Understanding the SQE1 January 2025 Results This blog offers prospective SQE candidates a descriptive breakdown on past performances, providing insight on how to ace the assessment. Understanding the SQE1 January 2025 Results This blog offers prospective SQE candidates a descriptive breakdown on past performances, providing insight on how to ace the assessment. info Read this blog to:

• Gain more insight into performance trends for the SQE
• Learn more about SQE preparation opportunities
• Discover SQE success tips

This article explores the January 2025 SQE1 results, offering valuable insights into how candidates across England and Wales are performing under the new route to qualification. In this article, we explore the overall pass rates, examine key demographic trends, and highlight what these figures may mean for future SQE candidates. Whether you’re planning your preparation or considering your study options, understanding these patterns can help you make informed decisions on your path to becoming a solicitor.

Overview

The Solicitors Qualifying Examination (SQE) is the assessment for all aspiring solicitors in England and Wales. It is designed to assure consistent, high standards for all qualifying solicitors. The SQE replaced the LPC in 2021 as the main route to becoming a solicitor for aspiring lawyers and has been promoted as a more accessible alternative to the LPC. This is mainly due to flexibility and lower costs.

The SQE1 and SQE2 are the two parts of the assessment, with the completion of Qualifying Work Experience also required in order to be admitted as a solicitor. The SQE1 tests functioning legal knowledge (FLK) and the exam consists of two parts: FLK1 and FLK2. The SQE2 tests practical legal skills and involves a combination of written/oral based tasks, which is taken over five days.

Overall Pass Rate Trends

Every year, the Solicitors Regulation Authority (SRA) releases a report detailing feedback on the assessment performance for the most recent cohort. Overall, for January 2025 56% of candidates passed the SQE1.

First-Time vs. Resit Candidates

60% of candidates taking the SQE passed first time. This means that 5908 out of the 6718 candidates (approximately 88%) who sat the SQE1 and passed, took it for the first time. The number of resit candidates was 810, which is approximately 12% of all candidates.

Performance Across FLK1 and FLK2

The passing score for both the FLK1 and FLK2 is 300 and out of 500 marks. Out of all the candidates, 64% passed the FLK1 and 61% passed the FLK2. 

Some more statistics:

• The highest score achieved for the FLK1 was 459, whilst the lowest was 98.
• The average score achieved for the FLK1 was 312.5.
• The highest score achieved for the FLK2 was 469, whilst the lowest was 84.
• The average score achieved for the FLK1 was 309.3.

The SRA report also provides insight into candidates’ performance for each practice area for the FLK1 and FLK2. The data is separated into quintiles, which is calculated by dividing candidates into five equal groups based on their performance. The top quintile received a score in the top 20% for the assessment, whereas the 5th quintile received a score in the final 81-100%.

In summary:

• FLK1 and FLK2: In Ethics, candidates in the fifth quintile achieved a score approximately between 0 and 275. This means for both assessments, Ethics had the lowest possible score (zero). However, candidates in the top quintile achieved approximately between 385 and 500. This means, candidates in the top quintile (in Ethics) achieved the highest minimum score compared to the other practice areas.
• FLK1: In Contract Law, Tort, Legal System, Legal Services and Ethics, candidates in the top quintile achieved the highest possible score of 500.
• FLK1: In Business Law and Practice, candidates in the 5th quintile also achieved the lowest possible score of zero.
• FLK2: In all practice areas, candidates in the top quintile achieved the highest possible score of 500.
• FLK2: in Trust Law, candidates in the 5th quintile also achieved the lowest possible score of zero.

SQE Detailed Breakdown Gain more insight into the SQE assessments CLICK HERE https://www.thelawyerportal.com/solicitor/sqe/

Demographic Insights

The SRA also collects diversity and socio-economic data to help understand how candidates with different characteristics and background perform in the assessments. The data categories are consistent with data collected by the Office for National Statistics (ONS) and the Social Mobility Commission.

Pass Rates by Educational Background

In summary, the pass rates for the following groups were:

• Attended state-run/state-funded/non-selective schools between the ages 11-16- 58% 
• Attended state-run/state-funded/non-selective schools that were selected on academic, faith or grounds  between the ages 11-16 – 62%
• Attended school outside of the UK – 55%
• Attended an independent or fee-paying school – 70%
• Have at least one undergraduate degree – 60%
• Had qualifications below degree level – 48%
• Achieved a 1st class undergraduate degree classification – 80%
• Achieved a upper second class undergraduate degree classification – 58%
• Achieved a lower second class undergraduate degree classification – 21%
• Achieved a third class undergraduate degree classification – 15%

Diversity and Inclusion Metrics

In summary, the pass rates for the following groups were:

• Asian/Asian British – 49%
• Black/Black british – 37% 
• Mixed or from multiple ethnic groups – 63%
• White – 70%
• Other ethnic groups – 44%
• Consider themselves to have a disability according to the definition in the Equality Act 2010 – 60%
• Female – 57%
• Male – 64%
• 16 to 34 years of age – approximately 49%
• 35 to 54 years of age – approximately 45%
• 55 to 64 years of age – 33%
• English speakers – 62%
• Non-English speakers (other) – 53%

The University of Law’s SQE1 Performance

The University of Law offers competitive degrees/courses for students who want to develop their law career and improve their prospects. For example, the university offers an LLM Legal Practise course (SQE1 & SQE2) course for graduates who want to qualify as a solicitor using the new SQE route to practice, and also gain a Master’s award. It also offers preparation courses for both assessments.

For January 2025’s SQE1 assessment, 75% of its students passed the first time, compared to the industry average first attempt rate of 60%.* For October 2024’s SQE2 assessment, 89% of its students passed compared to the industry average pass rate of 81%*

*All eligible cohorts contacted, results based on over 2,000 responses.

Find out more on how The University of Law can support your SQE journey here.

Implications for Future Candidates

Choosing the Right Preparation Course

In order to be fully prepared for the SQE and increase chances of succeeding, candidates may wish to enrol in a preparation (prep) course. The SRA has created a providers list of institutions that provide SQE education, tutoring or training services or produce SQE-related study materials and resources.

There is no standard course offered by institutions and can vary based on the type of prep courses offered. For example, some institutions offer separate courses to prepare candidates for the SQE1 and SQE2, whilst other institutions offer a combined course. Some course providers choose to teach their courses through interactive online materials, whilst other institutions offer 1-1 or small group tutoring.

(SQE prep courses are not mandatory for completing the SQE. Each candidate should determine if this is something they need based on their needs, own research, etc).

There are several factors that candidates must consider when choosing the most suitable prep course. This includes:

• SQE funding and course fees
• Course location and online options
• Time commitment requirements
• Enrolment process (complexity, flexibility policies, etc)
• Learning support (access to tutors, etc)
• Course structure and delivery (learning platform, course duration, feedback, etc)

Read these factors in detail here and here.

