According to The Financial Times, Kirkland & Ellis has told its fund formation lawyers they need to rein it in.
After complaints from limited partners on K&E’s conduct during fund terms negotiations—including an LP ‘top wishes’ survey graphic at an industry event which prominently featured “Fire K&E” in a word cloud—the firm has brought in its global funds team for retraining sessions on their communications style.
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In a tighter fundraising environment, the balance of power has shifted toward LPs, and process friction that was once tolerated now risks lost commitments for K&E clients.
Investors are said to have two primary gripes when engaging with the firm on potential commitments:
First, an unwillingness to negotiate even small points in limited partnership agreements.
In some cases, fund managers represented by K&E told investors they were unaware their counsel had refused to engage on those terms. One institutional investor’s in‑house lawyer said their organization declined to commit to two funds after K&E refused to negotiate clauses on gross negligence and international sanctions. That investor later discussed internally whether to avoid commitments entirely in cases where K&E managed negotiations.
Second, the firm’s generally abrasive style. Counterparties described terse markups that gave little rationale for rejection of proposed changes, and which frequently repeated a standard refusal, “We respectfully decline.”
In the firm’s recent remedial training, lawyers were told to provide rationales for markups and to stop using the stock phrase.
Internally, senior partners at the firm viewed the “Fire K&E” moment as a signal that ILPA was discouraging fund managers from working with them. The firm has since launched an effort to try to mend the relationship.
In October 2024, it invited in‑house counsel from ILPA and two large Texas pensions to a gathering of senior partners in Austin. Then, this summer, the firm hired Greg Durst, a senior managing director from ILPA, as “senior director of global fund partnerships.” At the time, K&E said the hire would “strengthen the firm’s relationships” with limited partners.
At stake is not just a handful of future fund formation mandates, but deeper business considerations related to the firm’s market-leading private equity practice. Fund formation has long been a reliable relationship-starter that leads to subsequent higher‑fee work with sponsors.
In response to an FT inquiry this week, K&E issued the following statement: “Our firm values the relationships we have built within the funds industry,” said Kirkland. “We continue to evolve our business, collaborate with our counterparts, and provide strong support for our clients … as market dynamics shift in the fund formation process.”