Thursday 27 March 2025
This blog provides an overview of recent developments regarding Diversity & Inclusion (D&I) in the United States under the Trump administration and their impact. It also examines the current position on D&I in both the U.S. and the UK.
Earlier this year, President Donald Trump issued several executive orders that have led to changes in D&I policies in the U.S., affecting both public and private sectors. Executive Order 14151 (signed on January 20, 2025) eliminates all diversity, equity, inclusion, and accessibility (DEIA) programs in the federal government. Executive Order 14173 (signed on January 21, 2025) similarly removes D&I programs across federal agencies and seeks to discourage their use in the private sector. The justification provided for these orders is that D&I programs may violate civil rights laws and undermine merit-based opportunities.
Following the issuance of these orders, the U.S. Equal Employment Opportunity Commission (EEOC), a government agency responsible for ensuring fair treatment in the workplace, requested information from 20 leading law firms about their equality practices. The impact of these orders has included consequences for some firms. One law firm was restricted from obtaining government contracts, citing its D&I practices as the reason, while another firm had its government contracts terminated and security clearances for its employees suspended.
Reactions to these executive orders have been mixed. One law firm filed a lawsuit challenging the orders and asking a judge to declare them unlawful. Another firm, however, has committed to providing pro bono legal work for administration-supported causes such as combating antisemitism and supporting veterans. Additionally, more than 300 Biglaw associates signed an open letter calling on law firm leaders to take a stand against these orders.
In contrast, the UK’s new Labour government has announced plans to introduce more ambitious anti-discrimination measures. These proposals include expanded pay gap reporting, requiring employers with 250 or more employees to report on ethnicity and disability pay gaps, and equal pay rights, extending these protections to cover race and disability. Although these measures are not part of the Employment Rights Bill, they are expected to be included in a forthcoming bill titled The Equality (Race and Disability) Bill, which is anticipated to be published in draft form soon. These changes are expected to have a notable impact on UK workplaces, increasing the focus on D&I initiatives.
UK employers are also likely to be indirectly affected by European Union regulations such as the EU Pay Transparency Directive and the Corporate Sustainability Reporting Directive, which emphasise greater transparency and accountability in workplace practices.
Despite the changes in the U.S., many law firms in the UK appear to be continuing their D&I commitments. One firm has set a goal for 20% of its partnership to come from lower socio-economic backgrounds within the next four years. Another firm has appointed a former CEO of a major UK clearing bank as a diversity and inclusion adviser. This individual will work closely with the firm’s equity, diversity, and inclusion committee and mentor partners, bringing valuable experience to advance the firm’s D&I objectives.
As the U.S. and UK take different approaches to D&I policies, these developments are likely to shape the future landscape of diversity, equity, and inclusion in both regions.
Carried interest has long been a contentious topic in the world of finance and taxation, often described as a lucrative incentive for private equity, venture capital, and hedge fund managers. At its core, carried interest represents a share of a fund’s profits allocated to general partners, rewarding them for their role in managing and growing investments. Unlike traditional income, it is taxed at the lower capital gains rate, sparking ongoing debates about fairness, tax policy, and economic incentives. As lawmakers in both the U.S. and the U.K. reconsider the tax treatment of carried interest, the issue remains a focal point in discussions about wealth, taxation, and financial industry regulation.
What is carried interest?
Carried interest is a share of profits given to general partners of private equity, venture capital, and hedge funds as incentive compensation. It is earned based on their role rather than an initial investment and aligns their earnings with the fund’s performance. Typically, carried interest is only paid if the fund meets a minimum return (hurdle rate) and is taxed as a long-term capital gain, which has a lower tax rate than ordinary income. Since it is distributed over time, it also allows for tax deferral similar to unrealised capital gains.
How is carried interest taxed in the U.S?
Carried interest on investments held for over three years is taxed as a long-term capital gain at a top rate of 20%, compared to 37% for ordinary income. Critics argue this benefits the wealthy by allowing them to defer and reduce taxes, while supporters compare it to “sweat equity” investments. The 2017 Tax Cuts and Jobs Act extended the required holding period from one to three years, with complex IRS rules introduced in 2021. Since private equity and venture capital funds typically hold investments for five to seven years, some lawmakers have proposed taxing carried interest annually as ordinary income. Carried interest is controversial because it is taxed as capital gains, which has a lower tax rate than ordinary income. This allows general partners to pay less in taxes despite often earning more than regular employees, creating a perceived tax inequality.
Closing the Loophole: What’s happening in the U.S?
President Donald Trump has renewed his push to eliminate the carried interest tax treatment, which allows private equity and hedge fund profits to be taxed at the lower capital gains rate instead of as ordinary income. Speaking to Republican lawmakers, Trump emphasised closing this “loophole” as part of his broader tax reform agenda. The carried interest tax benefit has long been a contentious issue, with previous reform efforts—including during Trump’s first term in 2017—failing due to congressional opposition. While many Republicans and some Democrats have historically resisted changes, the current political landscape may be shifting, with some Democrats openly supporting Trump’s stance.
The 2017 tax bill had already extended the required holding period for carried interest tax benefits from one to three years. Some policymakers suggest further extending this timeframe rather than eliminating the provision entirely. Meanwhile, private equity groups continue to argue that the existing tax treatment incentivises long-term investment and job creation. Trump’s proposal reflects a broader shift in Republican priorities, signalling a potential departure from traditional pro-business policies. As the debate unfolds, it remains uncertain whether this latest attempt to close the carried interest loophole will succeed where past efforts have failed.
The position in the UK
In the United Kingdom, the taxation of carried interest has undergone significant changes. As of April 2025, the capital gains tax rate on carried interest will increase from 28% to 32%. Further reforms are planned for April 2026, which will treat all carried interest as trading profits subject to income tax at rates up to 45%, plus Class 4 National Insurance contributions of up to 2%. This results in an effective tax rate of approximately 34.075% for additional rate taxpayers.
These reforms aim to align the taxation of carried interest more closely with other forms of income, addressing concerns about fairness in the tax system. However, there are concerns that such changes could impact the UK’s competitiveness in attracting and retaining investment talent, particularly in London, a major financial hub. The private equity industry has expressed apprehension that higher taxes may deter fund managers and investors, potentially leading to a relocation of financial activities to more tax-favorable jurisdictions.
Building on the insights shared in our previous blog about what 2025 may offer, we’re continuing the discussion by highlighting key developments shaping this exciting year. From a rebound in M&A activity and the continued rise of private credit to the evolving ESG landscape and rapid advancements in AI, 2025 is already proving to be a transformative year for global markets. Here, we dive deeper into these trends and their potential impact.
