Your guide to the legal profession 2025/26
updated on 10 November 2025
In this guide we outline some of the key issues facing the UK legal profession, as well as headline-grabbing legal updates and mergers – are you in the know?
Lawyers interact with companies, national and local government, institutions and individuals in almost every area of life, so it’s no surprise that wider economic and political issues affecting their clients often have a knock-on effect on their work. Of these, seven key issues are currently pressurising the sector and driving profession-wide change in various ways. They can be divided into:
- external factors – climate change, court backlogs, AI, the billable hour and cybersecurity; and
- internal issues – diversity and inclusion in the profession, and education and training trends.
Head to LCN’s Commercial awareness hub, sponsored by Mayer Brown International LLP, to boost your understanding of the factors impacting law firms and their clients.
Contents
Legal developments – talking points
Climate change
With at least 226 climate cases filed in 2024, it was a busy year for environment lawyers. While the number of cases continued to grow year-on-year from 2023, the rate of growth slowed. Companies, along with their directors and officers, were the focus of 20% of the climate-related cases filed in 2024. The US continued to lead in volume, contributing 164 cases. Political developments, including US President Donald Trump’s withdrawal from the Paris Agreement and other climate policy reversals, influenced the legal landscape. Notably, 60 cases were classified as involving an argument not aligned with climate goals, questioning the governments’ authority to pursue a proposed climate policy or companies’ environmental, social and governance (ESG) agendas.
Read this LCN Says by Mayer Brown to find out more about life as an ESG lawyer.
As legal scrutiny intensifies, pressure is also mounting on law firms themselves. Activists continue to urge firms to adopt greener practices, whether that’s by reducing emissions or carefully considering the nature of their work. For example, the Law Students for Climate Accountability’s (LSCA) 2025 report ranked 100 firms based on how much fossil fuel-related work they’ve engaged with over a five-year period. The firms were selected due to their top 100 ranking on Vault Law’s national ranking of the most prestigious law firms. Compared to 2024, an increased number of firms (14) fell into the ‘A’ category, such as Cooley UK LLP, Dechert LLP and Ropes & Gray International LLP, which means that they have minimal or no involvement in fossil fuel work. However, on the other end of the spectrum, 38 firms were placed in the ‘F’ category, reflecting significant engagement with fossil fuel clients or projects.
In recent years, the profession has made several changes in the name of sustainability. In 2023, 100 barristers made a declaration of conscience, refusing to represent fossil fuel clients or prosecute climate protesters. This made headlines because it undermines the ‘cab rank’ rule – a rule that requires barristers to take on a case if they’re available, regardless of personal beliefs.
Law firms have also been putting measures in place to ensure their practice is more sustainable. Currently, 17 firms have signed Legal Charter 1.5, pledging to reduce internal, external and global emissions to meaningful offsetting. The charter was originally launched in 2023 and included firms such as Clyde & Co LLP and DLA Piper UK LLP as original signatories. Individual policies to aid sustainability have also been introduced. For example, Burges Salmon LLP recently signed a partnership with Oxygen Conversation, investing £1 million in premium carbon credits. Meanwhile, Pinsent Masons LLP has removed plastic disposables from catering outlets and reduced print volumes by approximately 75% since 2014.
On top of the various changes that law firms have enforced, firms are also adapting to the new anti-greenwashing rules imposed on businesses by the Financial Conduct Authority (FCA), which all businesses and authorised firms have had to meet since 31 May 2024. This new regulation aims to ensure that “sustainability-related claims about [a firm’s] products and services must be fair, clear and not misleading” and gives the FCA the authority to challenge misleading claims. While the full impact on law firms is still unfolding, it's clear that steps are being taken to make the profession greener.
Court backlogs
Since the pandemic, the courts have faced mounting backlogs, with almost 80,000 cases pending in the crown court and 361,027 in the magistrates’ court, as of 25 September 2025. The National Audit Office (NAO) investigated the issue and laid out the key reasons for the delays, noting that industrial action has resulted in reduced disposals. Another fundamental issue is the lack of criminal barristers. It was found that the number of criminal law barristers decreased by 10% between 2016/17 and 2021/22. Former vice chair of the Criminal Bar Association, Mary Prior KC, explained that aspiring criminal lawyers are “put off by the hours that have to be worked, the additional stresses and strains of the job, and comparatively much less income than they can earn in other less stressful fields of law”.
