Edward Fennell’s LEGAL DIARY
Diary news plus insights, commentary and appointments from the legal world
24 October 2025
Editorial contact: fennell.edward@yahoo.com
SHORT THOUGHT FOR THE WEEK: Let Me Think About It
We have plenty of important – some REALLY important – stories in the Legal Diary this week but maybe the one of greatest long term significance comes from abroad – Italy of all places. Because Italy is going through something of (another) renaissance right now and this is embodied in its success in introducing Europe’s first national AI regulation aligned with EU Law (see the ‘Contributed’ article by Jonathan Armstrong).
Developments in AI are now the bread-and-butter of legal news. The urgency of its adoption was expressed this week in by lona Logvinova, Director of Practice Innovation, Clearly Gottlieb, Steen and Hamilton who said (in LegalTechTalk 2025 Reflections), “We are constantly working with words as our raw material…thousands and thousands of words which are essentially data points. I don’t see how that can reasonably be processed by the human mind.”
In other words, the modern legal landscape is getting so complicated as to be beyond the human capacity to cope. This is a mess of our own making. We need AI to help sort it out.
The LegalDiarist
In this edition
+ LEGAL DIARY OF THE WEEK
Clogging Up Money Laundering Regulation
HELLP, I need somebody! (Probably an accountant)
Following the ‘3 Points of Contact’ Rule?
A Fair Result for Clarke Willmott
+ CONTRIBUTED ARTICLES OF THE WEEK
Italy Passes Europe’s First National AI Regulation Aligned with EU Law by Jonathan Armstrong
A New Era of Corporate Accountability: The Failure to Prevent Fraud Offence by Charlotte Hill
+ LEGAL COMMENT OF THE WEEK
on work experience and autism, cutting red tape, the Children’s Act reform, the Sentencing Bill.
+ APPOINTMENTS OF THE WEEK
Burges Salmon
LEGAL DIARY OF THE WEEK
Clogging Up Money Laundering Regulation
With Scottish nationalism now, possibly, on the rise again one would imagine that the Labour government would steer clear of generating unnecessary anti-London sentiment north of the border. Instead, with unerring accuracy, the Starmer Government has once again adopted the worst possible strategy – this time in relation to money laundering regulation.
A couple of days ago HM Treasury announced that in a major change the Financial Conduct Authority (FCA) would assume sole responsibility for Anti-Money Laundering (AML) supervision across the borders . In other words, exactly what the Scots did not want to hear since it means stripping the Law Society of Scotland of its powers.
“We are frustrated and disappointed with this decision, which imposes a finance sector-focused AML regulator on law firms and all other professional services,” said David Gordon, the Convener of the Law Society of Scotland’s (LSoS) Regulatory Committee “It also flies in the face of other changes made here in Scotland which actually granted the Law Society new and strengthened regulatory powers over law firms.”
Gordon went on to add that the London Government had made its decision despite acknowledging the LSoS’s strong record of maintaining high standards in its role as an AML supervisory body, “Thanks to our detailed understanding of the Scottish legal services sector.”
And the Scots weren’t the only folk who were fed up. Sheila Kumar, Chief Executive of the Council for Licensed Conveyancers, said, “This is not the outcome we had expected because, as we and others (including all the other legal sector regulators) made clear to HM Treasury in response to the 2023 consultation, it will create a dual supervision regime and risks increasing the burden on the regulated community and a financial burden that will be passed on to users of legal services.”
In short, more red tape – this time wrapped up in a double bow.
HELLP, I need somebody! (Probably an accountant)
No doubt the insiders had seen it coming from a kilometre off but for the rest of us the suggestion that the Government was going to be targeting LLPs for National Insurance as a kind of sneak tax was something of a curveball.
Within a matter of minutes, it seemed, James Kipping, Head of Personal Tax at MHA, an accounting and advisory firm, had come up with a deep analysis of how it might operate and the ducking and diving strategies available to firms to deal with the threat.
As Kipping pointed out employer’s NIC is not currently imposed on partners’ profits shares because partners are not employees. And that, the Government probably thinks, is unfair on ‘hard-working families’’ who don’t get the same exemption. Nonetheless as Kipping explained “It is not clear how this will be administered. Employer’s NIC is calculated and paid by employers by reference to salary payments paid via the payroll/PAYE. Partners receive a profit share – that is a share of the net profit of the business, usually not known until the end of the accounting period, or some while afterwards.”