Strategies for Success

Success tips for the SQE are similar to previous exams candidates may have taken. However, there are a few considerations that may be unique to taking the SQE, such as balancing studying with work, childcare and other major commitments.

Here are 10 SQE success tips that candidates can start implementing:

1. Start early and created a structured study plan
2. Figure out your learning style and leverage this in your preparations/training
3. Master the SQE format and question style
4. Use active recall techniques
5. Practise under exam conditions regularly
6. Develop an exam day strategy
7. Create a healthy balance between work, studies and resting
8. Identify weak points and revisit your underperforming topics
9. Engage in group study sessions
10. Leverage past papers and mock exams

To read more about these strategies, check out the following articles:

• 7 Expert SQE Tips That Helped Students Pass First Time
• How to build the skills and confidence for SQE success
• Strategies for the Solicitors Qualifying Examination (SQE)

HELP

UK House Prices Experience Significant Increase New research suggests house prices in the UK have reached highs not seen in years, as concerns over affordability increase yet again. UK House Prices Experience Significant Increase New research suggests house prices in the UK have reached highs not seen in years, as concerns over affordability increase yet again. Residential properties in the UK have, according to new data from Nationwide, experienced a surge in price throughout the course of 2024, sparking fresh cost-of-living concerns. 

What has happened to house prices?

According to the latest data from Nationwide, UK house prices increased by 4.7% from the start to the end of 2024.  

Nationwide, which provides a significant portion of the residential mortgages available in the UK (being the largest building society in the UK), admitted that the numbers could be seen as somewhat surprising given the ongoing cost-of-living crisis, which has greatly limited the buying power of many new homeowners. 

Which areas specifically saw price increases?

 Every region in the UK appeared to experience an increase in house prices across the course of 2024, according to the data. However, some areas experienced growth faster than others.

For example, Northern Ireland saw the most rapid increase in prices. It might also be interesting to note that homes in the north of England experienced more significant hikes in price than those in the south (including in London, which has traditionally led the way in price increases for many years).  

How unaffordable are homes now?

 Cost-of-living concerns have been exacerbated by the fact that house prices are increasing far quicker than average salaries, which are growing at a significantly lower rate (something Nationwide’s chief economist points out in their press release).  

Another major concern is the increase in the cost of renting. While this might sound like less of an issue for those looking to buy a home soon, there is a knock-on effect here. Most people shopping for homes (to buy) are currently in rented accommodation, and so increases in their monthly expenditures mean even less money can be saved up for their house deposit (assuming they are looking for a mortgage), in turn making homes even more unaffordable than they already were.   Boost Your Applications Receive 1-2-1 application support to jumpstart your legal career! Learn More https://www.thelawyerportal.com/events/application-advice-mentoring-for-aspiring-lawyers/

Why are house prices increasing?

 There are a number of factors to consider here – some specific to 2024, and some indicative of problems that have literally existed in the UK (and indeed some other countries) for decades now.  

The most recent factors (which have likely had the biggest impact on this most recent growth) are related to stamp duty – a form of tax which has to be paid when you buy a home. The government is increasing stamp duty rates in April 2025, meaning many buyers have been in a rush to push their purchases through in 2024. Sellers are, of course, aware of this, and so are put in a stronger position in regard to bargaining power, thus leading to buyers having to accept higher prices.

The increase in April comes following Chancellor Rachel Reeve’s budget announcement that the temporary ‘stamp duty holiday’ is coming to an end. The threshold for having to pay stamp duty at the lower end of property prices was previously £425,000. That number is moving down to £300,000 (hugely significant given that a large proportion of UK homes sit in the middle of those two figures, meaning they were not liable for tax before and are now). 

 Another issue which is very much linked to recent economic affairs is the Bank of England’s interest rate. It has been relatively high for a while, which makes borrowing more expensive in general. Many are hoping that there will be gradual decreases in rates throughout 2025 (hopefully leading to lenders being more generous with their mortgage deals). However, predicting interest rate changes accurately can be a very complicated business. 

More broadly, and looking back further to years gone by, the UK has struggled to build enough homes for its rapidly increasing population for a long time. Issues here include limited amounts of land in desirable areas like London, the increasing cost of construction, and restrictions on planning permission (which some view as overly onerous, while others view as completely necessary). Others have, in more recent years particularly, criticised the UK’s welcoming approach to foreign investment, which some suggest has significantly limited the supply of homes available for UK residents. 

Why do lawyers need to know about UK property prices?

 There are a number of points here for aspiring lawyers (particularly solicitors) to understand. Many of these points would make for excellent conversations at interviews (and indeed on the initial application forms) for opportunities like vacation schemes and training contracts. 

Commercial awareness, as a general skill, is key across the legal industry. Understanding how interest rates can the cost of mortgages, for example, is one of the concepts which the lawyers of tomorrow will likely be expected to have a basic grasp on ahead of starting practice (since the issues are so tied up in other parts of the economy). 

The issues here are also very widely relevant. Imagine a local, high-street solicitor advising a young couple on their first house purchase – they will need expert, tailored advice on how the increase in stamp duty (something covered in brief on law school courses like the SQE) is likely to affect what they can and cannot afford. As part of the conveyancing process, legal advisors are expected to be able to give some input rather than giving purely legal advice. 

At the same time, think about how this story could affect much larger corporate clients (the kind of customers who will be coming through the door at your Magic Circle or elite US firms). Their real estate teams (a very significant practice area for many firms) need to understand how stories like these will affect investment opportunities for the kind of corporate bodies who are active in these areas. This is not to say that the lawyers will be the ones providing the financial advice in itself (as many SQE students should know, lawyers are usually restricted from doing this under FSMA unless one of the limited exceptions apply). However, clients expect their lawyers (especially at this price point) to be at a level where they can engage in conversation with such stakeholders in a deal, and the topics discussed in this article are examples of the kind of trends you need to be aware of.  HELP

UK Government Demands Access to Apple Data The UK Government is attempting to force Apple to allow it access to a huge volume of encrypted user data. UK Government Demands Access to Apple Data The UK Government is attempting to force Apple to allow it access to a huge volume of encrypted user data. Tech giant Apple are facing a controversial request from the UK Government – making all of the encrypted data of its users available (something it has refused in the past).

What is the UK government asking for?

 The UK Government has told tech giant Apple that it wants to be able to access encrypted data which Apple stores on behalf of users in its cloud service. This data is currently only viewable by the user themselves – not even Apple have direct access. 

The government have made this demand via the Home Office, which has the ability under the Investigatory Powers Act 2016 to compel companies to provide information for the purposes of law enforcement. Based on the rules within that Act, the demand will not be made public, and both the Home Office and Apple have declined to officially comment on the matter. However, numerous sources have confirmed that this request has indeed taken place.  

Why does the UK government want this data?

 Because the request itself has not been made public (and likely never will unless this dispute goes to court, though even then restrictions would potentially be put in place out of national security concerns, which courts are often deferential to), it is hard to know the exact purpose of this request. 