Earlier this year, former Judge Sir Brian Leveson conducted a review into the court system and made several recommendations to streamline the justice process, such as:
- significantly reducing the number of jury trials;
- creating a new crown court division, where two magistrates and a judge will handle “less serious offences”;
- reclassifying certain offences to expedite case processing;
- removing the right to choose a crown court trial for offences carrying a maximum sentence of two years, with some reclassified as ‘summary only’ and heard in magistrates’ courts;
- raising the threshold for criminal damage to be treated as a summary only offence from £5,000 to £10,000;
- allowing police to deal with more lower-level cases like first time offences with cautions; and
- increasing maximum sentence reduction for guilty pleas to 40%.
Read this news story to find out more about Leveson’s recommendations.
The House of Commons is also expected to make changes to prison sentencing, following a review by former Conservative Justice Minister David Gauke, with the aim of reducing strain on the prison system. The proposed changes include an earned release scheme and greater use of community sentences.
AI
The increasing sophistication of AI is leading to its widespread adoption by law firms, with the tech being used, among other things, to help streamline administrative tasks. Research by Thomson Reuters found that the percentage of firms and in-house departments using AI jumped from 14% in 2024 to 26% in 2025. As AI use has become more commonplace, it raises questions about how the profession will change. For one – how will AI affect the careers of aspiring lawyers?
Firstly, the way aspiring lawyers are entering the profession is changing as law firms release guidance on using AI in applications, with some even introducing AI-specific questions into their applications. Shoosmiths and A&O Shearman both released application guidance, with the magic circle law firm encouraging aspiring lawyers not to use AI to exaggerate their skills but rather to “complement” them.
Read this Oracle to discover more about approaching AI in applications.
AI is also causing seismic shifts in the way lawyers operate. Many law firms are investing in AI research and training to ensure that they remain on the cutting edge. Thomson Reuters’ data shows that AI investment is driven by client demand, as 59% of corporate law department respondents want their law firms to utilise AI, likely in hopes of reducing legal costs. For example, Mishcon de Reya LLP is embedding legal AI Legora into its processes, following a successful three-month pilot scheme. Dentons is also making use of Legora to streamline high-volume tasks, such as document review, drafting and legal research. Elsewhere, law firms are also working on creating their own tools. In 2023, A&O Shearman became the first firm globally to build an AI app for in-house counsel, ContractMatrix, through a collaboration with Harvey and Microsoft. Now, it’s expanding its use of agentic AI agents to automate complex workflows like antitrust filings and loan reviews. Meanwhile, Kingsley Napley LLP is working with legal tech startup Let’s Think to co-develop The Knowledge Exchange, a tool designed to enhance knowledge sharing across the firm.
AI is also being used in court rooms. Researchers at the University of Surrey have developed an AI tool tailored to British courtroom language that improves Supreme Court transcription accuracy and links written judgments to specific moments in hearing videos, making legal proceedings more accessible and transparent. The AI tool is already drawing interest from the UK Supreme Court and the National Archives, according to the university.
As AI is used to increase efficiency, many wonder how it’ll affect legal jobs. A 2024 survey of 160 law firms by legal technology company Litera found that almost half of respondents are embracing some form of generative AI (42%). However, the uptake doesn’t necessarily mean that jobs will be at risk. In April 2025, the UK judiciary updated its AI guidance, highlighting some of the risks relating to the use of AI and emphasising that output “must be checked before it is used or relied upon”. While it highlighted that AI is for summarising large bodies of text, writing presentations and performing administrative tasks, it recommended against using it for research and analysis.
The billable hour
As AI is adopted and remoulds the role of the lawyer, it’s likely that it’ll cause a significant shift in working patterns. For one, the custom to bill by the hour may change as AI makes work more efficient. Sales director at Legal Futures Associate, Glenn Rhea, explained: “AI significantly enhances legal work, particularly in drafting, research and document review. Tasks once taking hours now take minutes and, while this revolution boosts productivity, it disrupts the billable hour by reducing task completion time. Many clients, now more cost-conscious, are calling for predictable pricing models that focus on value rather than time spent.”
