Why 2025 marked a turning point for the business of law

It's two weeks till Christmas. Associates are rushing to close their time sheets. Festive parties are in full swing. And seemingly half of London's lawyers are on their way to Australia for the ashes. 2025 has felt like an inflection point for the legal sector. Sure, revenue, profits and pay, largely went up again for commercial lawyers, but fundamental changes are underway across the business of law. Welcome to the lawyer podcast. I'm Katrin Griffiths editor-in-chief of the lawyer. And I'm Christian Smith, the lawyer's litigation editor. The story of 2025 was seemingly dominated by technology, investment, expansion, mergers and Donald Trump. So for our final podcast of the year, we take a look back at what we'll remember amongst all the hubbub, what changed this year and what it means for 2026. And to do so, we bring you a mix of the old and the new as we welcome up for the first time onto the podcast International Editor, Charlie Johnston, our acting tech editor, Ben Lucas, as well as our more regular contributors, Richard Simmons, our Deputy Editor to UK, Jessica Bokeh, our Sustainability Lead and Nickel Raj Agawal, our Deputy Insight Editor. Ben Lucas, welcome. Welcome to the podcast for the first time. You are our acting technology editor. And I suppose the story of 2025, it's just AI, AI, AI and more AI. Absolutely, Kat. I think so many headlines around this. And then last week, I think kind of typified that when we found out that Harvey had done another fundraising round, raising 160 million dollars at a valuation of eight billion dollars. Absolutely massive. And that was its third funding round this year. It's raised roughly over 800 million this year with everything, sort of added together there. And the growth of companies like Harvey and LaGoura, the sort of the two companies battling out to win over business from law firms has really been sort of continuing this year in full force. And yeah, their growth has been astronomical. I mean, again, numbers here 100 million annual recurring revenue for Harvey this year. Winston Weinberg CEO of Harvey sat down with the lawyer earlier this year to tell us that he's got his site set on an IPO in the future, again giving you an idea of the ambition of these sorts of companies. And the same for LaGoura as well. You know, at the start of the year, they had around 200 customers in 20 markets. At the end of the year, they're looking at 550 customers in over 50 markets. Virtually no presence in the UK at the start of the year. They've now got a team of around 40 or 50 people here looking to get an office next year. And again, their valuation has skyrocketed as well. Their fundraising round a couple of weeks ago, 150 million fundraising rounds. Series C saw them hit a valuation of 1.8 billion. That's tripling in less than six months. And I think the key thing to take away from these things is these huge rise in valuations. And this is showing that investors are really confident in their ability to keep growing and generating revenue going forward. So they, you know, investors see only more growth to come from these companies. And that more AI can be rolled out in law firms to take on some of those cumbersome tasks that would take up so many people and so many hours. It's a very interesting point you make about valuation spend because, you know, elsewhere in the tech sector, there's been a certain amount of doom mongering about, you know, is there a massive AI bubble? Is it all going to come crashing down? But, you know, clearly, there's still an addressable market, you know, large addressable market for both Harvey and LaGoura to go after. I mean, they haven't converted half the potential clients that they want to convert yet. Chris, and I know that you're a little bit skeptical though. There's not my area, but all I'll say is, Ben, you've got the stats, but Harvey, for example, we're having an 8 billion dollar valuation somewhat out of, obviously, you're quite right. There's a huge market for it, but I mean, that sort of seems like bubble potential at the very least. Yeah, Winston kind of pushed back on this in the interview to say, you know, he was relaxed about the multiples that they have at Harvey. I think there is a lot of investment pouring in to AI firms. I spoke to one VC Vesta a couple of weeks ago who said, you know, there's kind of a lot of what he called unsophisticated capital flowing into a lot of AI law firms expecting big exits down the road. Now, whether those big exits materialize or not we'll have to wait and see, but then that could temper how much money comes into some of these companies going forward, particularly in the legal tech sector. For example, if those exits aren't as big as the investors expected, then maybe less capital start to rush in to those areas. But again, yeah, I think every sort of, in video results call, oracle results call, you know, everyone's waiting to see, is this the thing that bursts the AI bubble and for now it keeps going. And I think compared to previous bubbles that we've had, you know, it does seem that AI has become quite widely embedded, and so there is a sort of a base level for this technology across, you know, the business world, and whether valuations are stretched or not. I think it might depend on individual companies, but yeah, this will sort of definitely be playing out of the next year. Yeah, and there's, you know, obviously, it's not just