M&A
A rebound in dealmaking and exit activity is expected in 2025, building on momentum from late 2024. While the first half of 2024 was marked by caution, confidence in M&A picked up towards the end of the year. This recovery is expected to continue, particularly in sector-specific transactions influenced by regional and global economic conditions. In the UK, mid-market deal activity is projected to strengthen as the gap between buyer and seller valuations narrows, with deferred considerations and buyer equity playing a greater role in structuring deals. The UK’s public M&A market saw a significant shift in 2024, with a notable rise in large-scale transactions. There were 17 deals exceeding £1 billion, a dramatic increase from just four in 2023. Although the total number of firm offers remained steady (58 in 2024 vs. 60 in 2023), the total deal value more than doubled, reaching over £50 billion. Several factors are expected to drive dealmaking in 2025. The UK’s CMA is adopting a more proportionate approach to merger reviews, which may reduce regulatory delays. Share-for-share transactions, which allow acquirers to avoid borrowing, are gaining traction and expected to continue. Private equity sponsors are also set to re-enter the UK public takeover market, increasing competition for high-value assets as interest rates stabilise or decline.
Private Credit
Private credit continues to grow as an alternative to traditional bank lending, reaching an estimated $1.5 trillion in 2024 and projected to exceed $2.6 trillion by 2029. This growth is driven by tighter bank lending and rising demand for bespoke financing, particularly linked to private equity. With over $1.4 trillion in dry powder, private equity firms expect increased deployment, boosting direct lending and asset-based finance. Despite higher financing costs, credit quality remains stable, with a focus on non-cyclical industries. The sector’s adaptability is expected to solidify its role in 2025, with opportunities in hybrid capital and refinancing solutions.
The Growing Role of Continuation Funds
Continuation funds, or GP-led secondaries, gained significant traction in 2024 as liquidity constraints made traditional exits more challenging. These transactions allow sponsors to extend ownership of high-quality assets, providing additional time and capital for growth while offering investors flexibility in their holdings. One of the key advantages of GP-led secondaries is the alignment of interests. GPs often reinvest carried interest and increase their committed capital, ensuring they remain incentivised alongside new and existing investors. Additionally, these deals mitigate blind pool risk, offer more predictable returns, and provide liquidity options for LPs who may need to exit. As market conditions improve in 2025, continuation funds will remain an attractive tool for both sponsors and investors. With falling interest rates and stabilising valuations, they present a compelling way to maintain exposure to strong-performing assets while avoiding the volatility of traditional exit routes.
Evolving ESG Landscape and Regulatory Shifts
ESG and sustainable investing continue to evolve, with differing approaches in the US and Europe. The US faces an “anti-ESG” backlash, while the EU is navigating updates to key sustainability directives. In the UK, the FCA’s updated Stewardship Code is set to enhance transparency and disclosure standards. Moreover, the regulatory environment, both globally and domestically, is poised for significant changes. From Trump’s deregulation agenda in the US to the UK’s updates on corporate governance and fraud prevention, these shifts will create new opportunities and challenges across various sectors. Tax changes, particularly in the UK, will also influence deal timing and valuations, affecting sectors differently based on their structure and workforce flexibility.
AI’s Rapid Evolution: Market Shifts and Emerging Challenges
The development and influence of AI remain pivotal, with major tech firms like Microsoft and Nvidia investing heavily in the sector. Meanwhile, regulatory landscapes such as the EU AI Act are reshaping compliance strategies, with the UK adopting a more flexible, pro-innovation stance. The AI market was shaken this week by the emergence of DeepSeek, a Chinese AI startup that launched a low-cost, high-performing AI model rivalling OpenAI’s ChatGPT. Built using Nvidia’s older A100 chips (now banned for export to China) DeepSeek’s efficient “inference-time computing” approach has raised questions about the future demand for high-end AI hardware. The impact was immediate: Nvidia’s stock plunged 17%, shedding $600 billion in value, while other AI-related stocks, including ASML and Broadcom, also suffered losses. DeepSeek’s rise underscores disruptive AI potential and geopolitical tensions. While praised for its open-source approach, concerns over data privacy persist due to its use of Chinese servers. Its emergence challenges AI cost structures and U.S. tech dominance, with uncertain global traction.
Summary Remarks
As 2025 unfolds, key market trends are taking shape across M&A, private credit, and AI. Deal activity is rebounding, private credit continues its rapid expansion, and evolving regulations are reshaping investment strategies. Meanwhile, AI’s rapid advancements, exemplified by DeepSeek, are challenging industry norms and market valuations. Navigating these shifts will require adaptability, strategic foresight, and a keen eye on both opportunities and risks.
As we look back on 2024 and into the year ahead, the legal sector stands at the crossroads of significant change, driven by a mix of political, economic, and technological forces. This article revisits some of the pivotal events from the past year, including the impact of the U.S. elections and the UK’s 2024 budget, while also examining the continuing challenges in the battle for legal talent. Looking ahead to 2025, we explore the emerging trends and key considerations that law firms must navigate, from shifting regulatory environments and fiscal policies to the rise of artificial intelligence. The interplay of these factors promises to create both challenges and opportunities, reshaping the landscape for law firms and their clients in the coming year.
U.S. Elections
Trump’s re-election has significantly impacted the U.S. market, with a notable rise in demand for corporate legal services, particularly in areas such as mergers and acquisitions (M&A), tax reductions, and navigating regulatory changes. U.S. companies are seeking guidance on leveraging Trump’s domestic growth strategies, including incentives to bring jobs back, while law firms are playing a crucial role in advising clients within a protectionist business environment. His trade policies, especially tariffs on European imports, have strained U.S.-EU relations, leading to increased demand for cross-border compliance and dispute resolution as companies adjust to potential trade disruptions. Additionally, Trump’s renegotiation of the U.S.-Mexico-Canada Agreement (USMCA) has ensured continued legal work in North America, particularly in trade and investment sectors. In the Asia-Pacific region, rising tensions with China have created a complex legal landscape, increasing demand for advice on tariffs and compliance, while India’s growing importance as a U.S. partner is fueling legal activity in cross-border deals.
In the Middle East, Trump’s foreign policy is driving business law needs, especially in foreign investment and energy transactions, though regional tensions present challenges. In Europe, U.S.-EU trade disruptions and rising tariffs are creating a need for risk mitigation, particularly in the manufacturing, agriculture, and automotive sectors, while European M&A activity is expected to rise due to shifting policies. Trump’s policies are also reshaping U.S. investments in Africa and Latin America, with growing interest in Africa’s mining sector and potential political instability in Latin America, presenting challenges for businesses operating in these regions. In conclusion, while Trump’s re-election has brought opportunities in corporate, trade, and regulatory legal sectors, firms must navigate the complexities of his protectionist approach and the broader global policy shifts, with legal advisors playing a key role in helping businesses adapt to this evolving landscape.
