According to ILPA Institute Faculty Member David B. Parrish, Partner and Executive Committee Member at DLA Piper and Global Co‑Chair of the firm’s Investment Funds practice, one of the biggest responsibilities facing LPs today is understanding how legal terms influence behaviors, alignment, and outcomes.
In David’s classroom, particularly within the Legal Documents course, LPs dig into these complexities. They explore how legal provisions intersect with investment, operational, and portfolio oversight realities, and how understanding the full picture empowers LPs to underwrite relationships with sponsors more effectively.
What inspires you to be a part of the ILPA Institute faculty? Why is LP education so important?
Education is part of my personal mission, and it always has been. Personally, I care about helping institutions achieve their goals and their mission (as they define it). Being able to be part of a community and helping to increase knowledge in private markets through removing some of the opacity in the marketplace is personally enriching. We all have a responsibility to contribute, and it is important to ensure that the broadest audience as possible gets the benefit of what we each see. Education allows for the most efficient dissemination of how things are working and allows for the greatest potential impact. Increasing knowledge is a critical part of development and success.
You teach Legal Documents – what do you see as the biggest challenge for LPs to be aware of in this area today, and how does the course address that?
The answer to the first part of the question is not simple to answer as each investor will have its own biggest challenge to solve (as each investor is unique (even if there is commonality in terms of type of institution)). What I can say is that as private markets continues to mature and more institutions dedicate capital to the space and hire additional talent, it is really important that we work to advance development and increase the understanding of how the legal relationship with sponsors impacts behaviors and potential outcomes.
Legal Documents as a course was developed to help LPs understand how terms should not be viewed in isolation but how they can fit together to result in and/or influence outcomes. It is an important part of underwriting to understand how legal diligence fits with investment diligence and operational diligence so that we understand what our relationship is and what tools we have to manage it. It is worth saying that good terms do not always mean good outcomes and bad terms do not necessitate bad outcomes, but it is important to understand what our true cost and relationship is with our sponsor.