Harvey and Legora that are active in this market, you've got Microsoft, you've got, you know, Lexus Nexus, you've got a whole bunch of very seasoned kind of information or platform, information providers or platforms that are doing it, but they have already been casualties, right? Yes, I mean, that was just this week. I mean, we've been waiting to hear what's going to happen with Robin AI, very much not necessarily an AI native firm like the likes of Harvey or Legora sort of coming out and much later since we're around 2002. Cicero, bought Robin AI's managed services team this week. That was a deal that's been announced. No value on that deal. But we have, we have had bits of consolidation elsewhere as well. Walter's clueer bought the German legal AI firm Libre technology. That was for around 90 million. It's not so much of a casualty there, but definitely consolidation. And I think speaking to other people in the legal text base as well, I think that's something that we'll start to see as well in the new year that some of the smaller players, you know, they might be acquired or merged. I think that could be a dynamic going forward in the legal text base. And what about AI lid law firms? I mean, this is the sort of emerged and they're going to continue to do so. Yes, really good question. I mean, the buzz around Garfield AI this year in the UK when the solicitors regulation authority sort of approved them as the first AI law firm. You know, that wasn't only captured in the legal press, but mainstream press as well. They featured in a Channel 4 Dispatches episode about, you know, will AI take my job? And so this is kind of something that, you know, has really captured legal press and public press, but it's that's kind of, you know, at the more sort of consumer end of the legal market. But we're seeing this actually in the corporate legal market as well. So at the start this year, we had an AI native law firm called Crosby launch in the US. They've received over 25 million dollars in funding this year. And later on, we saw Blackstone invest, I think just over 50 million dollars of capital into an AI powered sort of legal and compliance chemical norm AI, which has just gone out to launch its own AI native law firm, norm law. And they're going to be working quite closely with Blackstone to take on some of their work. And, you know, almost certainly that's eating in to some of the bread and butter work that some of these bigger law firms servicing Blackstone will have been doing. And so again, I think we'll probably see one or two more AI native law firms pop up next year as well. Let's turn to Charlie Johnson, our international editor. Charlie, you became international editor at the lawyer this year. And I've very, we've all very much enjoyed your LinkedIn videos in perfect Spanish, by the way. So couldn't, it's always nice to have a linguist in this role. There's been a lot going on on the continent. And I think the sort of the idea that Europe is is a sort of second sort of backyard, if you like, for UK firms are only obsessed with with the US is is probably pretty disproved. But, but you know, what's been your biggest takeaway with all of the activity that's going on in the continent at the moment? Yeah, absolutely. So it's been, it's been a really fascinating year to start this role. And to be looking at the continent, as you rightly point out, there's a lot of law firms that are seemingly prioritising growth in Europe, much, much more so than than they have historically. And even in some ways, putting a pause on London to do so. But what I think has really stood out this year in terms of regions has actually been the Nordics. There's been so much change there. From a region that's traditionally known for its stability and collegiality in those referral-driven relationships. And I think that firms there are becoming much less wedded to those and much more competitive and expansionist. And a few of them are doing so in very different ways this year. And that's been exciting. Talk us through some of the firms that have, you know, they've been quite dramatic, major moves, haven't they, major team moves and so on. Yeah, absolutely. So one thing that that brings to mind straight away with team moves is of course Norway's BAHR. BAHR is one of the biggest firms in Norway. But historically, they have only had offices within Norway and very much deliberately strategically. So there are super, you know, super powerful domestic player, but have never expanded internationally until this year. Towards the end of this year, what we did see from them is that they embarked upon this huge partner raid across Stockholm and Copenhagen, largely from one of them in competitors. And that was a super aggressive, can I say, move for them. We've never really seen something like that from them before. The hires are all super high-quality, private equity teams. And I stress teams because there's such a large amounts of people that are moving over. And it just goes to show how that talent market is becoming much more fluid in a way that we haven't seen it before. And the firm that BAHR hired from is itself an aggressive, accusative firm, isn't it? Yes, absolutely. So, yeah, they've hired from a firm called Shirt, who historically are also known for quite aggressive hiring expansionist streaks. They've been compared to, you know, the likes of Kirkland for the Nordics before. They have operated a very aggressive, private equity