Impact of the 2024 UK Budget on Law Firms
The UK’s October 2024 budget, presented by Chancellor Rachel Reeves, introduced key reforms affecting law firms and their clients. Employers’ National Insurance Contributions (NICs) were increased by 1.2 percentage points to 15%, raising employment costs and prompting law firms to advise on workforce planning. Capital gains tax rates also rose, with the lower rate increasing from 10% to 18% and the higher rate from 20% to 24%. These changes led high-net-worth individuals and private equity firms to seek new tax strategies and restructure exit plans.
The budget also aimed to boost investment in corporate transactions, infrastructure, and public-private partnerships, benefiting law firms specialising in mergers, acquisitions, and regulatory compliance. Public sector spending in housing, energy, and transportation created demand for legal support on tax, financing, and regulatory issues. The focus on fiscal transparency heightened scrutiny of public contracts, prompting law firms to guide clients on compliance. The national living wage increased to £12.21 for workers over 21, driving businesses to seek advice on wage compliance and operational adjustments. With inflation expected to remain above target until 2029, law firms played a crucial role in advising on contract renegotiations, financial restructuring, and investment risk management.
The War for Talent
The war for talent in the legal sector, particularly highlighted by Paul Weiss’s proactive hiring spree in London, has intensified competition among firms. The New York-based firm has quickly built a strong presence, recruiting top lawyers from elite City firms like Kirkland & Ellis to establish its private equity practice. As Paul Weiss offers lucrative compensation packages, it has sparked salary competition, particularly for junior lawyers. This has led to record-high salaries for newly qualified lawyers (NQs), with compensation aligned to the Cravath scale equalling $225,000. Amongst non-Cravath / UK firms, conversely, there has been increasing frustration over salary “bunching” / “compression”, where NQ pay has risen but the salaries of more senior lawyers have not risen proportionally. It is also worth noting that Cravath aligned remuneration may differ given the varying conversation rates used by U.S. firms in London.
While some firms are focusing on financial incentives, others, like Pinsent Masons, are trying alternative approaches to attract talent. Pinsent Masons introduced a trial compressed workweek allowing employees to finish early on Fridays, along with a system to monitor burnout risk. Despite such initiatives, financial benefits like retention bonuses remain key in the competitive market. Non-financial incentives such as flexibility are also playing a significant role in firm choice. Research indicates that a large percentage of lawyers are switching firms primarily for better pay, while others value flexibility, with 90% of respondents citing remote work as crucial. Despite non-financial benefits, the higher pay at US firms, coupled with modestly increased workloads, remains the top driver for lawyers considering a move.
Labour’s Vision for Financial Services: Overview and Implications
The Labour government, following its strong electoral victory, has outlined a balanced approach to financial services regulation, aiming for stability, consumer protection, and economic competitiveness. One key policy is the cap on corporation tax at 25% for the entire parliamentary term, providing long-term predictability for businesses. Labour seeks to maintain high regulatory standards while streamlining and coordinating rules across government. The government is focused on innovation and technology, with initiatives like financial market infrastructure sandboxes and tokenized gilts issuance. Sustainable finance is also a priority, with plans to promote the UK Green Taxonomy and mandate transition plans for financial institutions in line with the Paris Agreement. Labour’s vision includes a focus on “regulation for growth,” with the financial services industry playing a key role in private investment and wealth creation. Key initiatives include the National Wealth Fund, which aims to generate significant private investment, alongside plans to encourage investments in green energy and infrastructure.
Labour is also exploring innovative financial products, such as digital currencies and securities tokenisation, and plans to enhance open banking and finance through Smart Data schemes. Labour is committed to fostering stronger trade relations with the EU, particularly in green finance, mutual recognition of qualifications, and cross-border clearing. Additionally, Labour is focused on improving consumer protection, with plans for an anti-fraud strategy, including real-time payment fraud prevention and regulating buy now, pay later products. Pension reforms are also on the agenda, aiming to consolidate small pension pots, introduce value-for-money tests, and streamline pension schemes. Labour emphasises a balance between regulation and efficiency, potentially simplifying rules for the Financial Conduct Authority (FCA) and enhancing consumer protection. These reforms reflect Labour’s commitment to modernising financial regulation while promoting growth and innovation.
Law Firm Mergers and Strategic Shifts
Mergers and acquisitions within the legal sector are expected to gain momentum in 2025, as the trend of market consolidation continues. High-profile mergers, such as A&O Shearman and Herbert Smith Freehills Kramer, indicate a broader pattern, with other firms quietly exploring similar strategic combinations. Firms, both U.S. and UK positioned in the
mid-market and upper mid-market market show potential to pursue bold moves, including mergers or potential spin-offs, in order to stay ahead of the competition.
Geopolitical Challenges and Regional Shifts
Geopolitical tensions, particularly in Asia, will remain a major influence on law firms’ strategies in 2025. Many firms are re-evaluating their operations in Greater China and parts of Asia, with more office closures expected due to the instability in these regions. The strained U.S.-China relations, intensified by the previous U.S. administration, have notably contributed to this reassessment. Additionally, some U.S. firms may reduce their presence in Germany and France because of the profitability issues caused by reduced client fees, which could lead to further office closures. For instance, Eversheds Sutherland has already closed its Berlin office, reducing its footprint in Germany to just four locations, while Hogan Lovells has revealed plans to shut down offices in Warsaw, Johannesburg, and Sydney in favor of focusing on key strategic markets.
U.S. Firms in the U.K. Market
U.S.-based law firms are expected to continue their aggressive expansion into the London market in 2025. With their superior financial resources and more attractive compensation packages, these firms are drawing top talent and winning significant mandates. However, the rapid growth could result in instability, with firms like Paul Weiss potentially facing partner departures as they struggle with the challenges of integrating lateral hires and managing swift expansion.
ESG Commitments and the Energy Sector
Law firms are increasingly focusing on enhancing their Environmental, Social, and Governance (ESG) credentials to attract clients and top-tier talent. However, this push for sustainability may be at odds with firms’ plans to capitalise on a burgeoning energy sector, particularly in the U.S. This tension reflects the delicate balance firms must maintain between expanding their client base in energy while safeguarding their reputations. Moreover, rising activism and climate protests could lead to a new wave of security concerns for law firms, who may need to invest in stronger protection measures to safeguard against potential disruptions and demonstrations.
Corporate Legal Spending and Client Expectations
With associate salaries and billing rates reaching unprecedented heights, concerns about the sustainability of corporate legal spending are growing. Clients are under increasing financial pressure, prompting them to insource more work and adopt strategies such as rate controls and alternative fee arrangements (AFAs) to manage legal costs. Law firms will need to innovate and become more cost-efficient, adjusting their approach to meet client expectations while remaining competitive in large-scale commercial matters.