The most likely option is that the Home Office want to be able to access the encrypted data of suspected criminals in serious criminal cases as part of government investigations. Given the context here, it is likely (though mostly still speculation) that the kind of offences in question are those which would pose a risk to national security – for example, terrorism charges.  

If this is the case, it would be presumed that the government would not have continual access to all user data – instead, there would likely be a process via which they have to justify taking a look through the databases when a particular case comes up. Even then, they would need to ensure that they have good reasons, that the decision to do so is proportionate, etc – or risk the threat of challenge by judicial review, a key power to speak up against the government in Public Law. At this stage, then, the Home Office are essentially just taking the preliminary step of pointing out to Apple that they expect this data to be made available upon request if the government so desire. 

How are Apple responding to this request?

 Apple have not released a public statement on the matter. However, they have previously stated that they view privacy as a ‘fundamental human right’ – something they will go to great lengths to protect on behalf of their users.   Keep Up With The Current News Subscribe to our monthly newsletter to learn more about international developments Sign Up Now

How are other bodies responding to this request?

 Quoted in a recent BBC article, a director at Privacy International (a charity with significant interest in this matter) described this move by the Home Office as an ‘unprecedented attack’ which will set a ‘hugely damaging precedent’.  

Apple’s main reservation to allowing such access appears to be the fact that, to achieve this, they would need to build a ‘back door’ into their systems. In other words, a way for the government to be able to ‘get in’ to their systems and retrieve such data. By doing so, they would almost certainly increase the risk of hackers and other malicious parties managing to walk through that same door. 

It is certainly interesting to note that this is not the first time Apple have faced such a request. In the US, the FBI have repeatedly tried to use court orders to force Apple to disclose confidential data to the investigatory body. For example in 2016, where the tech company were asked to give the FBI access to an iPhone used by Syed Rizwan Farook and his wife Tashfeen Malik, who committed an act of mass-murder terrorism in California. In the end, the case was dropped after the FBI managed to gain access to the device without Apple’s involvement – moving the specific investigation forwards, but leaving lasting question marks over how such a legal case would work if both sides remained steadfast in their position. 

Apple have even shown discomfort within the UK over this issue – when proposed changes to the Investigatory Powers Act were disclosed last year, they issued a public statement, describing the reforms as an ‘unprecedented overreach’ by the government. It is therefore relatively easy to predict the hostility Apple are likely to declare against this request when they do choose to speak up. 

Why do future lawyers need to analyse this story?

 There are a number of points here which the lawyers of tomorrow, whether solicitors or barristers, need to understand. These are also excellent talking points to use as part of applications for opportunities such as training contracts and pupillage. 

First off, it is worth considering practice areas relating to the story. Technology is, of course, an important practice area for many firms – advising big tech firms like Apple is a significant earner for many elite US and Magic Circle outfits, for example. Lawyers in these areas should have excellent commercial awareness in order to understand the perspective and goals of their clients in such specialised spaces.  

Public lawyers are also likely to be involved in this story. Analysing the government’s powers and how they are exercised is the foundation of most public law work, and those issues are clearly highly relevant here.  

Another angle worth considering might be jurisdiction. The top international law firms have the capabilities to advise on complex cross-border issues. In this story, the international aspect is going to be crucial. For example, questioning the relevance of the US cases to how this story is likely to play out in the UK, or looking at Apple’s options in terms of moving their operations around (and whether this is likely to allow them to escape the Home Office’s order, to some extent at least). Detailed research into both statute and common law is likely to be required here.  

In short, then, this story intersects a huge number of legal areas, and is likely to throw up highly complex questions for lawyers to unpack.  HELP

Starmer Proposes Major Judicial Review Reform Starmer Proposes Major Judicial Review Reform The Prime Minister has announced Labour’s intention to limit the availability of judicial review for applicants in certain cases. Keir Starmer has announced controversial new plans to make judicial review claims harder to establish in the context of national infrastructure projects. 

What is Starmer concerned about? 

One of the major criticisms of numerous Labour governments, although the current government in particular, is that they are ‘anti-business’. This is, of course, a matter of opinion – although statistically speaking, the Conservative Party have tended to offer lower taxes to businesses historically. In response, Starmer has recently had to make numerous public statements fighting back against such criticism. 

Much of the backlash Starmer currently faces in this area is in response to Chancellor Rachel Reeves’ recent budget from late 2024. While the party did stay true to their pre-election promises not to directly increase taxes on working people (or, perhaps more accurately, ‘work’ itself, since taxes like inheritance tax were raised by limiting some reliefs), such as income tax, the budget did see a significant rise in National Insurance. This is a tax which falls on employers to pay.

The overall rate increased to 15%, and the starting threshold for employers to pay was moved down from £9.1k to £5k. The latter means that many small businesses that were previously exempt will now be caught by the scheme, though it is arguably even larger businesses who will notice the impact on their bottom line even more. One analysis predicted that Tesco will lose an estimated £1 billion over the next four years as a direct result of this change. 

Numerous business leaders have, in the aftermath of the budget, spoken directly to Starmer and Reeves about their perceived harshness on businesses, with the ultimate fear being the looming threat of some major organisations abandoning the UK in favour of investing elsewhere instead. Astra-Zeneca, for example, the major vaccine producer and heavy investor in the UK economy so far, have recently decided to change course and limit their UK investments – with many citing the government’s recent policy decisions as a leading factor in that decision.  

In light of all the above, Labour need to be shown to take active steps to get businesses (and investment) back on-side.  

Why does judicial review affect businesses? 

Judicial review is a legal process in the UK via which anyone from members of the public to interested businesses and pressure groups can challenge government decisions. This is usually on grounds such as the decision-making process being unlawful in some way. Law students on courses like the LLB or PGDL often cover this process in depth via their studies of Public Law – or, more specifically, Administrative Law.  

One of the major areas in which judicial review cases are commonly brought is where public infrastructure schemes are seen to infringe on the interests of individuals or pressure groups. For example, where a major transport company working with the government plan to build new train lines through rural land, both local landowners and environmental pressure groups are likely to try to argue in court that the decision to grant permission for such a project was unlawfully reached. This would perhaps, for instance, be by suggesting that the government failed to properly take environmental factors into account.

By making judicial review claims harder to establish, the government are trying to signal to businesses that they are supporting investment in the economy.  Boost Your Applications Receive 1-2-1 application support to jumpstart your legal career! Learn More https://www.thelawyerportal.com/events/application-advice-mentoring-for-aspiring-lawyers/

How do judicial review claims currently work? 

Currently, there are a few procedural steps to bringing a judicial review claim. First, applicants should follow the pre-action protocol (there are many types, as SQE students studying dispute resolution will be aware) for judicial review, which broadly involves sending a letter to the party who are supposedly in breach, and waiting 14 days for a response. If the response is not satisfactory, the applicant typically moves turns to court. 