hiring spirit for the last few years. So it'll be interesting to see kind of how they respond to that now that a lot of those top partners are leaving, we'll have to see what that holds in store for them. So there's drama on that side, but there's also something quite profound as well, which is sort of potentially hints to a longer term and more substantial transformation within European independent firms. And that happened this year in Stockholm, didn't it? I believe you're referring there to the outburst of private equity investment in legal market. So that was a super exciting move that we saw happen this year. It's the first time ever in Sweden's legal market that there has been external capital invested into law firms. So that was the launch of AGRD partners, which is essentially bringing six independent law firms under one umbrella platform. It's the first time that that's happened and it breaks away from decades of tradition in what is again a very conservative market or regarded until now is a very conservative legal market. The lawyers involved in those law firms did have to leave the bar association to accept that external investment. So I think what that does show us is that, you know, client expectations in that market are clearly outpacing the traditional structures that law firms have. And the lawyers there are responding quite dramatically by breaking away. I think it's a direct response to gaps in, you know, tech investment and training and those scalable services and that delivery that those firms perhaps have been unable to solve on their own. And I think what's so notable about that particular deal? Well, not least that the former Vinger Managing Partner, Maria Pierre Hope, is actually leading that firm. It was, I think, advised upon by David Morley and Wim De Jong, who have been very vocal in their crusade to get private equity investment into the legal sector and to say that this is coming in a major way. It was very notable because when Matt Bernan-Iwer and New York just last month, US lawyers will referencing this deal. New York lawyers who you would not expect to be referencing a Swedish private equity investment were all talking about it as something that was really interesting. So I think that that has had ramifications. I know Charlie, it was a great story you got when you got that. It holds out a promise of quite radical transformation within Europe that I think not every European firm is ready for. Well, I think Charlie there on its own justifies a podcast in the new year. Thanks very much for that. We want to turn west of there now across the other side of the Atlantic and look at the year that was for transatlantic law. I mean, in many ways, it was sort of the year of transatlantic law. If it wasn't already in the years gone by, the lawyer, of course, launched the global elite, our new coverage of the top tier of global law firms. And the kill you have been doing a lot of work on all of this. And I mean, Merger Mania, which we did as a podcast not too long ago is really something that's been taking over. I mean, was it the year of the merger? Do you think? Probably, but even if you sort of take a step back from mergers because they normally grab the headlines, but if you look at what's been happening in the transatlantic corridor and particularly in the New York and London corridor, it's been one of the busiest and the most significant periods we've seen in a long time. We've had more cross-border deal activity. We've seen hiring become much more synchronized on both sides of the Atlantic. But more than anything, of course, like you said, it's been a year that's been defined by transatlantic mergers. You've had HSF Kramer go live earlier this year, then more recently, the Asherst and Perkins-Kuhi type was announced. What's striking about both those deals and really even if you go back to the A&O Sherman deal is that the momentum has come from the UK side. And to me, it says something pretty important about where the market's at. A lot of the US firms that have largely domestic offerings are starting to recognize the limits of that model. If you want to be truly competitive with clients that operate globally, you need proper scale and depth across that corridor. And that can be slow. If you're building that organically, it can be expensive and it can be uncertain. Perkins-Kuhi is a classic example of that trajectory. They launched in London last year. They made some highers, but ultimately realized that it was not going to give them the scale or the transatlantic capability that they need quickly enough. So they instead operate for a merger. So if you look into the next year or so, I think you're going to see a lot more US firms targeting London as a growth priority for some that might start with office launches or lateral hiring sprees. But I think we'll also see more strategic moves that ultimately lead to mergers or combinations. And I also don't think that it's going to be limited to the mid-tier of the smaller firms in the US. I mean, you've seen Sullivan and Cromwell recently make two marquee hires in London. And that raises a question about what they might do in London in the near future. I remain esceptic on Sullivan's move in London. I think they already make pots of money in New York. They're not a struggling firm by any means. But I think this is the idea that they're going to build out properly in London is utterly fanciful, frankly. Why? Because they are not culturally