The Continued Rise of AI in Legal Practice
Artificial intelligence will continue to reshape legal practices in 2025, with firms increasingly relying on AI-driven tools to handle routine tasks such as legal research, contract review, and document automation. These advancements will drive efficiency, reduce costs, and enable firms to devote more time to complex matters that require human expertise. The use of AI will expand into areas such as contract intelligence, risk analysis, and obligations management, creating new roles and high-value business opportunities. Law firms will shift from using AI as an experimental tool to implementing it systematically, establishing dedicated AI competency centers and fostering an ecosystem focused on AI governance and operational integration. Those firms that do not embrace this transformation may struggle to keep pace with the competition.
Private Equity and AI Investment
As AI becomes further embedded in the legal sector, firms are likely to seek private equity investment to fund their technological advancements. This trend could represent a significant departure from traditional financing models, with law firms looking to alternative funding sources to stay competitive. The continued integration of AI and automation will be central to improving operational efficiency and client service, while potentially driving consolidation in the market as firms pursue aggressive growth strategies.
Conclusion: Navigating a Complex Future
The legal industry in 2025 will be shaped by both gradual evolution and significant disruption. Faced with increasing competition and shifting client demands, law firms will need to make bold, strategic decisions, including mergers, office closures, and investments in new technologies. While AI will drive operational improvements, law firms must balance these technological advancements with maintaining the expertise and human touch that clients expect. Those firms able to successfully navigate these complexities will be well-positioned for long-term success in an ever-evolving legal landscape.
Let’s Talk Strategy
At Halkin, we aim to differentiate ourselves by structuring our teams according to specific practice areas. This approach allows us to provide tailored advice to lawyers on maximising their career goals while building long-term relationships. We remain committed to offering valuable insights without exerting undue pressure, ensuring that lawyers are aware of opportunities they might have otherwise overlooked. By engaging in consultative partnerships, we help both law firms and individuals navigate the complexities of this shifting landscape, positioning them for success in an increasingly competitive environment. If you have any questions or would like to explore your options, don’t hesitate to get in touch with us.
With Donald Trump re-elected as the U.S. president, law firms worldwide are bracing for an era of intensified activity, mixed with caution. This outcome brings both optimism and concern across various legal markets as firms anticipate shifts in policy, trade, and regulatory landscapes. Trump’s commitment to a pro-business agenda is expected to spur deal-making and advisory needs in certain sectors, but his protectionist and unpredictable foreign policy stance may bring increased volatility. Here’s a closer look at how the re-election may reshape demand and present new challenges across key regions and practice areas.
A U.S. Market Boost for Business-Friendly Law Firms
Commentators have remarked on the enthusiasm from Wall Street and business circles, which see a Trump administration as favourable for domestic growth and deregulation. This sentiment is mirrored in the legal sector, where transactional and corporate practices may find more work as U.S. companies seek counsel on tax reductions, reduced regulatory constraints, and potential incentives to “bring back jobs” to American shores. The legal sector can anticipate heightened demand for advice on domestic mergers and acquisitions (M&A), as well as guidance on navigating what may be an increasingly protectionist landscape.
Trade and Tariff Concerns Impacting International Business
In the international sphere, Trump’s strong stance on trade policies suggests a potential increase in tariffs, particularly on European imports to the U.S. Several London-based lawyers foresee heightened trade tensions, which could lead to tit-for-tat regulatory measures as the U.S. seeks to address perceived imbalances in its trade relationships with the EU. For firms advising clients with international footprints, this could mean a surge in demand for expertise in cross-border compliance and international dispute resolution. Protectionist policies may also prompt multinationals to explore alternative supply chain arrangements, further fueling demand for legal advisory. In particular, lawyers in the UK and EU may be called upon to support clients impacted by potential disruptions to established trade agreements.
North America: Renewed Focus on the U.S.-Mexico-Canada Trade Agreement
North America stands to be directly impacted by Trump’s return, especially regarding the U.S.-Mexico-Canada Agreement (USMCA). Commentators based in Canada and Mexico suggest that Trump may re-negotiate aspects of the agreement, creating a ripple effect across North American economies as firms prepare for ongoing legal and commercial adjustments. Legal practices specialising in trade and investment are expected to face a steady demand for counsel on adapting to renewed policy shifts, with implications for both transactional and regulatory practices.
The Asia-Pacific Region: Rising Tensions and Realignment
In the Asia-Pacific, Trump’s re-election is likely to intensify the U.S.-China rivalry, creating a challenging landscape for law firms with offices in China and those advising clients with business interests in the region. Commentators have noted the likelihood of continued tariffs and economic decoupling from China, which will likely result in more complex legal landscapes for multinational corporations. At the same time, India is positioned as a valuable strategic partner to the U.S., with legal experts predicting an increase in deal activity and regional partnerships that could drive legal demand in India. Australia and Singapore-based lawyers foresee a dampening of global M&A activity if heightened tariffs stoke inflation, potentially slowing economic growth and raising interest rates. Such conditions may lead to a cautious market outlook, though firms could still benefit from increased advisory work on regulatory and compliance issues.
Middle East Legal Sector Navigates Shifting Alliances
The Middle East may see varied impacts, with Trump’s administration expected to pursue an assertive trade and foreign policy. Increased U.S. presence in the region, particularly with close ties to the UAE, Bahrain, and Saudi Arabia, could stimulate business law needs for firms active in foreign investment and energy transactions. Commentators suggest that Trump’s re-election may, however, also affect regional tensions, particularly concerning relations between Israel and Iran, which may influence U.S. legal advisory on Middle East matters.
Europe’s Response: Preparing for Protectionism and Policy Shifts
In Europe, the legal sector is preparing for potential disruptions to U.S.-EU trade. Commentators note that European firms may need to provide extensive guidance on risk mitigation for companies operating in manufacturing, automotive, and agricultural sectors—all of which could be significantly affected by rising tariffs. Further, Trump’s return is prompting conversations about strengthening European sovereignty, which could drive demand for European M&A transactions aimed at consolidating market positions and competitiveness. The U.S.’s handling of the war in Ukraine also looms large, as European firms watch for any potential policy shift that may impact EU-U.S. collaboration. Legal advisory focused on regulatory compliance will be essential for firms managing U.S.-aligned clients affected by cross-border sanctions or aid-related policies.
Africa and Latin America: A Region-Wide Realignment
Trump’s victory is expected to influence the U.S.’s approach to Latin America and Africa, especially amid China’s significant investments across both continents. For Africa, the U.S.-China rivalry may increase American investments in critical minerals like lithium and iron ore, which could benefit local legal sectors in mining and trade advisory. In Latin America, commentators expect Trump’s return to fuel a period of instability, as his policies may lean toward unilateralism and protectionism.