According to LexisNexis research, 47% of lawyers believe that AI will change how law firms bill for services and many firms are testing alternative pricing strategies, such as fixed fees by matter (69%), retainers (44%) and flat fees (31%). Meanwhile, a 2025 survey from the Association of Corporate Counsel, which gathered responses from 657 in-house professionals across 30 countries, revealed that 61% expect AI to drive a move away from billable hours. Nearly half of respondents believe clients will lead this change, pushing for value-based billing and lower costs. However, while data showed that more lawyers are adopting AI (52% up from 23% in 2024), nearly 60% of respondents reported “no noticeable savings yet” from their outside counsel using AI on their matters. The top reason for this was AI being early in the adoption cycle (63%). However, 58% stated that this was because law firms haven’t adjusted pricing to reflect AI-driven efficiencies.
A shift away from billable hours would mark a major cultural change in the legal industry. CEO of LawCare, Elizabeth Rimmer explains that “firms often reward people who go beyond [billable hour] targets”, which can be an issue as this “incentivises people to work long hours”. So, could this shift go hand in hand with calls for better work/life balance in the legal profession?
Despite growing pressure from clients and the potential for AI to reshape workflows, the billable hour remains deeply entrenched in the business model of many top firms. Partners at leading UK firms now charge up to £1,500 per hour, with US counterparts reaching $2,000. Top firms continue to reward associates for hitting targets, and hourly rates have surged by nearly 40% over the past five years. President of Legal Professionals at Thomson Reuters, Raghu Ramanathan, acknowledged that while fixed-price models are being tested, “we’re simply not there yet”.
Deloitte Legal partner, Jeremy Black, said: “While some might have expected, and some predicted [the billable hour’s] use as an external measure would have fallen faster, it remains the main billing method used by law firms.” He added that even if firms adopt alternative fee models externally, “the billable hour is likely to persist internally since it remains the simplest way to measure output”.
Read this Blog to discover more about how AI could affect the billable hour.
Cybersecurity
There’s been a flurry of cyberattacks in 2025, with a number of businesses like Jaguar and M&S affected. In the legal profession, the Ministry of Justice (MoJ) confirmed that a significant amount of personal data was accessed during a cyberattack on the Legal Aid Agency (LAA), which it became aware of on 23 April 2025. The breach, which affected sensitive information including names, addresses and case details, has raised serious concerns about data security in the justice system. The incident is under investigation, and the MoJ is working with cybersecurity experts to assess the impact. Following the breach, the Law Society of England and Wales proposed 10 steps to restore legal services, including:
- restoring the LAA’s IT systems;
- ensuring those most in need have access to court representation;
- providing full transparency about what data has been compromised; and
- offering clear support to those affected.
This isn’t an isolated issue. Research published in 2024 by the National Cyber Security Centre found that 65% of firms have been victim to a cyberattack, but 35% don’t have a cyber-mitigation plan. Findings showed that large law firms are most at risk, with 90% of the top 25 UK law firms experiencing a threat. However, smaller law firms can also be vulnerable as they’re often seen as easier targets. Lubbock Fine partner, Mark Turner, outlined that law firms are particularly attractive targets because they hold highly sensitive data, which is “valuable if you intend to blackmail a law firm”.
The profession is increasingly aware of the risks. According to PwC’s Annual Law Firms’ Survey 2025, 81% of firms identified cyber threats as a “key threat” to achieving their strategic goals in the coming years – an increase of three percentage points from the previous year. Meanwhile, 92% of firms said they were “somewhat” or “extremely” concerned about cyber risks, up from 90% in 2024. When asked about their top business support priorities for the year ahead, slightly fewer of the top 100 firms highlighted cyber risk in 2025 compared to 2024. Despite this dip, the top 10 firms reported an average cybersecurity spend of £7.75 million. Meanwhile, firms ranked 11 to 25 increased their cybersecurity investment by 20%.