set up for high growth in London. They have to completely change their model about what they want to offer. They're not actually that private capital driven. They tend to do, over here, they tend to do much more M&A for strategics, etc. And financial institutions. So they're not set up as your class at US high growth warp speed kind of model. And just culturally, they're a super conservative firm. And I think in recent years, the only super conservative firm to have really broken the model is poor wise. And in order to do something big, if you're coming from a point of virtual zero presence is to do something dramatic Sullivan isn't going to do that. The you go Sullivan, there's the the gauntlet is laid down there. I don't necessarily disagree. And I think the skepticism is right. And I don't think that they're going to do something as dramatic as ball wise has. Having said that, I don't think that they made those two hires to remain a 15 part of practice. It indicates that they're going to hire at least seven or eight more people in the near future, if not more. I totally agree with your analysis that the material within the US is going to have to have a rocket underneath it, frankly, to start keeping up with this momentum. There is also this other major issue, which is one of the reasons that Ash has ended up being quite attractive to a US firm, was that it has a very well developed tech and delivery function, an innovation arm and so on. And that to a large extent is not something that has been built out by every single US firm, you know, the big firms have all got huge budgets on this, but quite a lot of the US mater are quite behind, I would say. And speaking of being attractive to merger partners, I feel like firms are going to make more internal changes to position themselves as investment or merger ready. Even if they're not openly personal deals right now, we've seen that with Decker, they're a good example here. They've had office closures, the sharper sector focus and the emphasis in profitability. It all sort of helps present a more attractive proposition than they might have even a few years ago, whether that's for the potential merger or for any external investment. And external investment, it's such a thing this year. And actually the sort of the US appetite for external investment is now literally a thing because earlier this year, McDermott and indicated that it was actively exploring private equity investment as well. We have to we have to bring in Rich Simmons here, our deputy editor, UK, who has been all over this topic, Rich, you led the UK 200 research, which was super involved, which was laser focused on the appetite and the progress of private equity investment within the legal sector in the UK. Your thoughts on the year? Yeah, well, it feels like it's been the year when private equity has gone in and out of fashion about six or seven times somehow. It feels like it's been the year when P houses and certainly the UK lowered mid-market has gone on a journey from innocence to experience, shall we say. There has been a lot of rising up, a lot of hard home truths. And a lot of discovery about what this might mean. We've seen a few more law-front acquisitions earlier in the year, including Treth Owens, one of the biggest acquisitions by law, well, the biggest acquisition by law front to date. We've seen Higgs go in the summer with private equity. But it also feels like that buy and build model might just be now falling out of favour and what we might see in the future is more sort of minority investments, things like that. And then away from the UK mid-market, we have almost a separate universe of what the global elite and the larger firms are going to do. And as you say, Kat, if 2025 has been innocence to experience in the UK, 2026 in the US, I think it's going to be something else. I think it's going to be massive. Yeah, and I think there will be some very high-profile mistakes. But nevertheless, it is fair to say, is it not, that the US, there are plenty of firms, mostly consumer-facing sort of claimant type firms, doing personal injury, so on. There has been a number of private equity investments in the states already, and they have been able to do this through various structures available ready to them. Yeah, and obviously the consumer space is so enormous in the United States. It dwarfs that anything we have over here, that there is just so much opportunity for consolidated to sweep up. But we shouldn't take our eyes off the global elite and Wall Street. It is remarkable how little aware that quite a lot of larger law firms are of what are going on in retail, on the retail side of legal services, if you like, with the consumer base, because they should really be on the lookout to see what's happening, because that is where all of the action is. You're totally right. And there have been, we're not mentioning on this podcast, but there are clear acquisitions in this space, which are distressed acquisitions, that you would not necessarily want to go. That's the poster child for modernisation and private equity investments in this sector. And speaking of Wall Street Christian, I didn't want to let the podcast end without just mentioning Preston Donald Trump and the effect that he has had on big law this year. Yeah, 2025 will go down in history very much so, both, particularly in the United States, of course, but also in the UK and Europe as well, and internationally, as the year