A Period of Opportunity and Uncertainty
Ultimately, Trump’s re-election will likely create both demand and disruption within the global legal industry. For law firms, the combination of a pro-business stance and heightened protectionism offers a mixture of new business opportunities and fresh challenges. As legal practitioners navigate this complex environment, they will play a crucial role in supporting businesses adapting to a new era of U.S. policy priorities—both at home and abroad. The legal landscape, therefore, stands at the threshold of transformation, where law firms must anticipate rapid changes across regulatory, transactional, and compliance arenas to best serve clients in an increasingly volatile global market.
The UK’s recent budget, announced by Chancellor Rachel Reeves on Wednesday 30 October 2024, introduces major economic reforms impacting law firms and their clients across sectors. With a focus on growth, investment, and fiscal responsibility, the budget outlines changes that will affect legal practices advising on tax, employment, corporate finance, and estate planning. Here is a concise overview of the key elements and their implications.
1. Employment and National Insurance Contributions (NICs)
One of the most notable changes is the rise in employers’ National Insurance Contributions, increasing by 1.2 percentage points to 15% starting in April. This hike in employment costs is expected to drive demand for legal advice on workforce planning, payroll compliance, and employment law. Law firms will likely assist clients in exploring restructuring options, cost-saving measures, or potential redundancies to offset these added expenses. Smaller businesses, in particular, may need guidance on qualifying for exemptions or managing their bottom lines in light of the new NIC thresholds. Employment law practices will be essential in helping businesses remain compliant and efficient as they adapt to higher labour costs.
2. Capital Gains and Inheritance Tax Increases
The budget raises the lower capital gains tax (CGT) rate from 10% to 18% and the higher rate from 20% to 24%, along with adjustments to inheritance tax (IHT) thresholds. These changes mean that high-net-worth individuals and business owners will face new tax burdens on asset transfers and estates, prompting a need for fresh tax planning strategies. Law firms advising private clients will likely explore trusts, gifting, and other tax-mitigation tools to minimise the impact of increased CGT and IHT.
Private equity firms will also feel the impact of higher CGT rates, which may reduce post-tax returns and dampen investor enthusiasm, especially for sectors with longer or uncertain exit timelines. Law firms specialising in tax and private equity will play a key role in helping clients restructure exit plans to optimise tax efficiency. This may include considering staggered sales, timing exits strategically or exploring alternative investment structures to reduce CGT burdens.
3. Corporate and Public Sector Investments
The budget’s focus on investment aims to create a favorable environment for corporate transactions, infrastructure projects, and public-private partnerships. This opens opportunities for law firms specialising in corporate finance, mergers, and acquisitions to provide strategic counsel on new tax and regulatory frameworks. Public sector clients and contractors may require support in compliance advisory services, especially as the government moves to balance its budget by 2027.
Increased public spending in sectors like housing, energy, and transportation will likely bring legal complexities in regulatory compliance and contract negotiations. Law firms may see an uptick in demand from clients involved in these projects, needing guidance on navigating tax implications, securing project financing, and ensuring regulatory compliance.
4. Transparency and the Office for Budget Responsibility (OBR) Review
The Chancellor’s emphasis on transparency, supported by an Office for Budget Responsibility (OBR) review, highlights the government’s commitment to fiscal responsibility and accountability. This includes addressing a £22 billion fiscal deficit, which may lead to increased scrutiny of regulatory compliance and public contracts. For law firms with clients in regulated sectors, this focus on transparency could mean more reporting requirements and potential audits.
Law firms specialising in regulatory compliance and public law will be essential in guiding clients through potential changes in reporting standards and ensuring they meet the heightened requirements. Businesses with public or government contracts, particularly in heavily regulated areas like finance and infrastructure, may look to legal advisors to help them maintain compliance as fiscal accountability becomes a priority.
5. Minimum Wage Increases
The budget raises the national living wage to £12.21 for workers over 21, affecting labour costs across many sectors. This increase may prompt businesses to seek legal advice on managing rising labour expenses, balancing wage costs against operational efficiencies, or exploring automation options. Employment law practices will likely experience a rise in consultations on wage compliance, redundancy strategies, and operational adjustments.
Law firms advising on employment law may find themselves assisting clients in managing the risks associated with non-compliance, helping to navigate redundancy procedures, and resolving potential employment disputes. This increase in minimum wage costs could lead businesses to seek guidance on labour law complexities as they navigate both cost management and compliance.
6. Inflation, Growth, and Economic Forecasts
The Office for Budget Responsibility (OBR) forecasts inflation to remain slightly above the Bank of England’s 2% target until 2029, with only modest growth expectations. In response, businesses may require legal advice on contract renegotiation, financial restructuring, and investment risk management. Law firms can assist clients in revising long-term contracts, managing intellectual property valuations, and restructuring financing terms to cope with inflation.Corporate clients may also turn to law firms for help with currency hedging, investment diversification, or renegotiation of financing arrangements to safeguard their financial stability amid inflation and slow growth. Law firms specialising in contract and financial law will play a critical role in helping clients adjust to economic pressures while preserving business continuity.
Summary Remarks
The UK’s new budget introduces comprehensive reforms that will affect legal practices in tax, employment, corporate, and regulatory compliance. Law firms advising businesses, investors, and high-net-worth clients will be essential in helping them understand and adapt to the complex fiscal changes. This new economic landscape will require legal expertise to navigate evolving compliance standards, tax structures, and strategic restructuring. As the government pursues fiscal reform, law firms will play a vital role in guiding clients through the challenges and opportunities of this transformative period.
In today’s society, diversity, equity, and inclusion are essential to ensuring that everyone, regardless of background, has equal opportunities to succeed. However, for many young Black individuals in the UK, access to these opportunities can still feel out of reach. Enter the Amos Bursary, an organisation dedicated to bridging this gap and empowering the next generation of Black leaders. This initiative is a critical force for change, offering mentorship, skills development, and a strong community for young individuals who might otherwise be overlooked. For this reason, as proud patrons of the Amos Bursary, we have decided to dedicate this blog to highlighting the Amos Bursary’s work, helping to spread its powerful message of empowering young Black leaders for a brighter future.
What Is the Amos Bursary?
The Amos Bursary is a UK-based charity established in 2009 by Colleen Amos OBE and Baroness Amos. The Amos Bursary, founded in tribute to Colleen Amos OBE and Baroness Amos’s parents, has become a remarkable legacy over the past decade. Rooted in their belief in the transformative power of education, the Bursary nurtures talent, builds confidence, and combats discrimination by instilling pride in Black history and culture. Their unwavering commitment to excellence and the aspirations of young people drives the programme’s mission to this day.
The Amos Bursary’s work focuses on identifying young individuals with academic talent and leadership potential, and providing them with the tools, support, and networks they need to succeed. The programme offers a wide range of resources, from financial assistance to mentorship opportunities with professionals across various industries, ensuring that participants not only thrive academically but also build the confidence and skills required to navigate their professional lives.
What Does the Amos Bursary Do?