This reflects increasing awareness of the threat and its potential cost. Director and underwriter at Travelers Europe, Sharon Glynn, explained that, although increased cybersecurity measures are costly, “when you consider the costs of a successful attack – reputation, rehabilitation, business interruption, restoration, to name but a few – the spend starts to look more like an investment”.
Read this Wrestle with PESTLE to discover more about the threats of cybersecurity.
Diversity and inclusion
Diversity, equity and inclusion (DE&I) remains an important discussion for future lawyers and those hiring them. Most, if not all, law firms now have various internal networks that are designed to educate and spread awareness, as well as provide a space for individuals and groups to network and support each other.
For example, LawCareers.Net’s Diversity hub sponsor, Gowling WLG (UK) LLP, currently has six employee networks, including EmbRACE, Enable and OpenHouse, each with different focuses. Looking inwards at what your future employers are doing is a useful way to determine how they evaluate the way they work, recruit and support their employees – and the improvements they’re making in these areas too.
Find out more about DE&I at Gowling WLG.
Read on for an outline of some of the most recent diversity stats across both sides of the profession.
Ethnicity
Of all solicitors in England and Wales, 12% are Asian, 3% are Black, 3% are from mixed/multiple ethnic groups and 1% are from other ethnic backgrounds, according to the Solicitors Regulation Authority’s (SRA) latest data (updated in January 2025, but based on data collected from firms in 2023) – this remains unchanged on last year.
When taking into account seniority, 13% of partners are Asian, 3% are Black, 2% are from mixed/multiple ethnic backgrounds and 1% are from other ethnic groups. At firms with 50 or more partners, only 8% are from a Black, Asian and minority ethnic background. Meanwhile, 76% of full-equity partners are white. With very little movement in the past 12 months, it begs the question: are firms doing enough?
At the Bar, although the disparity remains, there have been incremental increases to the number of barristers from minority ethnic backgrounds, including those who are King’s Counsel (KC). Since 2023, the percentage of barristers from minority ethnic backgrounds (for non KCs) has risen from 17.5% to 17.9% and for KCs the percentage is up from 10.7% to 10.8%, according to the Bar Standards Board’s (BSB) latest report, published in January 2025. Elsewhere, people from minority ethnic backgrounds made up 24.5% of pupils – a slight decline on 2023’s figure, 24.9%.
Much like last year’s report, the BSB’s 2024 report also highlights the disparity between the overall percentage of barristers from minority ethnic backgrounds (17.3%) and the percentage of KCs from the same background (10.8%). Despite indicating that the disparity is “reducing over time”, the BSB revisits previous trends mentioned in last year’s report, including the lower percentage of people from minority ethnic backgrounds entering the profession in the past and barriers to progression to KC, as potential reasons for this difference.
Gender
When looking at sex, women make up 53% of all practising lawyers in law firms and 62% of solicitors overall, according to the SRA’s data. However, while on the surface the representation of women in the profession looks positive, when you look into female representation at partner level, only 32% of full-equity partners are women.
At the Bar, the BSB report found that women accounted for 41.2% of the barrister population in 2024, with the proportion of female KCs increasing from 20.3% to 21.1%. Meanwhile, the percentage of female pupils was lower in 2024 compared to 2023, sitting at 58.3%. The BSB also highlighted the disparity between the proportion of the Bar who are women and those that are KCs (41.2% compared to 21.1%).
Disability
Disability is an area that’s often overlooked – evidenced by the length of this section alone given the amount of data available. The SRA’s latest figures show that 6% of all lawyers said they are disabled, compared to 16% of the UK workforce. As with most diversity strands, there are fewer disabled people at senior levels, with just 5% of full-equity partners having declared a disability.
Meanwhile, at the Bar, the proportion of pupils who said they had a disability increased 1.7 percentage point from December 2023’s 15.7% figure. Despite the low response rate (66.4%), the BSB’s report indicates that disabled practitioners continue to be underrepresented at the Bar, with just 8.9% of non-KCs, 5.1% of KCs and 17.4% of pupils declaring a disability as of December 2024.
