Managing risk as AUM scales

As funds grow, most general counsel expect risk to grow with them. More capital. More deals. More jurisdictions. More scrutiny. The assumption is that scale makes the legal work harder, and that harder legal work is where risk lives.

In practice, that is rarely where things go wrong.

Where risk really comes from as funds grow

What changes as AUM scales is not the quality of legal advice, but the tolerance of the operating model that delivers it. Volume exposes weak points. Processes that worked at a certain size start to strain. Teams grow. Decisions are repeated by different people in slightly different ways. What was once visible becomes opaque.

Risk, at that point, stops being primarily legal and starts being operational.

When good legal advice meets unsuitable operating models

This is uncomfortable for many legal teams because operational risk does not announce itself clearly. There is no single bad judgment or obvious error. Instead, it shows up as inconsistency. Delays that feel administrative but carry real consequences. Small deviations that are individually defensible, but collectively difficult to explain to a regulator, investor, or board.

Most GCs have lived this without necessarily naming it. A missed filing that traces back to unclear ownership. KYC decisions that looks different depending on who handled it. Transactions being slowed not by legal complexity, but by resource constraints or unscalable processes across internal teams and external providers.

None of these are failures of legal expertise. They just highlight the need for a new, scalable, operating model.

Why scale changes the GC and compliance mandate

At scale, reliability matters as much as judgment.

Legal teams are trained to think in terms of advice, interpretation, and defensibility. Operating models are designed around throughput, consistency, and accountability. As AUM grows, those two worlds collide. Risk no longer sits cleanly in one place. It emerges in the seams between teams, providers, and systems.

For general counsel and compliance leaders, this subtly but materially changes the role. The question is no longer just whether advice is sound in isolation, but whether the organisation can deliver that advice consistently across growing volume, compressed timelines, and increasing scrutiny.

The inflection point comes when legal and compliance are treated as operating functions, not episodic interventions. That shift forces harder questions. Who owns outcomes, not just tasks. What sits with legal vs compliance vs other teams. Where consistency is non-negotiable, and where human judgment must be preserved. How decisions are documented and explained when the pressure is on.

Operational design as a strategic opportunity

Seen this way, operational design stops being purely defensive and becomes enabling. For the most effective funds, this design is deliberately hybrid: internal leadership sets standards and culture, while trusted partners extend that model through scalable execution.

Done well, it does not just reduce risk. It creates confidence, consistency, and headroom to scale without constantly re‑engineering how legal and compliance work gets done. Funds that scale successfully tend to invest early in operating models designed for growth, rather than patched together in response to it.

This is already playing out in practice. At TowerBrook, a global asset manager, legal and compliance are deliberately aligned around a single operating framework rather than treated as a series of local or transactional checks. As Haris Vrahliotis, Compliance Director and Counsel, put it in our latest episode of Compliance by Design, “a good compliance program is the integration of compliance across the board and the flow of information and communication across teams.”

Rather than resetting expectations each time a new regulation or jurisdiction comes into play, TowerBrook operates to a global standard, with local nuance layered in where required. “We reach for the highest common denominator and go from there,” Vrahliotis explains. “That way, when something new comes in, we don’t have to explain why this matters. Teams already understand the level we operate to.”

The impact of this approach is cultural as much as procedural. Compliance is not experienced as a late‑stage hurdle or a box‑ticking exercise, but as something embedded into how deals are done day to day. As Vrahliotis notes, “good compliance doesn’t slow deals down. It speeds them up, because issues are surfaced earlier and handled in context.”

This kind of operating design creates institutional muscle memory. Teams know what good looks like, even when they are operating across jurisdictions or under pressure. It also creates the conditions for judgment to be applied consistently, rather than reinvented each time work scales or circumstances change.

Three ways funds respond to scale

In practice, the most sophisticated funds rarely make a binary choice. The strongest models combine internal ownership, cultural alignment, and institutional knowledge with carefully chosen external partners who can extend that capability at scale.

Some funds continue to build in-house, investing heavily in culture, shared standards, and internal alignment. When done well, this creates deep institutional knowledge and strong decision-making, as the TowerBrook example illustrates. The challenge is sustaining that model as volume, geographic reach, and regulatory complexity increase.

Others lean more heavily on large law firms, using depth of resource and brand to absorb scale. This can work well for capacity and perceived safety, but often introduces fragmentation and a loss of continuity across matters.

The most resilient approach blends these models. Legal and compliance leadership retain ownership of culture, standards, and risk appetite, while execution-heavy work is partnered out to specialists who operate to the same principles and ways of working.

This is where end-to-end managed services start to matter. Not as a replacement for in-house teams, and not as outsourced labour, but as an extension of the internal operating model. The right partner builds institutional knowledge over time, scales with demand, and applies judgment consistently within a framework set by the fund.

Avantia was built to support this hybrid reality. We partner closely with in-house teams like TowerBrook’s, reinforcing their culture of compliance and extending their operating model through specialist legal and compliance execution designed for scale. That work sits alongside core platforms and internal leadership, not in place of them. By combining experienced teams with operating models built for volume and complexity, we help GCs manage risk as AUM grows while maintaining control, visibility, and confidence.

What this means as funds continue to scale

As funds continue to scale, the question is no longer whether legal and compliance teams are capable. It is whether the way they operate is fit for the scale they are supporting.

In the next part of this series, we will look at one of the most sensitive tensions this creates: if consistency becomes non-negotiable at scale, where does judgment still sit, and how do legal teams avoid standardisation becoming a risk in its own right?