Proceedings are first issued in the Administrative Court (itself part of the High Court), where applicants write to ask for permission. If rejected, they can then ask for an oral hearing. If this second attempt fails, they have a third route to take – asking the Court of Appeal (a more senior court than the High Court) for permission in one last attempt. 

What are Labour’s new proposals? 

The new system Labour are suggesting is one whereby the first of the three stages outlined above would be scrapped, meaning you start on what is currently the second step (with an oral appeal). The third step would also be tightened – you would no longer be able to move to the Court of Appeal if the High Court judge at stage two labels your case ‘totally without merit’. In short, the appeals process for seeking permission will become much more limited. 

These proposals are, understandably, controversial. Judicial review is often regarded as a key cornerstone of the public’s ability to challenge questionable behaviour by public bodies. In that regard, this is a constitutional issue.

Of course, from the opposite perspective, these cases are seen as creating unnecessary bureaucracy, stifling the ability to ensure an efficient investment process. Striking the correct balance between the two is crucial, and it is likely that some legal and political commentators will suggest Starmer, himself a qualified lawyer who has worked within numerous judicial review contexts on some of the most high-profile cases in UK history, may be close to tipping the scales too far here. 

Why do aspiring lawyers need to understand this story? 

 Within both law firms and chambers (employing solicitors and barristers, respectively), public law tends to be a very significant practice area. Judicial review is arguably the most common type of work within this area, too. Understanding the procedure for judicial review, and how it might change as a result of these reforms, will be absolutely crucial for any legal professionals involved in such work. 

Other practice areas are also likely to be affected. For example, those working in areas like infrastructure (or ‘projects’, a similar title given to the area in some firms) or real estate law are likely to have the interests of their clients significantly impacted by these reforms (most are likely to take a positive outlook, as it stands). Understanding the client’s commercial perspectives on these matters is a crucial skill for any lawyer, demonstrating a high level of commercial awareness.  HELP

Airbus Announces Huge Job Cuts  The world’s biggest commercial aircraft maker, Airbus, has announced plans to cut a large amount of its workforce. Airbus Announces Huge Job Cuts  The world’s biggest commercial aircraft maker, Airbus, has announced plans to cut a large amount of its workforce. Aspiring lawyers can use Airbus as a useful case study for the impact of challenging market conditions on aerospace companies, which have led to significant job losses. 

 Who are Airbus? 

Airbus was founded in 1970 as Airbus Industrie – the idea being to build a collaborative European organisation which would rival the dominance of the American aerospace industry (which remains very powerful to this day). The company’s structure is relatively complex, although has been simplified somewhat in recent years. ‘Airbus Group’ is now the overall holding company, and is made up of numerous subsidiaries (some wholly owned, others not), such as Eurofighter and Elbe Flugzeugwerke.   

Airbus has a very wide range of operations. In its commercial aircraft division (the part most consumers will probably be familiar with the company through), it produces well-known aircraft such as the A320 and A380. It competes directly with other household names like Boeing in these fields. This is by far its most important area in relation to revenue (generating over 70% in relation to the company’s revenue as a whole).

It also produces a lot of aircraft for military applications, such as the A400M Atlas, and numerous space satellites and systems (think NASA, the ESA, etc). In these areas, again, well-established American names like Lockheed Martin are primary competitors. Upcoming rivals include non-Western names like Comac (over in China) too. 

Currently, the company is headquartered in France, but has manufacturing facilities spread across Europe, including Germany and the UK (plus others further afield, including those in the US and Canada). Its operations are massive, with close to 150,000 employees based on current estimates. 

What are the challenges Airbus is facing?

Airbus has been facing numerous challenges – and many of these are being faced by the industry as a whole, so have quite widespread importance. 

For a start, Airbus has been experiencing a number of issue with its supply chain. Perhaps surprisingly, the company admitted earlier this year that it has an overwhelming number of orders, with the primary issue being the fact their supply chain is not set up well enough to meet demand (sometimes referred to as a ‘bottleneck’). While this might sound like a ‘nice’ problem to have, such inefficiencies can be catastrophic when it comes to costs and the bottom line. 

This is compounded further by the fact that Airbus runs on relatively thin profit margins – sales rose 7% last year, but profits still managed to drop by a staggering 22% (partially due to the issues outlined above). 

Another issue has been a sector-specific one – Airbus’ space division (including products such as satellites) has been struggling for a while. Costs have skyrocketed, while competition in the sector has become fiercer than ever.

It may come as no surprise, then, that Airbus had already attempted to bring in new talent at the executive level in order to oversee an overhaul of the way its space division is run (there were even talks of some kind of restructuring or merger at one point earlier this year, but no material outcomes have surfaced there yet). Furthermore, the specific cuts that have been announced in the last few weeks are mostly focused on the space part of its business. 

Other areas have also been problematic. While the ongoing war in Ukraine has generally increased military spending across Europe (which should, in theory, be beneficial to Airbus’ bottom line), rising costs have meant that even its defence sector has been underperforming.   Keep Up With The Current News Subscribe to our monthly newsletter to learn more about international developments sign-up now

What are the cuts in question?

 As already discussed, the space arm of Airbus is taking the heaviest of blows here, with 1,128 jobs being lost (compare that to just 250 from its ‘air power’ team). The cuts are relatively spread out and mostly limited to Europe – 689 in Germany, 540 in France, 477 in the UK, and 303 in Spain.  

The response has been quite negative on the whole (as is to be expected generally for any job cutting announcements, but with some particularly specific points here too). Many commentators feel that Airbus appears quite poorly structured to have incurred such losses while demand for many of its products remains quite high, while UK trade unions have been very outspoken in their criticism of Airbus’ management. 

Have Airbus cut jobs before?

This is not the first time Airbus has had to take such steps. Back in 2020, a huge 15,000 jobs were cut globally (including almost 2,000 in the UK) when, understandably, the pandemic’s catastrophic impact on the travel industry meant that aerospace industry companies were massively affected.  

What can aspiring lawyers take from this story?

There are a number of points here which aspiring lawyers – whether future solicitors or barrister, and whether applying to opportunities such as training contracts or pupillages, can discuss. However, most of this story is particularly relevant to future corporate solicitors, who will need to advise clients such as Airbus in practice (and also bearing in mind the very limited contentious aspects of this story so far). 

Naturally, practice areas are a good place to start in terms of unpacking this story. Think about how corporate lawyers will be needed to work alongside accountants, auditors and other finance professionals in order to get to the root of the problems plaguing underperforming clients such as Airbus. Modern lawyers are expected to develop a decent understanding of related areas such as finance (hence why legal training courses such as the SQE, for example, will cover basic accountancy to some extent in modules on business). 

While these areas are certainly useful now, more might become relevant as the story develops, which is something top lawyers should be looking to predict in advance.