Sexual orientation and gender identity
The SRA’s latest diversity data shows that the percentage of lawyers who are lesbian or gay now sits at 2.6%, with 1.4% of lawyers identifying as bisexual. Of partners in law firms, 0.7% said they’re bisexual and 2.3% said they’re lesbian or gay. Nearly 12% of lawyers in small firms (ie, one-partner firms) and 4.9% of lawyers in larger firms (ie, more than 50 partners) said they’d prefer not to state their sexuality.
The SRA also found that 0.5% of lawyers said they have a gender identity that’s different from their sex registered at birth – a figure that’s fallen nearly 2% from 2.4% in 2017.
Of those at the more junior end of the barrister profession, 17% of pupils said they were either lesbian, gay, bisexual or another sexual orientation (not including heterosexual), according to data set out in the BSB’s latest diversity report – this is up from 12.6% in 2023.
Just over 7.4% of non-KC barristers and 5.6% of KCs also provided their sexual orientation as one of bisexual, gay or lesbian, or used another term (not including heterosexual). Elsewhere, the response rate on gender identity for the BSB’s report was up for another consecutive year, albeit marginal, from 51.5% to 52.9%. The report found that around 0.2% of practitioners (including non-respondents) had a different gender identity to the one registered at birth.
Social mobility
With parental occupation considered the most reliable indicator of social mobility by the Social Mobility Commission, the SRA has reported its findings in this area in accordance with the national approach. The regulator found that the proportion of lawyers from a professional background is 57%, while the proportion of lawyers from an intermediate and lower socioeconomic background is 13% and 18%, respectively.
When looking at the schools that lawyers attended, the SRA noticed a decrease (21%, down from 22%) in the number of lawyers who attended an independent/fee-paying school. On the other hand, those who attended a state school increased to 64% and those who attended a school outside the UK increased to 9%.
At the Bar, there remains a “disproportionately high percentage” of barristers who had attended UK independent schools between the ages of 11 to 18. Including non-respondents, the BSB reports that 19.4% of the Bar had attended an independent school, compared with around 6.5% of school children in England at any age – this remains unchanged on 2023’s data.
As of December 2024 (and excluding non-responses), 53.7% had a parent who’d attended university (down from 54.2%) and 46.3% didn’t have a parent who’d attended university (up from 45.8%).
Looking forward
With schemes such as The 93% Club, Able Interns and Bridging the Bar continuing to drive change in this area, firms and chambers must also continue to make moves to initiate progress. In the past year, we’ve seen (among other things):
- Gowling WLG set its new diversity targets as part of the firm’s Inclusion for All strategy;
- several firms introduce solicitor apprenticeships, with Shakespeare Martineau LLP recently welcoming its first cohort and Reed Smith announcing the launch of its UK solicitor apprenticeship programme, with plans to recruit three apprentices as part of the first cohort at the London office;
- Foot Anstey LPP expanded its parental leave policy to include six months full parental leave to employees of all genders, setting a new standard for the industry and beyond;
- 10 interns completed a six-week paid internship at The Law Society of England and Wales as part of the #10000BlackInterns initiative; and
- 15 scholarships were awarded to aspiring solicitors through the Law Society’s annual Diversity Access Scheme programme.
Education and training trends
Pass rates associated with the Solicitors Qualifying Exam (SQE), funding for level 7 apprenticeships and the new Level 5 Diploma for Senior Associate Paralegals are on LawCareers.Net’s list of educating and training trends from the previous year – here’s what you need to know.
SQE pass rates
The SRA’s most recent statistical report shows that the pass rate for July 2025’s sitting of the SQE1 was just 41% – the lowest recorded pass rate for the assessment. For candidates attempting the assessment for the first time, the pass rate was 46%.
There continues to be discrepancies between pass rates of candidates from different ethnic backgrounds, with the SRA recording a pass rate of:
- 55% for white candidates;
- 39% for Asian/Asian British candidates; and
- just 28% for Black/Black British candidates.
Elsewhere, the pass rate for qualified lawyers was 42% compared to the 47% achieved by non-qualified candidates.
Patrick McCann, CEO of City of London Law Society, took to LinkedIn to urge employers to “show compassion, exercise discretion, and see potential as well as numbers” following the latest SRA report.
