Private Equity Manager Quotes Steve Baldini on PE Litigation Risks
Akin Gump partner Steve Baldini, who heads the firm’s litigation practice, was quoted by Private Equity Manager for its article “Staying out of court” on the biggest litigation risks in private equity.
Baldini began by noting that, in order to avoid the risk of litigation, some PE firms discuss split investments with their limited partner (LP) advisory committees: “Doing so shows the LPs consented to the allocation percentages, an approval that would also show regulators the process took into account potential conflict of interest issues.”
On the topic of the risk of lawsuits for anticompetitive behavior in response to firms clubbing together to invest, Baldini said that general partners (GPs) should take note of how a jury might interpret correspondence between firms during club deals. Beyond external risks for litigation, Baldini also notes that members within the consortium should engage their legal advisors during the early stages of due diligence to review and predict where internal conflicts might emerge.