For example, if Airbus’ situation were to worsen significantly in the future, could the firm cross-sell their restructuring team to the client, offering advice on how to renegotiate with creditors and stem the losses? If this involves a potential takeover (as was already suggested above), could the firm’s M&A team be of use? Or if the current job cuts were contentious to some extent, would the firm’s employment team be able to step in and act on a matter of litigation?

Also note the very international nature of this story, as is to be expected given Airbus’ very cosmopolitan structure as an organisation in the first place. Lawyers need to think about this carefully. For example, how do the rights of their employees who are being made redundant differ between those based in France or Germany (in the EU) and those in the UK (which has amended some of its legislation post-Brexit)?

Large firms with strong international law capabilities (such as those in the Magic Circle, elite US, and other comparable groups) are well-placed to advise here.  HELP

Worker Protection Act: A Turning Point? The recently passed Worker Protection Act 2023 aims to significantly change the way sexual harassment is deal with in the modern workplace. Worker Protection Act: A Turning Point? The recently passed Worker Protection Act 2023 aims to significantly change the way sexual harassment is deal with in the modern workplace. Aspiring lawyers (and indeed all employees more broadly) should be aware that new legislation is coming in to tackle workplace sexual harassment – a brief analysis follows.

How did the new law come about?

 The piece of legislation in question is, formally speaking, the ‘Worker Protection (Amendment of Equality Act 2010) Act 2023’ – also now being referred to in legal circles as the WPA.  

The first thing to discuss here is the process of this legislation’s journey to fruition – which should be interesting to anyone studying Public Law (more specifically the Constitutional aspect), as is a compulsory topic on an English qualifying law degree. This legislation actually started off as a private member’s bill (PMB), being co-signed by two Liberal Democrat politicians – MP Wera Hobhouse in the Commons, and peer Baroness Burt of Solihull in the Lords.

The Act was eventually adopted by the Conservative government, who pushed it through in October 2023, when it received Royal Assent on the 26th October. As is often the case, a commencement clause delayed the start date until one year later, on the 26th October 2024 (meaning it is now active).  

Successful PMBs are relatively rare in general – the government of the day (in October 2023, the Tories) typically dominate the schedule, and so it is usually government ministers who are able to get timetable slots in order to push through legislation. PMBs are a rare opportunity for backbenchers to get a chance to introduce new legislation to the house – though there are limits, a few examples of which are laid out below: 

• There is a strictly controlled ballot (essentially a kind of lottery) carried out each session which offers 20 MPs the chance to present PMBs.  

• If you want to present a PMB in the House of Commons, you must usually apply for a very brief (10 minute slot) to speak in its favour. 

• PMBs cannot cover any topic – for example, issues of public spending are only formed by ministers of the day. 

• They are usually only considered on Fridays. 

A huge number of PMBs are introduced (data suggests more than 2,500 between 2010 and 2024), though very few actually end up making it all the way. Only 110 have received royal assent, the final hurdle for a piece of legislation – though the number of successful PMBs is on the rise. 

Another point of interest here might be the fact that the House of Lords wanted to adjust the wording of this specific Bill and send it back to the Commons (a process known as ‘ping pong’).

The final draft now says employers must take ‘reasonable steps’ rather than ‘all reasonable steps’. This is a chance which might seem relatively small, but all lawyers will know even minor adjustments can make a huge difference when it comes to statutory interpretation. 

What are the new rules in the WPA?

 Broadly speaking, this is not an entirely new set of rules – as the name of the legislation implies, it is really an amendment to the hugely influential Equality Act 2010.  

 Employees already have the right to go to an employment tribunal if they have experienced sexual harassment in the workplace (generally speaking). This new legislation puts extra pressure on employers by saying (via the newly formed s124A of the Equality Act 2010) that if the employer is found to have failed to take ‘reasonable steps’ to actively prevent the sexual harassment from taking place, the compensation awarded to the employee can be increased by up to 25%. This is at a maximum – only time will tell how widely this discretionary power will be used.   Keep on Top of Headlines Get the latest updates on world events and their legal perspective straight to your inbox Sign-up Now

What are the criticisms of the WPA?

 One criticism so far has been the fact that equality campaigners from other groups protected by the Act feel the 25% ‘reasonable steps’ added rule could have been rolled out more widely. For example to cover harassment based on race, gender, disability, etc.  

 Others have noted that, while the Tories arguably took a step forward on this issue, they also repealed s40 of the Equality Act in 2013. This removed the provision which allowed employees to accuse their employers of being vicariously liable (a compulsory topic covered on many Tort Law courses in England) for the conduct of third parties, which narrowed the scope of protection already massively. The phrase ‘shake your hand and stab you in the back at the same time’ perhaps comes to mind. 

Of course, another obvious criticism is the fact that the phrase ‘reasonable steps’ (as with a great deal of legislation) is rather vague, and could benefit from being much more precise (from both an employee and employer perspective, creating more certainty). 

Why has this new legislation been created?

 The new legislation is obviously a response to increased demands for accountability in regard to sexual harassment in the workplace and, indeed, sexual harassment in a broader sense, which statistics show is a growing problem across society. A key factor leading to this new law’s creation was the 2018 report from the Women and Equalities Select Committee aka WESC (select committees being a powerful force within Parliament). This identified that a staggering 40% of women had experienced sexual harassment in the workplace. 

 Separately, a huge number of employers have admitted to not having systems in place to manage this risk and punish such behaviour. This is despite the fact that this obligation has in fact been in place for many years via the EHRC – the Equality and Human Rights Commission. 

What do aspiring lawyers need to take from this story?

There are a number of points here for future lawyers (both solicitors and barristers) to note. 

First, the details of the Act and how they will apply to real-life contexts will be very important for lawyers in the specialist practice area of Employment Law, which is found across many types of law firms. These practitioners will need to advise on what employers should be doing to ensure they complete their obligations under the new rules. On the other side, they will perhaps be preparing to represent employees who want to bring a claim which utilises the new provisions being introduced. 

There is also a different point to be made here about the behaviour of individual employees within law firms (as businesses themselves). Law has often been described as a heavily traditional industry with its fair share of ‘toxic workplaces’ (as many news stories from over the years attest to), so adjustments to legislation such as this may prompt the industry to think harder about its own efforts in coming years too.  HELP

Bolt Workers Win Employment Battle Drivers working for cab-hailing app have won a legal case at the Employment Tribunal concerning their rights as ‘employees’. Bolt Workers Win Employment Battle Drivers working for cab-hailing app have won a legal case at the Employment Tribunal concerning their rights as ‘employees’. Aspiring lawyers can learn a great deal from studying Bolt drivers’ statement victory in a battle over rights including holiday pay and minimum wage.

What is Bolt?

Bolt is a ride-hailing company founded back in 2013 as ‘Taxify’. It was first created by high-school student Markus Villig, who personally recruited the first drivers on the streets of Estonia. It rapidly took off and started operations in London in 2017, but disputes over their licence (as other ride-hailing apps such as Uber have regularly faced) led to their removal in 2018.