The Amos Bursary provides a five-year personal and professional development programme beginning with students in year 12 of a state school in London or the West Midlands of England. The Amos Bursary’s work can be broken down into three core areas: education support, personal development, and career readiness.
Why Is the Amos Bursary Important?
The Amos Bursary is more than just a scholarship programme; it is a transformative initiative that addresses the systemic challenges young Black individuals face in the UK. Here’s why it’s so important:
The Future of the Amos Bursary
As the world continues to evolve, so does the work of the Amos Bursary. Its impact is growing, with an expanding network of professionals and a broader range of industries opening their doors to Amos Bursary participants. The charity continues to raise awareness of the barriers young Black individuals face and advocates for more inclusive policies within educational institutions and workplaces. In December 2019 the Amos Bursary secured funding to develop and introduce, for the first time in its history, young women onto The Amos Bursary programme, and in doing so recognises the importance of supporting all underrepresented groups in their pursuit of success. The Amos Bursary is a beacon of hope for many young Black individuals in the UK. By offering mentorship, personal development, and career opportunities, it is helping to level the playing field for those who face systemic disadvantages. Its impact reaches far beyond the individuals it supports, contributing to a more equitable society where talent, not background, defines success. The Amos Bursary is an inspiring example of how targeted, community-driven initiatives can make a tangible difference, and it remains a critical tool for shaping the future of Black leadership in the UK.
How Halkin Works with Amos and How You Can Too
The Solicitors Regulatory Authority (SRA) Diversity in law firms’ workforce overview covers solicitors and other employees working in SRA-regulated law firms and is based on data collected from almost all firms in summer 2023. This information shows that only 3% of lawyers in SRA regulated law firms in 2023 were Black. The Amos Bursary plays a crucial role in this context, as law firms seek to enhance diversity within their teams but often struggle to find candidates due to limited opportunities available to Black individuals who could excel in these roles. The work of the Amos Bursary is essential in actively addressing the root cause to this lack of representation.
At Halkin, we are actively involved in the Amos Bursary Mentoring Programme, with three of our partners mentoring talented students who have just begun their university journey. Our Managing Partner, Gordon Gooding, has described his mentoring experience as “an incredibly fulfilling opportunity to give back and nurture the growth of talented students and future leaders.” We strongly encourage law firms and professionals to participate in this programme and support the Amos Bursary. For more information, please visit the Amos Bursary website: https://www.amosbursary.org.uk/. To get involved in the mentoring programme, click here: https://www.amosbursary.org.uk/mentor/.
The Background
The war for talent is not a new phenomenon and has long been a topic of discussion, but the hiring spree by Paul Weiss has highlighted it as a key issue in the legal market. Namely, the New York headquartered White Shoe giant has been making waves in London by aggressively hiring top lawyers from elite City firms, including a significant team from Kirkland & Ellis, to build an elite private equity (PE) practice. Since launching its English law practice, Paul Weiss has quickly grown to c.140 lawyers in London, including 12 partners from Kirkland, and continues to expand. The firm’s hiring spree is motivated by a desire to provide a strong London presence for its PE clients, such as Apollo, Bain Capital, and KKR. Paul Weiss is reportedly offering highly lucrative compensation packages, which has also intensified salary competition among City law firms. While some question whether such rapid, high-value lateral hiring is sustainable, early signs suggest strong momentum and interest from potential recruits.
Meanwhile, Kirkland, known for its dominance in the PE sector, has been facing challenges due to the high-profile exits to Paul Weiss. Partners Neel Sachdev and Roger Johnson, who were instrumental in building Kirkland’s London presence, left amid alleged dissatisfaction with the firm’s direction and management style. However, Kirkland has responded by making its own strategic hires to bolster its London office and maintain its market leadership. Despite losing talent to Paul Weiss, Kirkland remains a powerhouse, with revenues growing significantly in recent years. The firm’s strategy focuses on maintaining a deep bench of partners and a diversified client base to weather market changes. While Paul Weiss aims to build a smaller, elite team that emphasises culture and quality, Kirkland’s approach prioritises breadth and depth to support large-scale PE operations.
Increasing Salaries
This fierce competition for talent has been driving up salaries for newly qualified (NQ) lawyers to unprecedented levels. Some junior lawyers in London are now earning more than the UK Prime Minister, with salaries expected to surpass £200,000 a year soon. Top US firms in London such as Paul Weiss, Gibson Dunn, and Quinn Emanuel have raised salaries to as much as £180,000, while UK-based Magic Circle firms offer up to £150,000. The intense salary competition is fuelled by booming private equity dealmaking and lucrative litigation work. US firms, with deeper pockets, dominate this war for talent, causing concern among UK firms as they risk losing lawyers to American competitors for better pay with only slightly increased workloads.
While these salary increases may seem like a positive development for associates, the high pay offered to NQs has caused frustration among more experienced associates who might earn only slightly more. The term “compression” is being reluctantly whispered by managing partners at City law firms. This term refers to the practice of paying NQ solicitors a substantial amount while failing to proportionately raise the salaries of lawyers with up to six years’ experience. Commentators warn that these salary hikes could not only unbalance financial stability but also foster resentment and division among the senior associate solicitors at firms which have hiked their NQ salaries and seemingly forgotten others.
Doing Things Differently
Given many firms’ inability to compete on the financial side, they are trailing other methods to attract talent. For example, Pinsent Masons is trialling compressed workweek, allowing employees to finish early on Fridays without a pay cut, provided client, team, and work commitments are met. This trial, taking place across the firm’s UK, Europe, and Middle East offices, enables staff to work their standard weekly hours by Friday lunchtime. The firm will evaluate the trial’s success after a month and potentially expand it to other offices in 2025. Managing Partner Laura Cameron emphasises the firm’s commitment to flexible, innovative working practices that balance business needs with employees’ personal lives. Unlike other firms, Pinsent Masons’ scheme does not involve a pay cut or extra hours earlier in the week, but early finishes depend on workload and client demands.
Pinsent Masons is also trialling a new system to alert management when lawyers risk burnout due to excessive work hours. This initiative is part of broader wellbeing measures following the death of a partner who experienced a severe mental health crisis. The system tracks the hours logged by lawyers and staff, flagging consistently high hours to management. This move aims to improve workload management and prevent overwork. However, it will be interesting to see whether these kinds of efforts will trump the remuneration and other financial benefits offered by these top law firms. One of the major incentives for associates at these firms is the referral fees on offer. For example, top U.S. law firms are now offering substantial referral bonuses of up to $50,000 to junior lawyers who bring in new associates. These types of incentives, alongside NQ salary increases, are a major sign underscoring the fierce competition for talent in the legal sector. Firms such as Kirkland & Ellis, A&O Shearman, Goodwin, and Paul Weiss have introduced these bonuses to attract young lawyers amid a boom in dealmaking. This marks a significant jump from the previous standard of around $25,000.
