

Physical proximity sounds like a small thing. In practice it is one of the most consistent factors that separates legal functions with strong internal brands from those that struggle. It is not just about convenience—it is about the daily low-stakes interactions that build the familiarity that makes high-stakes conversations easier. Teams that sit with deal teams develop a commercial instinct that cannot be built from a distance.

Navigating the gray area

One of the most important capabilities a legal and compliance function can develop is knowing how to handle the calls that are not obvious. The clear red lines tend to take care of themselves—deal teams often identify them without needing legal to point them out. It is the middle ground where the quality of the relationship and the quality of the judgment both matter.

The functions that navigate this well tend to share a few characteristics. They avoid instinctive reactions and invest in genuinely understanding what the deal team is trying to achieve before forming a view. They are clear about where a platform's risk tolerance sits, so that their judgments have a shared framework behind them. And they bring options and solutions alongside assessments—a legal function that can say here is the risk, and here are ways we could manage it, is a fundamentally different experience from one that arrives only with a conclusion.

"You have got to pick your battles carefully. I would be very mindful of not having a knee-jerk reaction of ‘no.’ You need to really dig in, think through what the risks are, and make sure you really understand the deal dynamics and thought processes of the deal team - because when you speak to them, it was often very well considered."

—Stuart Swift, general counsel, Carta Law

The gray area is also where the relationship is most visibly tested—and most visibly strengthened. A difficult call handled well, where legal engaged seriously with the commercial context and arrived at a considered view, builds more trust than a dozen smooth transactions. And crucially, it works both ways.

"If you have given the advice, they have understood the risks, they fit within the wider risk tolerance of the platform and they still want to go ahead? You have to trust their judgment in the other direction. It is a two-way street."

—Stuart Swift, general counsel, Carta Law

What the firms making progress have in common

The firms that have built strong legal and compliance cultures have not done so through a single initiative. They have done it through a consistent set of choices, made over time, about how the function is positioned and how it behaves.

They involve legal and compliance structurally and early—as part of deal pipeline conversations, not just deal execution. They invest in the relationships between legal and commercial teams before those relationships are needed. They communicate reasoning rather than conclusions, and treat every interaction as an opportunity to build credibility rather than just to resolve the immediate question.

They also recognize that the operating model has to evolve as the firm grows. The mechanisms that work at a smaller scale need to be supplemented—and in some cases replaced—with more deliberate structures as headcount, geography, and deal volume increase. That evolution does not happen automatically. It requires the same intentionality that built the culture in the first place.

What the best functions have in common

Across the funds where legal and compliance genuinely works—where deal teams trust the function, problems surface early, and the GC is a voice in strategic decisions rather than a reviewer of concluded ones—a handful of things tend to be true.

1. Compliance is introduced to deal teams, not deployed against them. New hires on deal teams are briefed on how the legal and compliance function works with them, what it needs from them, and why early involvement makes transactions move faster. The relationship is established before it is tested.

"If you understand and communicate the first principles rather than a list of rules, you can almost deputize more people across the firm to say: This feels like it doesn't fit in—can you help me with that?"

—Haris Vrahliotis, principal compliance director and counsel, TowerBrook Capital Partners

2. Legal and compliance teams attend the forums where commercial decisions are shaped, not just the ones where they need to sign off. This is a structural choice, and often a physical one. Teams that sit with deal teams, attend deal review calls, and are present in investment committee preparation develop a commercial instinct that is impossible to build from a distance.

3. Problems are surfaced early because the culture makes it safe to do so. Deal teams that trust the legal and compliance function raise issues when they are small and manageable, not when they have become embedded in a transaction structure that is hard to unwind. That trust is built over time, through consistent behavior: legal that engages constructively, communicates clearly, and does not treat every concern as a reason to pause.

4. The standard is set from the top. In every firm where compliance culture is strong, it is because senior leadership—not just the GC, but the CEO and investment leadership—treats compliance as a reflection of the firm's values rather than a regulatory obligation. That tone shapes how deal teams experience the function, and whether they treat it as a partner or a hurdle.

"Policies and procedures are never enough alone—they're not going to be perfect for every single scenario. You need those underlying qualities that can drive you when you're off script."

—Haris Vrahliotis, principal compliance director and counsel, TowerBrook Capital Partners

The technology question

No conversation about legal and compliance culture in 2026 avoids AI and technology. The market is full of tools that promise to make legal or compliance faster, cheaper, and more consistent. Some of them deliver on parts of that promise. Many of them add a different kind of friction: a new platform to learn, a new workflow to embed, a new set of outputs that still require a senior lawyer to review before anything can move.

The adoption paradox is real. Legal and compliance teams that are already stretched do not have the bandwidth to train new systems, curate internal data, and manage iterative improvement cycles on top of their existing workload. Tools that require significant upfront investment to become useful tend to stall at the pilot stage: used by the enthusiasts, ignored by everyone else, and quietly retired when the contract comes up for renewal.

The more important question is not which tools to adopt but what problem technology is actually solving.

If the underlying culture is one where legal and compliance is brought in late, seen as a blocker, and disconnected from the commercial teams it serves, technology will not fix that. It will make the existing dysfunction faster.

The firms that are getting the most from legal AI, or partnering with solution providers that have it embedded, are those that already have strong operating models, clear playbooks, and a culture where compliance is embedded into how work gets done. Technology in those environments compounds what already works. Everywhere else, it adds complexity before it reduces it.

"Bolting it on because everybody else is doing it is not going to be the answer. But doing it well is really hard; all change is hard. The firms that succeed are those that take the time to understand their workflows, get people involved, and only embed something where it genuinely makes people more efficient."

—Hannah Thompson, deputy general manager, Carta Law

The gap most funds are living with

The honest reality for most funds at scale is that the compliance seat is partially occupied. Legal and compliance are involved in major decisions, trusted on significant risk calls, and respected as a function. But it is not yet embedded in the daily rhythm of the business in the way the best functions are. It is called rather than present. It reviews rather than shapes. And deal teams, while they would not describe it this way, have learned to manage around it.

That gap does not close on its own. It closes through deliberate choices: about where compliance sits in the business, how it is resourced, what partners it works with, and what the operating model looks like at the next stage of growth.

AI-Native Law Firm for Private Capital

Scale your legal and compliance operations through AI-native workflows with expert oversight built into every step.

Get started