Legal Outlook 2025
Navigating Change, Mitigating Risk and Embracing Opportunity
We anticipate increased M&A and Capital Markets activity in 2025. This growth will be driven by multiple factors reshaping the financial landscape:
Key Drivers of M&A and Capital Markets Growth
As momentum returns to the M&A market, businesses must navigate a world of non-zero interest rates, contrasting with the near-zero rates experienced in the 15 years following the Global Financial Crisis.
If it is more expensive to finance business activity, then it becomes all the more important that businesses protect themselves against commercial risks and execute their plans successfully.
This implies an even greater importance for legal advisers not just to have deep experience in dealmaking and financing, but also to have expertise in commercial and operational issues, risk management, and executing complex plans all over the world – which is precisely our strength at Linklaters.
There are two major areas experiencing change that businesses will have to deal with in 2025: technological and political.
On the technological side, businesses are dealing with challenges and opportunities on multiple fronts – notably, AI, and the energy transition.
On the political side, the re-election of Donald Trump to the White House, as well as new and evolving agendas from governments across the world, may lead to significant changes that will affect businesses across many areas of activity.
Companies are likely to face increasing scrutiny from regulators and other stakeholders in 2025.
In relation to regulators:
We anticipate that there will be increasing intervention by regulators, leading to heightened litigation risk. Additionally, it is not just the volume of regulatory scrutiny that will rise – the complexity will also increase. Global authorities continue to demonstrate a more connected and co-ordinated approach to regulatory enforcement, increasing potential exposure to enforcement action across jurisdictions. Meanwhile, for businesses, the goalposts are shifting. New theories of harm are being developed by competition regulators, and new and increased levels of potential disclosure and analysis are emerging from the advent of AI and other novel technologies, giving rise to additional risk for organisations.
These issues do not just bring regulatory risk – they also bring the potential for litigation action by other stakeholders. Organisations may find themselves facing investor or NGO lawsuits in relation to ESG goals and claims of greenwashing or having to confront increasing consumer power through influential social media platforms or in the form of class actions supported by litigation funders with deep pockets. Such actions give rise not only to financial and commercial risk, but also to reputational risk. Companies will need to be mindful not just of regulatory compliance, but of the overlapping risks and perceptions of these other stakeholders, in 2025 and beyond.
To explore our in depth insights on three key sectors (with links to further reading in our relevant sector guides), click on each of the titles to the left
Read our Fintech & Payments Legal Outlook 2025 and our Financial Regulation Outlook 2025.
“2025 will be another busy year of regulatory change, both in the UK and the EU. The breadth of areas which will be impacted is great, ranging from digital assets and AI to consumer protection and from sustainable investing to wholesale market reform. Underpinning these changes will be competing policy priorities, including the pursuit of growth and the protection of consumers. To such a broad agenda we must also add the continued gradual divergence of UK and EU rules which overlays a further complexity for global businesses.”
Peter Bevan, Financial Regulation Partner
Financial institutions face challenges and opportunities across multiple fronts in 2025.
The lending market overall will continue to face the double challenge of falling interest rates and increasing competition from private credit funds, albeit that funds and banks are also finding ways to work together to source and finance deals.
While new lending volumes may increase in 2025, there will also be a significant volume of existing loans that need to be restructured – for example, in the real estate sector, as the office and leisure verticals continue to deal with new ways of working and engaging in leisure activities in a post-COVID world.
On the regulatory side, financial institutions face a plethora of evolving requirements: for example, the implementation of Basel III reforms (albeit that these may well be delayed or watered down); the continuing ratcheting up of ESG and sustainability-related regulation; continuing regulatory evolution in the wholesale markets as EU and UK MiFID reforms move to implementation; and the scrutiny of the usage of third-party AI systems via operational resilience regimes.
"Setting up an AI governance framework which ensures compliance with existing data protection and financial services regimes is an important first step towards meeting the additional challenges of AI-specific regulation.”
Julian Cunningham-Day, Global Co-Head of Fintech
Technology and innovation will remain huge drivers for financial institutions in 2025 with the insatiable appetite for AI fintech solutions driving investment. Ongoing efforts to digitalise financial assets, payment systems, and market infrastructure are progressing from pilot to scale, with tokenisation holding transformative potential. Retail customer demand for instant, frictionless payments continues to drive innovation, and all financial market participants are feeling the pain of cost pressures for which technological innovation holds the promise of solutions.
The fintech and payments compliance landscape is growing ever more complex for financial institutions. Regulators are expanding oversight but are increasingly recognising the need to promote innovation in a competitive world. The winners will be the players who can navigate this regulatory landscape and use compliance as a competitive advantage.
Read our ESG Legal Outlook 2025 and Energy & Infrastructure Legal Outlook 2025.
“We expect 2025 to be another exciting year as the energy transition continues at pace. Regulatory frameworks supporting low carbon technology and energy markets will see further development and implementation this year, contributing to growing certainty for investors and project developers.”
Mark Russell, Energy & Infrastructure Partner
Despite the uncertainty of the geopolitical landscape and notwithstanding a likely change of focus from a new US administration, the transition to clean energy is well underway. The momentum is expected to continue throughout 2025 with the implementation of new industrial policies, progress in supportive regulatory frameworks for low carbon technologies and an increasing recognition from business of the economic benefits of sustainable strategies.
Energy will remain a critical factor in geopolitics in 2025 and beyond. Governments recognise that energy demand will increase significantly due to electrification of transport and industry, the build out of data centres and AI as well as increasing global temperatures. Determining the mix of renewable, non-intermittent and dispatchable power to meet that future demand whilst also facilitating economic growth is a big challenge for governments worldwide.
The last few years have seen a big shift towards more clean energy investment. We anticipate that the rise in clean energy spending will continue throughout 2025. There remains plenty of bank liquidity globally, particularly for proven renewable sectors such as offshore wind. As new types of funds and financial institutions continue to expand their financing into energy transition assets, project developers are increasingly looking to hybrid financing arrangements which bring in funders not traditionally familiar with project finance assets and structures. Investment in energy transition funds and climate tech also remains strong.
As the 2030 and 2050 emission reduction targets near, the pace of regulatory reform is likely to increase. New and reformed regulations and incentives to increase investment in low carbon energy projects and climate mitigation technology will continue to drive the energy transition forward this year.
From a broader ESG perspective, although the last couple of years have seen ESG policy and regulation globally develop at pace, 2025 is likely to be a year for implementation of recently adopted rules, as well as reflection and recalibration, coupled with a marked change in approach in the US. Globally, we anticipate a sharper focus on climate transition plans, from both business and governments, with investors increasingly demanding more detailed disclosures on business strategies for decarbonisation and adaptation to a low carbon future. 2025 will also be a significant year for sustainability reporting as the first wave of companies covered by the EU Corporate Sustainability Reporting Directive submits their reports and disclosure standards are implemented or amended in other jurisdictions.
“We anticipate 2025 will be focused on ESG reflection and recalibration. The pace of change going forward will likely slow and there will be increased focus on practical implementation of new regimes to give businesses some much-needed breathing space.”
Rachel Barrett, Global Head of ESG
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