UEFA Women’s Euro 2025
The Lionesses secured a decisive victory in the UEFA Women’s Euro 2025 Championship, winning 3–1 on penalties against a formidable Spanish team. This remarkable achievement has inspired the theme of this blog, which explores investment in sport and the development of this sector as an increasingly appealing opportunity for investors. The blog will highlight the growing popularity of women’s sport among the public, as well as the rising interest it is attracting from both public and private sector actors.
Growth of Private Equity in Sport
Private equity investment in sports rights-holders, including clubs, leagues, federations and promoters, has grown rapidly since 2020 and appears set to continue expanding in the coming years. Leading firms in this area include CVC Capital Partners (CVC), Bridgepoint, Silver Lake, Clearlake, Arctos and Dyal. While some have long-standing experience in sport, others are newer entrants or have created sport-specific investment vehicles. These companies form part of a broader and increasingly competitive investment landscape, which also includes other private equity firms, institutional investors, high-net-worth individuals (often former athletes), and mixed consortiums. Other prominent names active in the sector include RedBird Capital, Elliott Management, Ares Management, 777 Partners and many more.
Firms Advising on These Deals
Several prominent law firms have played leading roles in these high-profile transactions, including:
Returns on Early Investments & Why Sport Appeals to Investors
Despite the sector still being relatively young, several investments have already reached maturity and delivered significant returns. For example, CVC turned a $2 billion investment in Formula One into $8.2 billion over the course of a decade. Providence Equity tripled its money with a stake in Major League Soccer’s Soccer United Marketing, while Dyal saw the value of its stake in the Phoenix Suns basketball franchise rise from a valuation of $1.55 billion to $4 billion in under two years. Other successful exits include Bridgepoint’s ongoing involvement in MotoGP through Dorna, KKR’s investment in Bundesliga club Hertha Berlin, and Elliott Management’s profitable sale of AC Milan to RedBird Capital.
Sport is seen by many investors as a resilient and attractive asset class. In the United States in particular, sports leagues benefit from a closed structure without promotion or relegation, long-term broadcast agreements, salary caps, and financial support from local authorities. This creates what some describe as monopolistic advantages. These features are in sharp contrast to European football, where clubs operate within an open pyramid system, face significant cost challenges, and are exposed to the risk of relegation. As a result, there are concerns that US investors may attempt to reshape the European model in favour of closed leagues. The ruling from the European Court of Justice on the failed European Super League is expected to be an important moment in this debate.
Although macroeconomic headwinds such as high inflation, rising interest rates and energy costs may pose challenges, they are not expected to change the overall direction of travel. If anything, as the cost of borrowing rises, the relative attractiveness of private equity investment may grow. Many believe that sport continues to offer strong fundamentals. It remains one of the few forms of entertainment that consistently draws large, predictable audiences. As media consumption fragments and attention spans shorten, sport retains its ability to bring people together and capture widespread attention. This value is increasingly recognised by technology companies such as Apple, Amazon and Alphabet, which have begun aggressively acquiring sports media rights. Their involvement has intensified competition in the US market and contributed to rising valuations.
Rising Popularity of Women’s Sports
Women’s sport has seen remarkable growth in recent years. In 2023, a record 46.7 million people in the UK watched women’s sport, the highest ever, according to the Women’s Sport Trust. Women’s sport made up 15% of total sports viewership, rising from 10% in 2019. Attendance also increased, with the 2022 UEFA Women’s EURO final attracting 87,192 fans, a record for any European Championship final. The 2023 Women’s World Cup sold over 1.9 million tickets, making it the most attended women’s tournament in history. Sponsorship revenue in women’s sport grew by 20% in 2023 as brands increasingly invest. Globally, women’s elite sport revenue is projected to reach US $2.35 billion in 2025, up from $1.88 billion in 2024. Digital engagement in the UK is booming, with TikTok views up 105%, YouTube views up 84%, and Instagram engagement rising 92%. This growth highlights women’s sport becoming a major global industry with increasing cultural and commercial significance.
Investment in Women’s Sports
Following the Lionesses’ historic win, the UK Government has announced bold measures to boost investment in women’s and girls’ sport. Central to this is a commitment to more than double prime-time access at grassroots football facilities for women and girls over five years, aiming for equal access as demand grows. This forms part of the Government’s £400 million grassroots sports infrastructure plan announced in June 2025. Dedicated Lionesses pitches will be created nationwide to inspire the next generation. A new grants scheme, in partnership with the Premier League, The FA, and the Football Foundation, will improve grassroots sites to be safer and more accessible. A national school framework will ensure girls have equal access to sport through partnerships with clubs and governing bodies. The Government also launched a Women’s Sport Taskforce to drive change on athlete health, leadership, and visibility. Culture Secretary Lisa Nandy called this “decisive action” to secure a lasting legacy from the Lionesses’ success.
This blog provides an overview of blockchain-based technologies, including cryptocurrencies, stablecoins, and asset tokenization. It explains what these terms mean and why they matter in the context of the legal sector. This blog will also introduce the growing regulatory landscape surrounding these developments.
