Legal News: Key Updates You Can't Miss! ⚖️

Big Law’s Big Merger test

1. A&O Shearman: One Year On

Background: Allen & Overy (A&O) and Shearman & Sterling merged to form A&O Shearman, a transatlantic legal powerhouse with 4,000 lawyers and 47 offices in 28 countries.

Challenges:

• Trump-era scrutiny: The form was forced to settle with the Trump administration over it DEI (diversity, equity, and inclusion) hiring practices. It agreed to provide $125 million in pro bono services and remove “DEI” terminology.

• Cultural clashes: UK staff are concerned about “Americanisation” - e.g., stricter return-to-office mandates.

Retention efforts: A&O Shearman introduced a new all-equity pay model. Top partners can now earn over $10 million to stay competitive.

Outlook: The firm’s first combined annual results this summer will be the key test for success.

Am Law 200 Sees Double-Digit Revenue Growth in Q1 2025 Despite Sluggish Demand

The Am Law 200 reported 11.3% revenue growth in Q1 2025, largely driven by continued increases in billing rates, according to Wells Fargo’s latest legal sector report. Standard rates rose by 9.5% year-over-year, with the Am Law 50 leading at over 10% growth.

However, the increase in demand—measured by lawyer hours—was modest at 1.7%, falling short of the 3.2% projected by firms in January. This reflects a cautious mood amid slowing US M&A activity (down 13%) and economic contraction (GDP shrank 0.3%), both partly influenced by new tariffs introduced by President Trump.

Law firms responded to anticipated demand by increasing lawyer headcount by 3.4%, contributing significantly to a 10% rise in expenses. Still, optimism remains high for 2025, with firms not yet revising their forecasts.

Commercial Awareness Insight: Rising rates are currently sustaining revenue growth for US law firms, but sluggish deal activity and economic instability are pressuring demand. Aspiring solicitors should watch how firms balance hiring and expenses in uncertain markets, and how global political decisions (e.g. tariffs) influence legal workflows, especially in M&A and cross-border practices.

Commercial News: The Latest Insights You Need to Know! 📈

Rio Tinto Shareholders Reject Activist Push to Review London Listing

At its annual general meeting in Perth, mining giant Rio Tinto faced an activist proposal from hedge fund Palliser Capital, calling for a review of its dual-listed structure with a view to consolidating on the Australian Securities Exchange (ASX). The proposal received just 19% shareholder support—far short of the 75% required for approval and even below the 20% threshold needed to prompt further investor consultation.

Palliser argued that consolidation would unlock shareholder value, citing that 80% of Rio’s earnings are derived from Australia. However, Rio’s board rejected the claim, warning of significant tax implications and a potentially lower value for a unified ASX listing. Major institutional investors and proxy advisers are split, with ISS and Glass Lewis backing the review, while others, including Royal London Asset Management and Ninety One, opposed it.

This development underscores the ongoing tension between activist investors and corporate governance, while also raising broader questions about City of London’s ability to retain major listings—particularly in the mining sector, following BHP’s exit and Glencore’s potential review.

Commercial Awareness Tip: Understanding corporate governance structures and shareholder activism is crucial for aspiring commercial solicitors, particularly those interested in capital markets, M&A, and regulatory matters.

Lloyds Reports Record Mortgage Lending Day Before Stamp Duty Change

Lloyds Banking Group reported its highest-ever daily mortgage lending in March 2025, completing 5,000 mortgages in one day as buyers rushed to beat the stamp duty deadline. In Q1, Lloyds lent to 20,000 first-time buyers and grew its mortgage book by £4.8bn. The stamp duty threshold for first-time buyers fell from £425,000 to £300,000 on April 1, prompting a surge in early completions.

Despite the lending boost, Lloyds’ pre-tax profits fell 7% to £1.5bn due to increased provisions for bad loans, partly attributed to concerns over the economic impact of US tariffs. Net interest margin improved to 3.03%, and revenue rose by 4% to £4.4bn.

The bank continues to invest in digital transformation and cost-efficiency, though it faces ongoing risk exposure from its motor finance operations pending a Supreme Court ruling on commission disclosures.

Commercial Awareness Tip: This story highlights how tax policy, economic uncertainty, and regulation can directly impact lending patterns and financial performance. Understanding the ripple effects of government policy and judicial decisions on financial institutions is essential for aspiring solicitors, especially those eyeing banking, real estate, or financial regulation.

Legal Lingo Unpacked: Your Quick Terminology Breakdown! ⚖️

What is Private Capital?

Private equity and venture capital are just part of a wide private capital universe. It is an area of finance that has been around forever, but has become increasingly commented on in the last couple of years.

The term “Private Capital” refers to investment in unlisted assets, often (but not always) by private pools of money such as buyout firms, sovereign wealth funds, private investment funds and wealthy investors. Institutions with a long-term view, such as pension funds and university endowment funds, are also active in the market (either via direct investments or through investments in funds), as are banks. The distinction between private capital and private equity is that the former is the umbrella term for all types of investments in unlisted assets. This includes private equity (investments in private companies and/or buyouts of public companies) but also encompasses venture capital (investments in early stage companies with high growth potential), real estate (investments in real estate assets), private debt (debt investments that are not publicly traded), infrastructure (investments in infrastructure assets) etc.