They were reintroduced in 2019 and have since become a relatively significant player in the taxi space (while also starting their move into food delivery – in the same manner as Uber Eats). 

What did the Supreme Court rule in 2021 regarding Uber?

Taxi-hailing app services have had a difficult run with the law so far. Back in 2021, Uber lost a case in the Supreme Court (the highest legal authority in England and Wales), who declared that Uber drivers were, in fact, workers (not self-employed, as the firm attempted to argue).  

Uber attempted to promote their employment setup as one which gave drivers the maximum possible flexibility (e.g. no set hours required for working, no set location, etc). However, at the same time, drivers pointed out that this meant they were denied a number of rights such as holiday/sick pay and the minimum wage.

The Supreme Court sided with the drivers, represented by Bates Wells (a law firm known for its B Corp certification – a ‘socially conscious’ business), and declared that Uber would need to change its payment structure going forwards. 

At the time, this decision was widely praised by drivers and trade unions, who said that (in the words of TUC union boss Frances O’Grady) ‘it shows no multi-national company, however big, is above the law’.

At the same time, however, there were ongoing complaints about the fact the Supreme Court had apparently not required Uber to backdate payments for missed earnings in the past which should have been paid. This was alongside the fact that Uber interpreted the ruling to mean they needed to give their workers the full required rights only when they were on an active trip (not during the waiting period between bookings, which is anecdotally often the majority of the time spent during the working day of a driver). 

There was also one particularly interesting comment from Uber manager Jamie Heywood at the time: 

“Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives”  Boost Your Applications Receive 1-2-1 application support to jumpstart your legal career! Learn More https://www.thelawyerportal.com/events/application-advice-mentoring-for-aspiring-lawyers/

What has the Employment Tribunal now ruled regarding Bolt? 

 It appears that the time has now come for other similar companies to also face the music. Last week, Bolt lost a legal battle in the Employment Tribunal concerning the status of their own drivers – again, they have been declared to be workers, not self-employed. 

There are a few interesting points to note this time. First, a number of the 15,000 total claimants, represented by law firm Leigh Day, are past employees seeking backdated payments for the rights they should have received in the past.

It has been estimated that these payments could now cost Bolt up to £200 million (a pretty sizeable figure for the company in context). Leigh Day estimated that the average payout could be somewhere in the region of £15,000 per driver represented (though this is likely to vary significantly based on specific factors which lawyers and courts will now need to scrutinise in order to ensure accurate payouts). 

The decision was arrived at mostly through very close inspection of the contracts signed between drivers and Bolt when they joined the app. The tribunal found that ‘there is nothing in this relationship which demands, or even suggests, agency’ on part of the drivers.  

However, the win is significantly limited by the fact that the tribunal’s findings are limited to drivers who are not ‘multi-apping’ (meaning those who are working on numerous taxi-hailing services like Bolt and Uber at the same time). This, in reality, makes up about 90% of all drivers on Bolt, so this is something the unions are concerned about going forwards.  

What can aspiring lawyers take from this story?

 There are a number of points here that the lawyers of the future (both solicitors and barristers) can use in their upcoming applications. This might include applications to vacation schemes, training contracts, or pupillages. Such discussion points could provide great material for both application forms and, later on, at interviews.  

First, it is worth noting that most of these cases on workers’ rights in the context of taxi-hailing apps are going to court. While this might seem obvious at first, it is useful to consider why alternative methods of dispute resolution (a topic covered in detail on the SQE, for example) are not working – for example, arbitration or mediation between Bolt and its disgruntled drivers.

Remember that court is often seen as a ‘last resort’ due to the time and money this route takes. This also means that barristers (as those individuals representing clients in such cases once they reach court) are becoming extremely important for these cases, drawing on crucial skills such as advocacy. 

It is also worth looking at a number of specific areas of law (both practice areas and overriding themes). In regard to practice area, employment law is clearly very significant here. This is a very profitable sector for a number of law firms. Chambers ranks Magic Circle firms like A&O Shearman and US names like Baker McKenzie as among the best in this field.

Also, try to consider academic areas of law which you are likely to have covered on courses like your LLB or PGDL. Specific rules governing contract law were very important in how these courts and tribunals came to their conclusions (and you can find the specific judgments for these cases online – excellent further reading if you want to go into more detail). HELP

The Biggest Stories of 2024 Check out some of the biggest stories of 2024 and what to keep an eye out for next year to build your commercial awareness skills. The Biggest Stories of 2024 Get the latest on the fall of X, global voting trends, food and the cost of living crisis and the challenges following the UK General Election. The year has seen many twists and turns, political shocks and market disruptions. Here are some of the biggest events of 2024.

UK General Election

In July, Sir Keir Starmer became the UK’s latest prime minister after the Labour Party won in a landslide general election victory. This is a stark difference from the general election results of 2019, where, led by Jeremy Corbyn, the Labour Party suffered its ‘worst electoral defeat in almost a century’.

The Conservative Party previously held power in Parliament for the last 14 years, but similarly suffered its worst result in almost 200 years. We can expect to witness an ‘ideological battle’ over the party’s future direction. Kemi Badenoch’s recent appointment as Conservative Party leader is proof of that.

As expected, the Labour Party will face many challenges including making an impact in a nation that is becoming increasingly divided politically, especially after being under Tory reign for so long. In his first speech as Prime Minister, Sir Keir said, “Changing a country is not like flicking a switch. The world is now a more volatile place. This will take a while, but have no doubt the work of change will begin immediately.”

The party’s biggest policy moves include building new prisons, ‘cracking down’ on water bills and helping people back into work. Boost your Commercial Awareness Subscribe to our monthly newsletter to learn more about international developments SIGN UP NOW https://www.thelawyerportal.com/newsletter/?_gl=1*1sgwpxt*_up*MQ..*_ga*MTgwNzQ1NTkwNS4xNzMzNzQwOTcx*_ga_XFZTGLKX00*MTczMzc0MDk3MC4xLjEuMTczMzc0MTAxNi4wLjAuMA..

The Demise of Twitter (X): Chatbots, AI & Censorship

Since Elon Musk’s acquisition of Twitter/X in 2022, X has become a volatile platform with its usage falling by 23%. X, spearheaded by Musk, sought to create a ‘deregulated’ and uncensored user experience, with very limited restrictions on what users can post. Warnings from anti-hate speech campaign groups and the EU about misinformation and extremism on the platform have since driven away many previous users.

For example, it has been reported that political propaganda accounts powered by AI posed as real people on X to argue in favour of Republican candidates and causes, according to a Clemson University research report. Moreover, the platform is now described as a “ghost town of AI bots“.

Millions of accounts on X have been created without human oversight and operate on automated routines to outsmart bot-detection algorithms. The purposes of these bots include spreading misinformation and recruiting followers with hopes of selling the account or using it for another purpose once it ages.