where the US government came after a certain number of law firms. We all know the story there, the current status of that is, of course, those matters are all on appeal. The government lost all of those matters in the US from the firms that challenged the executive orders against them, but they're now on appeal and rumbling away, although somewhat mysteriously below the surface. But yeah, I think that is something that will absolutely be remembered from this year. And I think that we did a podcast series on this earlier in the year when it was going on. And we sort of said that a number of firms had been found wanting and I don't know if our opinions had necessarily changed on that. It certainly faded as a top of mind issue. Nevertheless, it's, you know, and I think this is all the piece actually with private equity investment. You know, this, this is now a time where most of big law can say goodbye to, I mean, a lot of, a lot of managing partners in big law still cleave to this idea of the partnership, you know, and I mentioned that because when we were visiting the US firms in November, a lot of them managing partners, but when I'm owning this and saying how important it was to maintain this, this partnership on ethos, I think hand in hand with that goes an idea that a law firm is represents more than just an economic animal. I think what this year has shown is that firms are now, they've been so pragmatic that they've become businesses first and foremost. And the idea that there is anything greater than them, that there is an allegiance to a rule of law or a set of principles outside the profit and loss is now questionable. And I think certainly with private equity investment coming in, we're seeing a complete shift. So I think it's all of a piece. I agree with that to a large extent, but I think that there's a slight difference between those firms that that did push back against Trump and those that that bent the knee for one of a bit of phrase. Yes. But I think you're right. I think we can no longer take for granted that across the board and law there is the sort of higher ethical factor that is there for lawyers as alongside making money. Some people would say it was never there in the first place, but I think we've certainly seen evidence of that now. Yeah. And I think if you're making that much money, and by the way, my remarks were referencing the largest US firms and the most profitable firms, if you're making that much money, you have more to lose. You have more to lose if part of your business could walk out of the door as a result of an executive order against the firm. So as I say, that pragmatism is not necessarily in my view a good development for the law generally. But we are in 2025. We're going in 2026. And unfortunately, I don't think that that any of the firms that we talk about are suddenly going to have a fit of conscience on this topic. Well, that's interesting. I mean, looking ahead to 2026, I think, and beyond perhaps, I think the question that still hangs over all of this is, what will these firms do or what my other firms do if the issue returns in another way or the administration tries to take it a step further? Will they then draw a line or will they just keep getting pushed? That's going to be really interesting. And we've certainly seen that none of those firms are happy to band together. We will be awarding the lawyer peace prize. But look, let's not end the year on that note. Let's let's welcome in our regional editor and sustainability lead Jessica Boat. Jess, in many ways, 2025 seemed like a year where if you are an environmentalist or if you're concerned about climate change, things perhaps went backwards. But but for law firms, you don't think that's the case, do you? Yeah, absolutely. I think there's a lot to be positive about. And I think one of the things that's changed this year that highlights this is what's happening around carbon offsetting schemes. So I think it's fair to say that these schemes have got a bit of a dodgy past. If you'd hear of the words carbon offsetting, people might think you're passing the blame. Early schemes often involve planting trees in remote regions. There was very little transparency or accountability. And I think a lot of organisations with a lot of money just chuts some money at it and hope the problem went away. But I think now there's been a lot more scientific research and there actually lots of firms such as Clyde and CoDWF, Shoesmiths, Burgess Salmon. This year have all signed up to schemes that seem much more credible now. So in what sense is it credible? Is it now a credible metric, Jess? Because you're absolutely right, there was a lot of cynicism around carbon offsetting. And we all remember getting those press releases back in the day, you know, sort of firms planted a conifer here or what have you. I mean, is there something that signals are more sophisticated and granular approach taken by law firms to measure their impact? What, you know, in what sense now is what is a good carbon offsetting scheme in your in your eyes? Well, there's definitely more than one type of good carbon offsetting scheme. I think the ones that I've come across that you just instantly feel like that is something decent and credible. They have a lot more scientific rigor behind them. Some of them have insurance policies. So I think it's Clyde and Co. One of its schemes is like, well, if something happens to these carbon credits, they're guaranteed