Meanwhile, the SRA stands by the SQE1 format. The regulator states that single best answer (SBA) multiple-choice questions (MCQs) are “widely used in professional high stakes exams in the UK and across the world”, as well as “high stakes legal assessments such as the centralised exams in barrister training courses in England and Wales”. The SRA explains that it’s “important that candidates are able to demonstrate they can apply their knowledge to a wide range of areas of legal practice”, with SBA MCQs allowing candidates to do this “in a time efficient” and “cost-effective way”.
You can read more about the SRA’s rationale for using SBA MCQs for SQE1 via its SQE website.
For more information on the latest SQE pass rates, head to LawCareers.Net’s News section or the SQE hub, sponsored by The University of Law.
Level 7 apprenticeship funding
At this point last year, the government’s reforms to the apprenticeship system was high on the list of worries for those joining the profession. In an update published in May 2025, the government announced that it plans to “continue funding the level 7 apprenticeships for those aged 16 to 21”. While this news was welcomed by many, including the Law Society, the plans to cut level 7 apprenticeship funding for those aged 22 and older from January 2026 remains a concern. In light of this, the Law Society has called for the government to continue funding for those starting solicitor apprenticeships aged 21 and over in England, stating that 45% of those who began a level 7 solicitor apprenticeship in 2023/24 were between the ages of 20 and 24.
On the other side of the profession, the latest noise surrounding barrister apprenticeships comes from Tim Coulson, chief executive of Cornwall Street Barristers and chair of the barrister apprentice trailblazer group. Coulson is hopeful that barrister apprenticeships “will be open to candidates in the not-too-distant future” and described them as “one of the key tools for unlocking quality and widening participation”. Watch this space!
Level 5 Diploma for Senior Associate Paralegals
The first Ofqual regulated qualification for paralegals at level 5 was launched. The National Association of Licensed Paralegals’ (NALP) new Level 5 Diploma for Senior Associate Paralegals is designed to build on key foundational subjects and can be studied at a range of NALP approved centres. NALP CEO Chantal Cooke described the qualification as an “important addition”. Cooke added: "Paralegals play an important role within the legal sector and they deserve to be confident that the qualifications they are taking are of the highest quality, which is why NALP is proud to be the only organisation offering Ofqual regulated paralegal qualifications.”
Law firm growth: M&A, private equity, litigation funding
As with any business, growth is inevitably the goal and law firms are no exception. Lateral partner hires and plans to target fast-growing sectors like AI are among the routes that law firms are likely to seek growth as we move into 2026. In fact, nearly one-fifth of leaders indicated that they’ll be selling tools developed by the firm itself, according to HSBC’s 2025/26 Law Firm Strategy and Investment Report, while Richard Medd from Browne Jacobson LLP says the firm is still committed to investing in “high-quality lateral hires”. He adds: “The firm needs expertise in the areas that clients genuinely need, not only in terms of legal services but also to meet the challenges faced by their industries.”
In addition, private equity (PE) is fast emerging as a popular avenue for law firm expansion. Law firm Greenwoods Legal LLP recently took PE investment from Gresham House Ventures, becoming the first mid-market law firm to take investment of this kind. The move has been described as a “natural next step”, after the firm had dismissed other funding options (eg, bank or partner funding), with plans to drive strategy and expand the firm’s reach. Medd says the PE market “has matured significantly” and “now has a more specific and compelling offer for legal”. In fact, nearly a quarter (24%) of firm leaders now view PE as a more attractive growth prospect than they did previously, according to HSBC’s report. Nik White of Brabners LLP says: “There is a role for private equity, and I’m sure it will become more common with diversification, as firms and their cost bases both continue to grow.”
The appetite for M&A is also on the rise, with one-in-five leaders predicting a significant uptick in activity over the next 12 months. While only 2% foresee their firm floating, almost one-third across all revenue bands are eyeing mergers in 2026. The HSBC report suggests that Herbert Smith Freehills LLP and New York-based firm Kramer Levin’s merger might signal the way for other firms. The two firms joined forces earlier this year to form a new global powerhouse to operate under the name Herbert Smith Freehills Kramer, with a focus on expanding key practice areas and solidifying the firm’s US presence.