In the second half of the year, we saw a new competitor for X emerge: Bluesky. Bluesky is also a social media platform, with many interface and functional similarities to X. As of November, it has reached more than 15 million users worldwide, gaining 6 million users in two months.

Currently, it is not evident that Musk will attempt to appease disillusioned users with a more regulated interface, especially as he continues to champion free speech and other propaganda on his account, often threatening to penalise accounts that mock him.

The Year of Voting: Global Voting Trends in 2024

In 2024, eight out of the 10 most populous countries went to the polls this year: including India, Germany, Spain, the UK and the US. Ahead of this, the World Economic Forum’s Global Risks Report (2024) identified the emerging challenges around misinformation, turnout (especially amongst the youth demographic) and electoral integrity, regarding this year’s global elections.

As the year has progressed, there has been an array of findings and opinions on the issue of political misinformation. For example, according to research published by The Alan Turing Institute, there is no evidence that AI-enabled misinformation meaningfully impacted recent UK or European election results. Researchers from the Centre for Emerging Technology and Security (CETaS), from the institute, identified 16 confirmed viral cases of AI disinformation or deepfakes during the UK general election and 11 viral cases were identified in the EU and French elections combined.

On the other hand, a Clemson University research report explained that political propaganda accounts powered by AI posed as real people on X to argue in favour of Republican candidates and causes.

Voter turnout amongst young people continued to be one of the lowest among age groups. For example, based on estimations, as of November, 42% of younger voters (aged 18-29) cast ballots in the US presidential election this year. This is a lower youth turnout than in 2020. In the UK, many young people feel misrepresented in UK politics and sceptical about whether voting makes a difference.

Politicians must spend the years to come to focus on many areas such as:  

• including youth representation, especially in campaigns
• fighting for democratic access for marginalised and lower-class groups
• raising awareness on misinformation/fake news and how to identify it

Food & the Cost of Living Crisis

As we near the end of the year, inflation rates are currently at 2.3% and are expected to reach 3% in 2025, according to forecasters. At present, the UK holds the highest core inflation rate among the G7 countries, as well as the highest food inflation. Rising food costs has meant that many families can not afford ‘essential household foods’ like vegetables, with many members going for prolonged amounts of time without eating.

One of the reasons food prices are expected to become more volatile is due to the current climate crisis, with its more extreme weather and substantial shifts in seasonal patterns. These can lead to spikes in the price of individual products, with olive oil and cocoa being recent examples, or across-the-board increases, caused by abnormal weather patterns.

As of November, the latest Office for National Statistics (ONS) data showed food price inflation is now a more manageable 1.95% this year, but as of right now, spending a lot more on a weekly grocery shop is still the new normal.

Conclusion

Based on this year’s biggest news stories, there are a few things you can look out for to build your commercial awareness around these areas:

• How State leaders are building /maintaining relationships as ‘new’ parties come into power
• Possible contingency plans the Labour Party may implement to offset the impacts of food price inflation and other possible disruptions to national food supply/supply chains
• The rise of propaganda and misinformation on social media platforms
• States increasing regulations for social media platforms in areas of AI, fake news, advertisement, competition law, etc
• Trends related to global public/political trust and what States will do to protect democratic integrity

More Resources Boost Your Skills

The Budget: Key Features and Reactions Numerous businesses have provided their thoughts on the chancellor’s Budget, with many raising national insurance increase concerns. The Budget: Key Features and Reactions Numerous businesses have provided their thoughts on the chancellor’s Budget, with many raising national insurance increase concerns. Aspiring lawyers looking to develop their commercial awareness will likely want to understand the impact the Budget has on future clients.

What was the context to the budget?

The UK economy faced choppy waters throughout much of 2023, where GDP suggested a mild recession – before growth returned in the start of 2024. The economy then grew relatively sharply, including lower inflation and rises in average wages rising higher than price rises (which is often a strong indicator of a good economy).

The Bank of England predicted that inflation will soon drop below the 2% target. At the same time, however, public debt was significantly higher than planned for. The government borrowed almost £80 billion since the start of the fiscal year, in contrast with the OBR’s forecast of £73 billion.

Following the Labour election win under Keir Starmer, many voters (and businesses) watched on eagerly to see what changes would be made to fiscal policy. Traditionally, Labour have been seen as the most likely candidates to raise taxes significantly.

Their election promises were heavily based on the idea of increased public spending in areas like the NHS, despite the fact that Chancellor Rachel Reeves has reportedly identified a pre-existing ‘black hole’ of debt left over from the Conservative government – of around £22 billion. It was therefore inevitable that the budget would lead to some tax increases. 

What are the key aspects of the Chancellor’s budget?

The budget promises much higher public spending in a number of areas. The OBR has called it ‘one of the largest fiscal loosenings of any fiscal event in recent decades’. 

Tax hikes were also notably present. The changes proposed are supposedly going to raise £36.2 billion a year in additional revenue for HMRC. A list of key changes are outlined below (though not exhaustive, by any means):

• National insurance
  • Rate of employer national insurance to go up to 15%
  • Starting threshold for employers paying national insurance to go down from £9.1k to £5k (meaning more businesses will be caught by the requirement)
• Capital gains tax
  • The lower rate of CGT to go up to 18%, and the higher rate to go up to 24%
  • The rate of carried interest CGT to go up to 32% (and 36% a few couple later)
• Inheritance tax
  • The BPR (business property relief) and APR (agricultural property relief) exemptions will be capped at £1 million (previously unrestricted), with only a 20% reduction above that
  • Certain pension funds which were previously exempt will now be subject to inheritance tax
• VAT
  • VAT will now be charged on private school fees in England (a contentious topic leading up to the election)

Boost Your Applications Receive 1-2-1 application support to jumpstart your legal career! Learn More https://www.thelawyerportal.com/events/application-advice-mentoring-for-aspiring-lawyers/

What has the reaction to the Chancellor’s budget been so far from businesses?

The main concern for the average employee has been any suggestion that income tax would go up. It has not, in line with Labour’s promise not to tax ‘working people’ more (directly) via this budget. 

In practice, however, it might be more accurate to say that the budget will not be increasing tax on ‘work’ itself (a more specific definition), since ‘working people’ may (arguably, as Starmer has faced numerous questions on in the last few days) still hold assets which are going to be taxed more heavily . For example decently sized pension funds will now be subject to inheritance tax. 

Even then, though, it can be argued that these business-focused tax increases will still inevitably end up hitting the pockets of employees. This is since businesses facing the increased burden may well attempt to pass on these losses through employee salaries, to some extent (though there are complex tax and legal rules in play here). Higher taxes based on your number of employees might also make you reconsider exactly how many jobs you are hiring for, too. This leads to even more concern amongst job-seekers – such as recent university graduates – who are already facing a very narrow, competitive job market. 

Businesses themselves have been widely critical of the increases to national insurance contributions which they are being asked for – essentially, this makes employing staff a lot more expensive. To give a recent example, high street retailer Primark’s owner ABF have said that their wage bill is likely to increase by ‘the tens of millions’ as a direct result of the budget.