to do something that counteracts it. If say, I don't know, a forest fire occurs, the carbon is released again into the atmosphere. There's actually an insurance policy there as something called forward procurement as well. So you're sort of almost banking future removal as well. Also, a lot of these projects are UK based projects now. So I think DWF has got a forest up in Scotland. Burgess Salmon has got a forest down south somewhere and they've actually been to visit them. They know the founders and organisations behind these projects. So it's not like some firms, some of the very well-known firms years ago had tree planting offset schemes saying Kenya, but no one had ever actually been to visit them. So I think there's just sort of several factors and ways in which you can monitor these and they just seem much better. Is this being pushed by clients still? Because back sort of good three or four years ago, the clients were asking for that. You'd speak to a lot of general counsel and sustainability was totally on their agenda. And they were passing that back to law firm saying like, exactly what is your impact on the climate? What is the impetus behind this? So I think the clients are definitely interested in this and for sure when clients go out for tender law firms do you have to fill in sections around ESG and things like that. But actually the pressure is from the carbon reduction targets that law firms have set themselves. And a number of those firms you mentioned there are national firms in the sense that they have several offices around the country rather than just one in London. Of course some of them are international as well. But is there any relevance to that? The fact that I've got more offices? I don't think so. I think it's definitely more tangible. So I know Burgess Salmon, I think a lot of their staff have gone well actually. Let's have somewhere where our staff can go visit and then they can actually, you know, understand ask questions. I think they can take clients there for example as well which, you know, does give them a few brownie points. DWF is the same. They've got an office up in Scotland. Their team has gone to visit the forest. I think it's a Nigel Knowles when he was still there. There's a lovely picture of him and his Welles up there. You know, these are very tangible projects. But I don't think it's necessarily about having more offices as such. I'm sorry, I'm finding it really hard to picture Nigel Knowles in a pair of Welles, but moving on. But one thing, I mean, on the sustainability front, one other thing that's been really clear this year and you've written a lot about this, Jess, is there are many firms who are moving into new offices, huge new bills, particularly in the city of London. I mean, Osborne Clark's office in Bristol sort of a couple of years ago was famous because it was all very sort of, you know, environmentally compliant and very beautiful, et cetera. And the push to create, you know, super compliant offices that are also very, very attractive for the workforce. They go hand in hand at the moment. And that seems to be the more obvious manifestation of a sustainability push within law firms. Yeah, absolutely. I think just as I've just said with the forest, people can go and visit them. An office is one way in which staff can get excited and energized about sustainability. I mean, we've got a TLT up in Manchester, it's got a massive living wall that you literally walk into it and you go, oh wow, that's actually, there's people watering their plants, there's greenery, there's, you know, signs saying, you know, where the wood has come from or the the floor has been reclaimed. Again, it's something really tangible that people can understand because not everyone cares about sustainability or it's, you know, clued up on all these things. And you're right, the amount of law firms that have moved this, moved this year or moving next year, I think Link Clayter's has been in its building for God knows how long and they've really struggled to sort of improve it because it's such an old building, there's only so much they can do. And when they move next year, God, I mean, they're emissions, I'm expecting to come way down because it's just, it's remarkable what their new office is actually done and I think it's really going to excite people. I have to say that there is a, an undercurrent of massive competition between law firms for the most beautiful and the most sustainable office. I've lost count of the number of managing partners, I've talked to them going, our one is the best, you wait until you see our one, it's much better than insert here, recent firm that's moved, it's quite extraordinary. And every press release, as well, has always got a paragraph on all the credentials and everything that you kind of like were bit bombarded with how amazing these offices are. Well on that more cherry note, thank you very much. Jess and with that, we wrap up the final podcast of the year. And what a good year it has been for the podcast, has it not Christian, we were one of the winners at the publisher podcast award alongside the likes of the FT because he knew statesman at the times. So big thank you to our loyal listeners for being part of our growing audience. Yeah thanks so much for listening, it really means a lot, we'll be back again next year, but until then of course you have a very merry Christmas, a happy new year and we'll see you in 2026. Bye bye. Goodbye.