The tension: why compliance culture is harder to build than it looks

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. 

That design challenge is what this piece is about. Not the destination - we covered that in the first article in this series - but the specific dynamics that make it difficult to sustain, and what the firms making the most progress have figured out about how to navigate them. 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. 

Stuart Swift, General Counsel at Avantia, draws on his experience working in-house and as transaction counsel embedded within deal teams at a global investment firm to share what he has seen work - and what tends to get in the way. 

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 inhouse counsel recognise. It is not usually the result of deliberate exclusion - deal teams are not trying to marginalise 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, Avantia 

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 behaviour, 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, Avantia 

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. 

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 $5bn does not automatically survive the journey to $20bn or $50bn. 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, Avantia 

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 grey 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, Avantia 

The grey 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, Avantia 

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 recognise that the operating model has to evolve as the firm grows. The mechanisms that work at 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. 

In the next article in this series, we look at that scaling challenge directly - what changes when a fund hits a growth inflection, and how the build vs. buy decision shapes whether the legal and compliance function keeps pace or falls behind. 

For our clients, the right legal and compliance partner is a key step in building a scalable culture of compliance - get in touch to see how we can help. 

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