They ruled out speculation that this would be passed onto consumers (leading to even more pressure on the pockets of working people, especially in a relatively budget-friendly environment such as Primark). However, they did suggest in a recent interview that the changes might lead to them focusing more time and money on their overseas operations (taking the view that the opportunity for growth in the UK is being stifled by the budget – something the Conservatives have been widely arguing on from the opposition benches).

According to a very recent statistical study, two thirds of business leaders feel that the budget will have a negative effect on their operations. Of course, voters need to weigh this up against considerations like greater funding for public services (which the Conservatives were widely criticised for cutting in the light of lower taxation).

Why do aspiring lawyers need to know about the budget?

Aspiring lawyers at all levels need to understand this story. Whether you are a solicitor at a high street law firm (advising local private limited companies with a handful of employees) or a Magic Circle / elite US law firm (advising some of the biggest companies in the world in complex cross-border arrangements), the Budget has a huge effect on anyone that does business in the UK. Indeed, it affects all individuals in the UK, too – though they may be likely to turn to less formal tax advisors than legal professionals for advice.

In terms of commercial awareness (a key skill which law firms and chambers are always on the lookout for at interview, and even in the early application stage), the Budget is one of very few stories that honestly appears a ‘must know’ topic for candidates (at least at a baseline level) due to its wide-reaching consequences. 

An excellent starting point might be looking at the client list of your target firm and trying to predict how such major changes to the UK’s fiscal policy are likely to affect them, both legally and in a broader ‘business’ sense (as we have done above briefly in the context of Primark, to give just one example). HELP

Boohoo’s Breakup: A Potential Corporate Restructuring Fashion giant Boohoo is considering breaking up a number of its divisions in light of serious recent financial struggles. Boohoo’s Breakup: A Potential Corporate Restructuring Fashion giant Boohoo is considering breaking up a number of its divisions in light of serious recent financial struggles. Corporate restructuring lawyers are likely to be involved as online fashion retailer Boohoo take steps towards improving their business model.

Who are Boohoo?

Boohoo are an online fashion retailer based in the UK (specifically, in Manchester). The business was founded in 2006 by Mahmud Kamani and Carol Kane (both of whom are still on the board of directors to this day). Early on, they supplied goods to budget high street fashion chains such as Primark, before moving towards becoming a retailer in their own right. 

Instead of opening high street stores, Boohoo focused on developing a strong online presence, while still maintaining a focus on keeping prices as low as possible. 

A key business strategy in recent years has involved the company buying up the rights to numerous household name brands. Boohoo now owns Oasis, Coast, Dorothy Perkins, Burton and Debenhams (to name just a few from its huge roster). Boohoo Group also runs a number of subsidiaries, including PrettyLittleThing (which was initially founded by Kamani’s two sons back in 2012, before being bought out by Boohoo completely in 2020).

An initial public offering (IPO) in 2014 saw the company valued at around £600 million – a number which it has fallen below in recent years (after peaking in the summer of 2020 – perhaps no coincidence considering the growth of online shopping during the lockdowns associated with the Coronavirus pandemics).

Why are Boohoo in financial difficulty?

First of all, the slowdown in online shopping which boomed during the pandemic has naturally hit Boohoo very hard – this appears rather obvious considering its share price peak during the lockdowns. 

Another key factor has been the growth of even cheaper online competitor fashion retailers from China – namely Shein and Temu. 

Boohoo has long been criticised for its contribution to the ‘fast fashion’ system (cheap clothing goods which are quickly disposed of, thus using up a great deal of energy, labour, materials, etc – for a very short lifespan). As a result, the company has attracted quite negative ESG perspectives for a number of years.

While this has kept some potential customers at a distance, the ones who were less concerned by this are now equally happy to shop at Shein and Temu. They attract similar criticism, but offer goods at even lower prices as a result of their ‘direct to consumer’ model, while maintaining far lower marketing costs than Boohoo, who have splurged on partnership deals with everyone from Paris Hilton and Nicole Scherzinger to Khloe Kardashian and Hayley Bieber. 

On the ESG point, it is not only environmental concerns on the table – numerous allegations of worker exploitation abroad (mostly in Pakistan) have also been circulating for a number of years. This is something which fast fashion houses are now becoming particularly aware of, and adapting their marketing materials to attempt to counter.

Other issues often cited include a high number of product returns – in recent years, online retailers have noted significant losses via this process. A few months ago, a number of online fashion retailers including ASOS and PrettyLittleThing (a Boohoo subsidiary) announced that they were looking to end free customer return programs.

This business model had, according to many of these companies, ended up costing far more than they used to, and were simply unsustainable long-term. Consumer backlash has led many to question whether this was the right move – only long-term sales numbers will give us a definitive answer to that question.

The results of all these issues have become quite obvious. In May, the company revealed net debts of almost £100 million (with losses widening by 76% compared to the year before). Early attempts to stem the tide included the decision to cut more than 1,000 jobs back in May, which does not appear to have fixed the problem entirely.

A month later, a £100 million FSMA lawsuit against the company from its own investors came to light, alleging that a failure to disclose information regarding staff wages ended up negatively affecting share prices. This is a relatively rare example of social governance being used in the context of British share price disputes, which some commentators are speculating could become more commonplace in the future.   Keep Up With The Current News Subscribe to our monthly newsletter to learn more about international developments Sign-up Now

What are the proposed solutions to Boohoo’s problems?

The recent news story surfacing in the past few days is that Boohoo are considering drastic measures in order to turn the tide on the business’ fate, which currently appears quite bleak. While it is hardly time to call in the administrators, the business does clearly need pretty significant restructuring in order to get back on the right tracks. 

The most likely next steps are some form of breakup (the opposite of an M&A deal, you could say – fragmenting the business into smaller parts). The most likely next steps, according to financial commentators, are dropping Debenhams and Karen Millen (since those two brands have historically been less appealing to younger audiences, which Boohoo are trying to hone its attention onto).  

How will future lawyers be involved in the Boohoo breakup story?

There are a number of points here that aspiring lawyers can discuss on their upcoming applications. This story is likely to be particularly relevant to the corporate law solicitors of tomorrow (likely applying for vacation schemes and training contracts) – think Magic Circle, elite US, etc. 

Generally, this story involves deep analysis of commercial awareness – understanding not just the legal issues which could arise, but also the reasons for the financial difficulties in the first place, future decisions which could lift Boohoo out of this situation, the impact of changing ESG perception on their business model, and many, many more talking points. Having these discussions demonstrates key skills which firms are always on the lookout for in their applicants.

There are, of course, legal issues here too, though. If the company does want to significantly restructure, restructuring lawyers will be at the heart of that process. Splitting up various brands will require an in-depth understanding of IP (intellectual property) law. If more redundancies are unfortunately on the horizon, employment lawyers will need to provide expert advice on contract obligations too. HELP