What Do These Terms Mean?
Why Does This Matter?
Blockchain technology offers a transformative set of benefits for the legal industry, particularly in terms of accessibility, transparency, cost savings, automation, and data integrity. By leveraging blockchain, lawyers can streamline transactional work, digitally sign and immutably store legal agreements, and use smart contracts to automate the creation and execution of legal documents. This reduces the time and resources spent on routine tasks and lowers the overall cost of legal services. These savings can then be passed on to clients. In terms of accessibility, blockchain simplifies legal processes and cuts through complexity, making the legal system more approachable and affordable for individuals and small businesses. Transparency is enhanced through distributed ledger technology, which ensures that all parties share access to a single, immutable record of transactions. This reduces ambiguity, lowers the risk of disputes, and builds compliance directly into digital agreements. By automating tasks like document drafting and escrow management, blockchain significantly cuts operational costs and human error, helping to create more efficient, inclusive, and affordable legal services.
This topic is especially relevant as more law firm clients engage with blockchain technology and legal work in this area continues to grow. This growing importance is evident in the rising volume and complexity of legal matters related to blockchain and digital assets handled by firms. For example, Linklaters advised Ant Digital Technologies as technology service provider on the issuance of tokenised repackaging notes on public blockchain which are backed by ESG real world assets held by a world-leading new energy group and international manufacturer of solar materials. This pioneering transaction marked the first ESG-focused RWA (Real World Asset) tokenised repackaging notes where the proceeds were used to acquire Photovoltaics (PV) businesses. This transaction showcases the use of asset tokenization technology in the context of green and sustainable finance. Other notable transactions in the blockchain technology space include:
The Regulatory Approach
In October 2023, the UK Treasury proposed new rules for regulating cryptoassets, including stablecoins. The proposals aimed to make certain activities, such as operating a crypto trading platform or issuing stablecoins backed by fiat currency, regulated services. Firms carrying out these activities would need authorisation from the Financial Conduct Authority (FCA). The rules also included requirements around market abuse, asset disclosures, and listings. By November 2024, the government confirmed it would go ahead with the proposals, with only minor changes, and planned to pass the legislation by the end of 2025.
On 29 April 2025, HM Treasury published draft legislation, along with a policy note, setting out the UK’s new regulatory framework for cryptoassets. This is a key step in applying existing financial rules to the crypto sector. The new legislation introduces regulated activities under the Financial Services and Markets Act (FSMA) 2000. These include issuing UK stablecoins, storing and managing cryptoassets, running crypto platforms, and arranging transactions involving qualifying cryptoassets. Any firm carrying out these activities will need authorisation from the FCA.
Thursday 29 May 2025
What Is Private Credit?
Private credit is a form of lending that happens outside traditional banks and public markets. Instead, the money comes from private lenders, such as investment funds, and is used by companies to meet different financing needs such as business loans, financing at the fund level, or loans backed by assets. There are several types of private credit, including mezzanine loans (which are part loan, part equity), loans for companies in special situations, and debt from struggling businesses. But the most common form is direct lending where private lenders give loans straight to companies without going through a bank. In the UK, private credit is becoming more important. Around 2,000 businesses are now receiving about £100 billion in funding from private credit providers, showing just how significant this type of lending has become.
Why Private Credit Matters
Private credit has proven its value during uncertain times. It offers strong income through floating-rate loans (floating-rate loans, also called bank loans, senior loans, leveraged loans or syndicated loans, pay interest that adjusts with market rates rather than a fixed amount each period) and can help reduce the impact of market volatility. Two of the main strategies in private credit are direct lending and asset-based finance. Direct lending involves loans made directly to companies, while asset-based finance is backed by physical assets such as equipment, vehicles or consumer loans. These strategies work well together and can bring more stability and predictability to an investment portfolio.
One reason private credit has grown so quickly is that, after the Global Financial Crisis, banks reduced lending to higher-risk businesses. This opened the door for private lenders to step in and offer more flexible financing. Over time, both companies and investors have become more familiar with private credit and the advantages it offers. The growing prominence of private credit is evident in a series of strategic hires across the London legal market in recent years. Clifford Chance has brought in fund finance partners Aimee Sharman and Matt Lilley, while Freshfields has strengthened its offering with the addition of Paul Stewart, Mark Davis and Nick Fortune. Meanwhile, Mayer Brown expanded its capabilities by hiring private credit specialist Sheel Patel.
The Market Outlook
After a quiet period, mergers and acquisitions are starting to pick up again. While activity is still below long-term averages, the number of deals increased by 7% last year and the total value of those deals rose by 15%. There is growing optimism that 2025 could see stronger momentum as economic conditions improve and central banks begin to lower interest rates.
