The New Labour Government: What Does This Mean For Law Firms In The UK?

Date Written: 31/01/2025

Writer: Annika Park

Introduction

As expected, the Labour Party’s win in the UK’s general election, held on July 4th 2024, marked a significant shift in the country’s political and economic landscape. The government's new policies and changes in regulation are set to affect many sectors across the UK, and the legal sector is no different. In order to be adaptive to the changing legal field, it is crucial to highlight key growing sectors to take advantage of potential opportunities and challenges that the new government will present for firms and lawyers.

Regulatory Reforms

The first dramatic change in the market is Labour’s plan for national insurance contributions. For law firms, these new contributions drive up the costs of hiring new lawyers, making the job market even more fierce. This is because the tax contributions may demand higher profitability than previously under the Conservatives. Now, what does this really mean for aspiring lawyers? With the costs of hiring increasing, it is likely that firms become more selective to mitigate risks. This would lead to higher competition, particularly for NQs and juniors looking to work at larger firms. However, it is important to stay hopeful as at its current state, the legal market remains afloat and firms are still highly receptive to candidates with strong skills.

Emphasis on Employment Rights

Another key reform proposed by Labour is the evolution of employment rights. The new government is keen on implementing, or sustaining, flexible working. They expect it to be the new employee standard and support a hybrid working style. Therefore, it is likely that firms will start factoring this into workplace environments and even recruiting in order to ensure their productivity is not stunted.

Environmental Law and Sustainability

When Labour was elected, many focused on the 10-year infrastructure strategy outlined in their manifesto. This included promises for significant investments in renewable energy, support for new nuclear projects, improved energy storage solutions, and even a commitment to fully decarbonise the electricity grid by 2030. As the government implements new environmental regulations, what does this mean for law firms? Due to the increase in environmental work, it is likely that environmental specialists will be a valuable commodity. This creates a recruitment challenge for firms, both in hiring and retaining their lawyers. The firms will likely have to increase salaries and boost benefits packages in order to appeal to new talent. However, for aspiring lawyers, this creates lots of opportunities. It is suggested that future lawyers start to educate themselves on environmental laws and sustainability as these are skills now highly valued at top firms in the UK.

Private Client Law

For firms which specialise in private client law, it is expected that Labour’s new budget will increase competition dramatically. This is due to the new budget including tax adjustments, specifically targeting high earners and corporations, leading to an increased demand for lawyers specialising in wealth management, estate planning, and crucially, tax law. Firms like Charles Russell Speechlys and Macfarlanes LLP are likely to see and are already seeing, increased workloads as their wealthy private clients respond to the new regulations and compliance requirements.

Conclusion

Overall, the Labour Party’s win signals a transformative era for the legal sector, as regulatory reforms, enhanced employment rights, environmental initiatives, and tax adjustments reshape the field. While this may bring challenges for both firms and lawyers, it also opens up massive opportunities for aspiring lawyers to quickly adapt and focus on key growth areas in order to be well-positioned to succeed in the evolving legal landscape.

References

Chadwick Nott. How the new Labour government could impact the legal sector and create new challenges and opportunities for UK solicitors and law firms. Available at: https://www.chadwicknott.co.uk/blogs/how-the-new-labour-government-could-impact-the-legal-sector-and-create-new-challenges-and-opportunities-for-uk-solicitors-and-law-firms/

Sweep. Labour wins UK general election. Available at: https://www.sweep.net/insights/labour-wins-uk-general-election#:~:text=Labour's%20manifesto%20outlines%20a%2010,support%20for%20new%20nuclear%20projects

Chambers and Partners. Private wealth law – London firms. Available at: https://chambers.com/legal-rankings/private-wealth-law-london-firms-21:2633:11814:1?l=en-GB