Find out more about the Herbert Smith Freehills Kramer merger via LCN’s News.
Meanwhile, 43% are planning acquisitions or considering full-scale mergers in 2025 and 2026 – and 7% are actively exploring or preparing for PE investment, which could be the catalyst for even greater momentum.
Read this Feature for a guide to law firm mergers.
Legal developments
Employment Rights Bill
As of 30 October 2025, the Employment Rights Bill is in its final stages, following the release of its expanded version on 14 March 2025. The bill addresses key issues like unfair dismissal, collective redundancy consultation and zero-hour contracts. Key changes include:
- new right to be offered ‘guaranteed hours’ contracts to reduce zero-hour contracts;
- new rules for redundancy process when an employer proposes 20 or more redundancies at once;
- legislation to stop ‘fire and rehire’ tactics;
- changes to statutory sick pay;
- new rights for trade unions; and
- the creation of a new state enforcement agency the Fair Work Agency.
The government stated that the bill aims to improve workers’ rights and living standards. The bill will likely see increased work for employment lawyers as businesses will need to stay up to date with changes to ensure they’re compliant. TMW Solicitors predicted that the new clauses would result in an additional £80 million in annual costs for UK businesses. This financial burden comes on top of recent increases to the national minimum wage and national insurance contributions. TWM also cautioned that the bill may deter businesses from making new hires. Prime Minister Keir Starmer has defended the legislation, calling it “the biggest upgrade to workers’ rights in a generation.” He stated: “Our Employment Rights Bill is good for workers, good for businesses and good for the economy. It’s a core part of our agenda to make people better off and will make a real difference to people’s lives.”
Read this Commercial Question by Birketts LLP to find out more about the changes the Employment Rights Bill will bring.
EU AI Act
AI regulation is a hot topic across all areas of business, and the European Union (EU) AI Act is the world’s first comprehensive AI legislation. While the UK is no longer part of the EU, UK companies that operate in EU countries will need to adapt their strategies to align. Additionally, as Taylor Wessing outlines in its Commercial Question, the act is also likely to set the standard for future legislation, much like how GDPR legislation became a benchmark for data privacy.
So, what impact will the act have? The act introduces a tiered risk framework, placing the toughest requirements on high-risk AI systems – such as those used in recruitment. These must meet standards around transparency, data governance and human oversight. Businesses will need to be prepared for changes as breaking regulations will result in significant fines of up to €35 million or 7% of global annual turnover. Sector-specific implications are already emerging. For example, HR teams using AI for hiring will need to meet new transparency standards, while media and fashion businesses must consider how biometric data is handled.
Renters’ Rights Bill
The Renters’ Rights Bill received royal assent in October 2025 and is set to significantly reshape the private rental sector in England by abolishing fixed-term assured tenancies, assured shorthold tenancies and Section 21 ‘no fault’ evictions. However, some key details remain unclear, such as the implementation timeline. Industry stakeholders are calling for at least a six-month lead-in before major changes take effect. The bill also introduces a mandatory landlord registration database, although its launch date and requirements are yet to be confirmed. Purpose-built student accommodation is expected to be exempt, allowing for landlords to grant fixed-term contracts that align with the academic year. To do this, landlords will need to be a member of the housing code of practice and the tenancy must be granted by an education institution.
Following the bill’s introduction, tenants will also have more power to challenge rent increases, which can take place once a year or at the start of a new ‘rent period’. During the bill’s passage through parliament, there were some concerns that the new legislation gave tenants a positive incentive to challenge rent reviews, whether or not they align with the market rate, potentially leading to a surge in cases before the First-tier Tribunal. To address this, the government introduced a safeguard: the secretary of state now has the power to make regulations, allowing rent increases to be backdated. This means if a tenant delays a rent increase by challenging it, the landlord might still be able to recover the full amount later – if the tribunal is overwhelmed and delays decisions.
Ellie Nicholl is a senior content & engagement coordinator and Olivia Partridge is acting deputy head of content and events at LawCareers.Net.