This potential rise in dealmaking could give private credit another boost. The market recently passed $3 trillion in assets under management and continues to grow as more companies look for alternatives to bank financing. At the same time, investors are attracted to private credit during times of stability and not just during periods of market turmoil. This is because private credit it offers steady income and competitive returns. Higher interest rates have made this asset class even more appealing. Even though loan margins have tightened slightly, overall returns remain strong. Investors can still earn over 10% without using leverage, and those using moderate leverage can achieve returns in the low teens.
Managing Risks
As private credit has grown, the market has become more competitive. Over the past five years, more than $2 trillion has been raised, which means there is more capital competing for deals. This has led investors to ask important questions about loan quality, potential risks, and whether returns still offer good value. Strong underwriting and careful risk management are more important than ever. Leading private credit managers are being selective, focusing on companies with stable earnings and strong positions in their markets. Asset-based finance is also attracting more interest because it is backed by physical assets. This can offer more protection, especially during times of rising costs, since the loans are tied to real assets rather than uncertain future profits. Although the market is still sensitive to things like interest rate changes and geopolitical events, private credit has remained relatively stable. In fact, during recent periods of stock market volatility, private credit has held up well. This is partly because many investors are focused on larger, more resilient companies that are better prepared to handle economic pressure.
Looking Ahead
As deal activity gradually picks up, private credit is expected to keep expanding. Sectors like technology and infrastructure continue to be key areas of focus, but new opportunities are also emerging in industries such as manufacturing, aerospace, defence and asset-backed investments. Banks are also selling more of their loan portfolios, creating more space for private lenders to step in. At the same time, long-term investors, including pension funds, are increasing their exposure to private credit. They are looking for higher returns and greater stability than what public markets are currently offering.
While there are still some concerns about how private credit is valued, most large firms rely on independent third-party valuations, similar to the approach used by banks. These systems are designed to ensure transparency and strong governance. In short, private credit is playing a bigger role in how businesses are funded and how investment portfolios are built. It offers reliable income, flexibility and the ability to adapt in a changing market.
Monday 28 April 2025
Overview of US Tariff Measures and Their Impact
In early 2025, the United States launched major tariff actions against various countries and industries, citing national emergencies, economic imbalances, and unfair trade practices.
Impact of the Tariffs
The sweeping tariffs introduced by the US, though temporarily scaled back under the reciprocal tariff system, are already reshaping the global trade landscape. These wide-reaching measures threaten to disrupt international supply chains and trade routes across multiple sectors. Markets have responded with heightened volatility, reflecting investor anxiety over rising costs, potential shortages, inflation, and waning business and consumer confidence. If these trade restrictions persist, they could destabilize international markets further and heighten geopolitical frictions. For EU businesses, the consequences are especially significant given the US is the region’s largest export destination. The effects are expected to vary across industries, depending on each sector’s reliance on the US market for sales and investment. Key sectors such as automotive, pharmaceuticals, and machinery are particularly exposed. In 2023, each of these key EU export sectors individually recorded values of over USD 200 billion to the US market.
While pharmaceuticals were mostly spared under the reciprocal tariff system, recent signals from Washington suggest this may change. The EU automotive sector is especially vulnerable, as it is already navigating a period of transition. The newly imposed 25% tariff on cars, combined with broader trade actions affecting Mexico, Canada, and China, poses a major threat to the tightly interlinked automotive supply chains. Given that many EU carmakers depend on production hubs and parts from across borders (particularly in Mexico) these tariffs could raise manufacturing costs, delay production, and further strain an already pressured industry. In addition to direct costs, companies may also be hit by ripple effects from expected retaliation by US trading partners. These countermeasures are likely to raise prices, disturb supply chains, and add uncertainty to the global trade system. Preliminary forecasts point to a potential global GDP decline, which would further discourage investment and complicate strategic planning for international businesses.
Shifting trade dynamics are also expected to cause indirect disruptions. Countries affected by US tariffs may redirect exports to new markets, putting pressure on local industries elsewhere. The EU is already feeling these effects, as seen in the steel sector, which is under strain from excess global capacity and a surge in Chinese exports. This has prompted new trade defense actions from the European Commission, echoing patterns seen during the Trump presidency. Beyond broad market shifts, sector-specific retaliation could also carry risks. EU discussions around potential countermeasures targeting US banking and tech sectors are raising concerns. Restricting US financial services, limiting access to capital markets, or imposing investment caps could backfire by disrupting the flow of US capital, especially in high-risk or innovation-heavy sectors such as venture capital and digital technology, where EU funding alternatives remain limited. Experts warn that such steps could have unintended consequences for the EU economy, amplifying the challenges facing businesses navigating this uncertain trade environment.
In conclusion, as global trade evolves, tariffs continue to shape international trade policies and operations. Despite political gridlock, the WTO remains a venue for challenging U.S. actions, with countries like Canada and China already taking steps. Businesses face uncertainty, rising compliance costs, and are adapting risk strategies, while some investors pull back from cross-border deals. Still, opportunities may arise in sectors tied to U.S. domestic priorities, and European firms could benefit from gaps in financial and digital services.
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.