Let’s leave that tricky one aside for a moment to consider how firms might respond.
There are several possible options and most of them look like elementary get-out-of-gaol cards. For example, large international firms with a worldwide practice could simply up-sticks and move away from London/UK to escape the tax. (in other words will this be the final straw for some members/partners who can easily practice from outside the UK?).
Alternatively some firms might simply deflect the impact away from the Partners on to the rank-and-file staff so that the heightened tax burden is borne in practice by the employees ( i.s. through lower pay than they would otherwise have received).
And then there is the exodus option – in some cases partners might slough off their partnership responsibilities and opt for self-employed consultancy status instead.
Any which way, it will be more complicated than HMRC thinks.
Following the ‘3 Points of Contact’ Rule?
A sharp focus on an industrial sector or two can often prove a winning formula for ambitious law firms. Bird & Bird pulled it off with technology and sport and here’s another new outfit aiming to do the same trick – albeit in the Age of AI and with a third string to their bow.
Three Points, has been set up by Simon Leaf and Tom Murray who between them have a couple of decades of experience in sports, tech and commercial law. Their aim now is to ‘seamlessly integrate artificial intelligence and cutting-edge technologies throughout every client engagement’.
“We’re building a firm that is fit for the future and one that will focus on three of the fastest-moving areas of business and law: tech, sports and commercial,” said Leaf who was previously Head of Sport and Co-Lead of the Technology Transactions group at Mishcon. “While we have historically been recognised for our high-profile sports work acting for the world’s best athletes and teams, we have developed a successful track record for advising on some ground-breaking tech and commercial law matters, which also evidences the increasing convergence of these three focus areas.”
Amongst their clients are the mercurial former Manchester United star Marcus Rashford who was advised on his move to Aston Villa and then on to FC Barcelona – so they are clearly good at the personal relationship side of the business.
But, let’s face it, technology is now the critical area and it is crucial to the way Three Points’ plans its service delivery.
“As a new firm born in the AI era and unencumbered by legacy systems, we can deliver work faster, be more efficient and collaborate effectively in line with our clients’ needs,” claims Murray. “This technological foundation enhances rather than replaces the human element of our profession and has already helped Three Points secure mandates from some of Europe’s most exciting tech and creative businesses.”
As any D-I-Y’er knows, one should follow the ‘3 Points of Contact’ rule when climbing a ladder. Probably the same applies when climbing the ladder of legal ambition.
A Fair Result for Clarke Willmott
Sir Alexander Bustamante (1884-1977) was Jamaica’s first Prime Minister, taking office in 1962. Founder of the Jamaica Labour Party he is still regarded as a national hero for his campaign for independence and workers’ rights. An award is now made annually in his name by the Association of Jamaican Nationals (Birmingham) UK and the winner this year is Karl Brown, a commercial property partner at Clarke Willmott LLP,
Brown chairs the firm’s Equality, Diversity and Inclusion Committee and aims to foster what is called ‘a truly inclusive culture and ensuring meaningful outreach across the communities it serves’.
Given the current controversy over Aston Villa’s football match with Israeli side Maccabi Tel Aviv there’s obviously a challenging job to be done in the West Midlands right now and it is ironic, maybe, that Brown’s award was actually made at Villa Park.
“It is an incredible honour to receive an award that bears the name of Sir Alexander Bustamante, a man who dedicated his life to justice, equality, and opportunity for all,” said Brown. “I am deeply grateful to the Association of Jamaican Nationals for this recognition, and I share this award with everyone who is working to make our professions and communities more inclusive.”
Celebrating his partner’s success, Peter Swinburn, CEO of Clarke Willmott, said, “Karl’s passion and commitment to equality and inclusion is inspiring. Karl’s work, both internally at Clarke Willmott and externally in the wider market, continues to make an incredible difference. We are delighted to see Karl’s achievements recognised with this well-deserved honour.”
At which point one can only quote one of Bustamente’s best known sayings, “So many of us forget that great asset which is known as humility.”
CONTRIBUTED ARTICLES OF THE WEEK
Italy Passes Europe’s First National AI Regulation Aligned with EU Law by Jonathan Armstrong
Italy has made legal history by becoming the first European Union member state to implement a comprehensive national law on Artificial Intelligence that directly aligns with the forthcoming EU AI Act.