In comparison, UK law firms (Including the Magic Circle firms), offer lower referral bonuses which are about £15,000 for successful hires. Although the majority of the Magic Circle firms have increased the salaries for junior lawyers to stay competitive with their U.S. rivals, there is a visible trend of associates moving from UK to US law firms in London. Lower-tier firms tend to offer smaller referral bonuses, often around £5,000, according to insiders familiar with individual firm practices. Similarly, the rise in referral and retention bonuses reflects the intensifying “war for talent” in the legal industry. Retention bonuses are typically offered by firms experiencing significant departures, such as the loss of a key partner from a team. These bonuses are paid to associates to encourage them to stay, a strategy that often proves effective and gives the firm time to fill the gaps left by those who have left. Meanwhile, sign-on bonuses, although not unheard of, are less common in the current firm-driven market. These bonuses were much more prevalent during the post-Covid hiring boom when a surge in work required firms to hire aggressively, and top candidates often had multiple firms competing for them.
While non-financial incentives may attract some individuals to join or stay with a firm, research indicates that pay rises are the primary reason lawyers switch firms, with 56% of the 338 respondents who changed firms in the past year citing better pay as their motivation—a 20% increase from the previous year. The study highlighted the impact of a tight talent market and cost-of-living pressures on hiring, emphasising the importance of competitive salaries. Other reasons include dissatisfaction in current roles (34%), seeking greater flexibility (32%), unmanageable workloads, and limited career progression. Flexibility, particularly the ability to work from home, has become increasingly valued, with 90% of respondents highlighting its importance. Law firms that offer three days of remote work weekly are considered above average in the current market. Overall, switching firms can lead to an average salary increase of 15%, and 85% of firms have raised salaries for existing staff by 5-10% in 2023.
Summary Remarks
As the cost of living rises in the UK, along with increasing inflation and interest rates, many high-performing junior associates may be drawn to US law firms that offer significantly higher salaries for a modest increase in workload. With the growing push for employees to return to the office, the differences between firms in terms of non-financial benefits are narrowing, making US firms more attractive due to their higher pay. However, this choice depends on individual priorities, such as the desire to maintain a better work-life balance. For some associates, firms that cannot compete on salary might still offer more appealing options depending on these personal preferences. Ultimately, the decision comes down to what each individual values most. At Halkin, we specialise in supporting lawyers at every stage of their careers, helping them achieve their specific goals—whether that’s progressing towards partnership, enhancing their work-life balance, or relocating internationally. We are keen to engage with commercial associates interested in gaining insights into the legal market beyond their current firm and exploring the best pathways for career advancement.
This overview will first focus on the Labour government’s plans regarding financial services regulation, a key area of interest at Halkin. Following this, it will provide a broader overview of how the Labour government may impact law firms and industry more generally in the sphere of financial regulation.
Labour’s Vision For Financial Services
Following their overwhelming majority victory with 412 seats, Labour’s approach to financial services promises predictability and a balance between consumer protection, competitiveness, and financial stability. One example of such promised stability measure is Labour’s plan to cap corporation tax at 25% for the entire parliamentary term. This measure aims to offer predictability for businesses, facilitating long-term planning and investment decisions. While Labour’s manifesto is light on specifics, other sources provide insight into their plans. Labour champions the financial services sector, viewing it as a cornerstone of the UK’s economic future. They emphasise a pro-business, pro-worker stance, advocating for a robust regulatory regime that avoids the pitfalls of the pre-2008 financial crisis era. Labour aims to maintain high regulatory standards while streamlining rules to be efficient, proportionate, and coordinated across government. They also intend to foster a closer relationship with Europe, seeking deeper cooperation.
Innovation and technology are another priority. Labour envisions the UK as a leader in these fields, promoting regulatory clarity and advancing initiatives like financial market infrastructure sandboxes and tokenized gilts pilot issuance. Sustainable finance is also a crucial focal point, with commitments to advancing the UK Green Taxonomy and mandating credible transition plans for UK-regulated financial institutions to align with the Paris Agreement goals. They also plan to explore covered bonds for green assets to boost investments in net-zero infrastructure. Labour’s regulatory innovation includes establishing a new Regulatory Innovation Office to modernise regulation and improve coordination across sectors. They also support Open Banking and Open Finance, aiming to expand data consolidation from various financial products to enhance financial inclusion and spur innovation. Consumer protection will also be a focus for Starmer’s government and its plan for financial services in the UK.
Implications
The new government’s focus will be on “regulation for growth” and reallocating capital to areas such as venture capital, small-cap equity, infrastructure, green energy, and green home improvements. Labour’s vision emphasises uniting “workers and business” for wealth creation, with the financial services industry playing a key role, particularly in facilitating private investments alongside public funds. The National Wealth Fund, for instance, plans to generate £3 in private investment for every £1 it invests. This approach may involve reforms in pensions and retirement to encourage specific investment choices, increased regulatory support for retail investors, and policies to promote growth in cooperatives and mutuals. Labour is also open to innovations like easing regulations for new savings products, regulating AI, developing a central bank digital currency, and exploring securities tokenisation. Additionally, Labour plans to advance open banking/finance through its “Smart Data schemes” and establish Digital Verification Services.
Labour also aims to strengthen the UK’s trade and investment ties with the EU by removing unnecessary obstacles for businesses, particularly in green finance, mutual recognition of professional qualifications, and cross-border clearing. Additionally, Labour seeks to lower trade barriers where UK and EU regulations are compatible, with a primary focus on enhancing the competitiveness of UK financial services. While a return to the pre-Brexit regulatory framework is unlikely, the UK will still pursue selective regulatory divergences. Nonetheless, there is a noticeable trend towards gradually increasing alignment with EU financial services regulations. Meanwhile, Keir Starmer’s Regulatory Framework review will proceed, and existing reforms, such as the Financial Services and Markets Act 2023, will continue as scheduled.
Similarly, the new government will also be placing emphasis on consumer protection in its financial regulatory plans. It aims to implement a comprehensive anti-fraud strategy, including measures to introduce anti-fraud features in real-time payments and potentially granting the Financial Conduct Authority (FCA) new powers to ensure face-to-face banking services. Key initiatives include regulating buy now, pay later (BNPL) products and collaborating with HM Treasury and the FCA to clarify the advice-guidance boundary, thereby addressing the “advice gap” and encouraging firms to provide better customer support. However, challenges remain in managing complaints and claims risks. The government also plans specific pension reforms, such as consolidating small defined contribution (DC) pension pots, introducing standardised value-for-money tests for DC schemes, requiring trustees to offer retirement income solutions, and consolidating the defined benefit (DB) market through commercial Superfunds. The Pensions Ombudsman will be reaffirmed as a competent court to simplify the recovery of over-payments. Labour emphasises a balance between regulation and efficiency, citing the Consumer Duty as a model for outcomes-focused regulation. This approach aims to streamline the FCA’s rulebook and could lead to fewer rules in the future.
