DIY Fund Docs? Why Private Placements Aren’t the Place to Cut Corners

September 2024

There are a lot of places in a startup where it makes sense to roll up your sleeves and figure things out as you go. Fund documentation isn’t one of them.

Private placements involve a unique mix of legal, regulatory, and operational complexity. If your documents aren’t built correctly from the start, it doesn’t just create confusion — it can expose you to regulatory risk, turn off investors, and cost significantly more to fix later.

At Moeller Law PLLC, we serve as outsourced general counsel to private fund managers. That includes drafting key fund documents and coordinating across your legal, tax, compliance, and operational partners to ensure everything works together.

The Problem with DIY Fund Docs

It’s not uncommon for first-time fund managers to try and repurpose a template or modify someone else’s PPM or limited partnership agreement. It might even look professional. But we’ve reviewed documents that reference the wrong type of entity, contradict fee structures across agreements, or use outdated exemption language that no longer reflects SEC practice. We’ve also seen provisions that seem fine in isolation but don’t match how the fund actually operates. For example, a PPM might describe quarterly redemptions while the LPA says withdrawals require 90 days’ notice. Or tax provisions may not reflect the waterfall your accountant is using. These inconsistencies create real exposure — for you and your investors.

Why Fund Structuring Isn’t a One-Person Job

Launching a fund requires more than just strong legal documents. It requires alignment between your offering structure, compliance obligations, tax allocations, and investor onboarding process. That means the legal side has to work in step with your fund administrator, accounting team, deal professionals, and, if applicable, trading or asset management team.

As outside general counsel, Moeller Law PLLC works closely with all of these functions. We oversee legal documentation, help coordinate adviser registration and compliance filings, and bring in trusted fund specialists when deeper expertise is needed. Our job is to spot disconnects early and keep the overall structure sound, whether that means revising a management agreement or flagging a tax clause that doesn’t match the modeling.

The Hidden Costs of Cutting Corners

DIY documents are often motivated by cost, but they tend to create problems that are far more expensive to fix later. Sloppy or recycled docs can lead to investor hesitation, regulatory issues, or worse — investor rescission demands. Even in a best-case scenario, you may find yourself redoing everything during your first audit, capital raise, or expansion.

Documents that don’t reflect how your fund actually works also create internal confusion. If your documents say one thing and your team operates another way, it opens the door to miscommunication, operational breakdowns, or investor disputes.

How Moeller Law PLLC Helps Fund Managers Get It Right

We provide legal support that is practical, scalable, and fully integrated into your fund’s broader structure. That means we tailor documents to your specific strategy and investor base, coordinate with external tax or fund counsel when needed, and work closely with your back-office and investment teams to make sure your documents are operationally aligned.

Rather than relying on rigid templates, we build your documents using best-practice clause sets and flexible drafting tools, all with an eye toward clarity, consistency, and growth. Our flat-fee or phased billing options are designed to keep legal spend predictable, especially for emerging managers.

Final Thoughts

Private placements require precision and alignment — across documents, teams, and compliance processes. DIY approaches can seem efficient in the moment, but they rarely hold up when it counts. At Moeller Law PLLC, we help private fund managers launch with confidence. That means serving not just as lawyers, but as legal quarterbacks who help ensure the full structure works the way it’s supposed to.

If you’re considering a fund launch or want a second look at existing documents, let’s connect.