Let’s Talk Strategy
Halkin aims to differentiate itself from its competitors through structuring our teams by specific practice areas, similarly to law firms. This means that each one of our consultants specialises in advising lawyers within specific practice areas like financial services regulation. We advise lawyers on the steps they can take to maximise their career goals. Our goal is to provide valuable insights without exerting undue pressure. However, we will engage with lawyers to ensure they are aware of and consider opportunities they might have overlooked. As our work takes a consultative approach, we are eager to engage with regulatory lawyers to discuss their work and offer valuable insights into the evolving market. This means that we focus on building long term relationships with the individuals and law firms we work with. We are committed to assisting clients in building out their teams, and individuals to develop their careers.
This article covers a number of topical matters relating to the legal world, including the unexpected announcement of an early general election in the UK, the rising importance of artificial intelligence (AI) in legal practice, and salary increases, mergers, and expansions in the legal sector. It also emphasises the growing interest of UK law firms in Texas due to its booming energy sector.
The General Election
In an unexpected move, U.K. Prime Minister Rishi Sunak announced on May 22 that a general election will take place on July 4, much earlier than anticipated. This has prompted lawyers to prepare for the possibility of advising clients on what could be the country’s first government transition in 14 years. Subject to the outcome of the elections and the policies of the new government, some of the key areas of impact may include changes in financial regulations, corporate governance, and compliance requirements. Similarly, a government with a strong focus on public sector and infrastructure investment may lead to significant legal work in public procurement, construction law, and project finance. Meanwhile, a government prioritising environmental issues might introduce new environmental regulations and sustainability initiatives, leading to an uptick in matters relating to environmental compliance, renewable energy projects, and related areas.
Artificial Intelligence
The significance of AI continues to be paramount in industry, and the example of Nvidia (technology company) illustrates this. Nvidia’s overall revenue grew by 262% to $26.04 billion. Its shares are up 92% this year and 200% over the last 12 months. Nvidia is the bedrock of the artificial intelligence revolution, with Google, Amazon, Meta, and Microsoft estimated to be spending $200 billion buying up its AI chips.
The importance of AI is also notable in the legal sector. Research from PwC has found that lawyers with AI skills could earn significantly more, with U.S. vacancies offering a 49% wage premium and U.K. positions offering a 27% premium. The report highlights the value of AI skills like machine learning and neural networks across various sectors, including professional services, information and communication, and financial services. PwC’s ‘barometer’ report delves into AI’s impact on the workplace, noting that increased labour productivity from AI can drive economic growth, higher wages, and better living standards. It points out that sectors with high AI adoption see nearly fivefold greater labour productivity growth.
In the legal sector, many top U.K. law firms are starting to develop AI capabilities, using platforms like Harvey, and exploring generative AI technologies such as ChatGPT since late 2022. This has sparked significant interest in AI from law firms. The report also notes that Singapore leads in AI-related job vacancies. However, the full impact of AI on the legal market is still uncertain, as most firms have not yet fully integrated the technology, especially in lucrative transactional and litigation work.
Further developments in London’s legal market relating to AI also include Travers Smith’s AI division becoming an independent business, set to offer its services to the broader legal market. The new company, Jylo, will be headed by Shawn Curran, the firm’s former director of legal technology, who is leaving Travers Smith to focus on Jylo. According to a statement from Travers, Jylo allows users to “easily explore, organize, and interpret findings” through a combination of analysis and chat features.
Salary Increases and Domestic & International Developments
Some of the most eye-catching developments in the London legal market have been the increases of salaries for newly qualified associates (NQs) which include the likes of Linklaters and Freshfields, which have both increased NQ salaries from £125,000 to £150,000, an increase of 20%. Similarly, Quinn Emanuel increases its NQ salaries from £152,000 to £180,000, a rise of 18%
Relating to domestic and international expansion, Allen & Overy and Shearman and Sterling have officially completed the long-awaited merger to become A&O Shearman on the 1st of May 2024. Meanwhile, since its rapid growth in London in recent months, Paul Weiss continues to push on with expansion plans as the firm sets its eyes on Latin America with former Willkie Farr Partner, Maria-Leticia Ossa Daza, who will be spearheading these efforts. Similarly, set on expansion is Seattle-founded firm, Perkins Coie, which announced that it will open in London, with a six-lawyer office led by former White & Case private equity co-head, Ian Bagshaw. The office will focus on corporate matters for European technology-focused clients, including startups through the life cycle of a company.
Looking across to mainland Europe, Eversheds Sutherland decides to close its Berlin office, leaving the firm with German bases in Dusseldorf, Frankfurt, Hamburg, and Munich. Meanwhile, also in Germany, Latham & Watkins have also lost four partners which are set to join rival US law firms Willkie Farr & Gallagher and White & Case in the country.
On the other hand, looking to the U.S, Texas is becoming a key focus for U.K. law firms due to its robust oil-rich economy and the energy transition boom. Major players like Vinson & Elkins and Baker Botts dominate the market. In Q1 2024, deal-making in Texas’s energy and power sector reached $145.7 billion, an 80% increase from 2023. Key U.K. companies with significant presence include the likes of BP and law firms Clifford Chance and Linklaters, which have competitive energy and infrastructure practices. Clifford Chance launched in Houston last year, hiring 10 partners, emphasising energy transition as a priority. A recent trade pact between the U.K. and Texas aims to leverage expertise in new energy solutions, life sciences, and professional business services.
Prequin predicted infrastructure assets would reach $1.87 trillion by 2026, making it the largest real asset class. Kirkland & Ellis played a major role in guiding Global Infrastructure Partners’ $12.5 billion acquisition by BlackRock. Interest from U.K. firms is growing, with Freshfields Bruckhaus Deringer showing intent to enter the Texas market. The challenge is for these firms to compete effectively in the energy transition sector, where private equity is increasingly focused.
Summary Remarks
In reflecting on the legal market developments of 2024 so far, it’s evident that significant shifts are underway, both domestically and internationally. The upcoming general election in the UK introduces an element of uncertainty for law firms, particularly concerning potential regulatory changes that could impact various sectors. Meanwhile, the rise of AI continues to shape the legal landscape, with notable increases in demand for AI-skilled lawyers and the emergence of independent AI ventures like Jylo from Travers Smith.
Internationally, law firms are strategically expanding their presence, with Perkins Coie’s entry into London and A&O Shearman’s recent merger being notable examples. Moreover, Texas has emerged as a focal point for UK firms due to its thriving energy sector and opportunities in the energy transition. Despite challenges, such as navigating new markets, firms in London are actively positioning themselves to capitalise on these evolving trends, signalling a dynamic year ahead for the legal industry.