On 17 September 2025, its Parliament approved the new law regulating the use of AI, Senate Act No. 1146-B. The Italian government said the aim is to promote “human-centric, transparent and safe AI use” while emphasising “innovation, cybersecurity and privacy protections”i.
Key legal provisions under new law
The new law introduces a robust series of criminal and civil provisions specifically designed to curb the misuse of AI and establish clear boundaries for its development. The most significant measures include:
- Criminal penalties of 1 to 5 years in prison for the illegal spreading of AI-generated or AI-manipulated content that causes harm.
- Increased criminal penalties when AI is used for crimes such as fraud, identity theft and money laundering.
- Requirements for parental consent for children under the age of 14 to use access AI services.
- Permitting AI driven text and data mining only for non-copyrighted content or scientific research by authorised institutions.
- Copyright protection for AI generated or assisted works if the works originate from genuine intellectual effort.
Enforcement and oversight
The oversight for this regulation will rest with the Agency for Digital Italy (AgID) and the National Cybersecurity Agency, both responsible for monitoring compliance and imposing sanctions. However, Italy’s data protection authority, the Garante, will continue its work in parallel under GDPR, creating a dual enforcement landscape that combines data protection and AI governance.
The Garante’s record makes clear that it is not afraid to act. Italy was the first Western country to block the advanced chatbot ChatGPT in 2023ii and later banned the Chinese AI platform DeepSeekiii. Alongside these bans, the regulator has also issued a series of significant fines.
ReplikaAI was suspended and fined €5 millioniv; Foodinhov and Deliveroovi were fined €7 million and €2.5 million respectively for using AI algorithms to manage delivery workers; and Clearview AIvii received one of the largest penalties to date, €20 million, for its use of facial recognition technology.
A European signal
Italy’s move is a wake-up call for the rest of Europe. By legislating early, it has positioned itself as the EU’s regulatory test case for AI. With the EU AI Act becoming fully applicable over the next 12 months, one message stands out for businesses, which is to prepare now.The age of soft AI self-regulation is officially over.
Jonathan Armstrong is a Partner at Punter Southall Law
A New Era of Corporate Accountability: The Failure to Prevent Fraud Offence by Charlotte Hill
On 1 September 2025, the UK’s new corporate offence of Failure to Prevent Fraud came into force under the Economic Crime and Corporate Transparency Act 2023. This landmark legislation marks a significant shift in how fraud risk is managed and litigated across large organisations. Crucially, liability arises even if senior management was unaware of the fraudulent conduct — a strict liability approach that underscores the need for proactive governance, particularly given the fine for any company falling foul of the new duty is unlimited.
The offence applies to organisations meeting two of three thresholds: over £36 million in turnover, £18 million in assets or on the balance sheet, or 250+ employees. If an “associated person” — including employees, agents, subsidiaries or contractors — commits a specified fraud offence intending to benefit the organisation or its clients, the organisation may be held criminally liable. The only defence is to demonstrate that reasonable procedures to prevent fraud were in place at the time.
From a litigation perspective, this new offence changes the landscape. The offence will be enforced by the SFO and the CPS, who are expected to actively pursue enforcement, including alongside substantive fraud charges. The expanded identification doctrine now allows attribution of liability to senior managers acting within their authority, removing previous barriers to prosecution.
For legal practitioners, this demands a shift from reactive compliance to embedded fraud prevention. Advising boards now requires a forensic understanding of risk exposure across the organisation, including third-party relationships. Lawyers must assess existing compliance frameworks against the six core principles outlined in government guidance: top-level commitment, risk assessment, proportionate, risk-based procedures, due diligence, communication and training, and monitoring and review.
Interpreting “reasonable procedures” will be context specific. A robust defence may hinge on documented risk assessments, tailored training, and clear governance structures. Legal teams should anticipate how prosecutors will scrutinise internal controls, especially in high-risk sectors or where fraud may be concealed within routine operations.
Ultimately, this offence is more than a regulatory hurdle — it’s a call to embed integrity into corporate culture. For law firms, it presents an opportunity to lead clients through this transition, ensuring not only legal compliance but resilience against reputational and financial harm.
Charlotte Hill is a LSLA Committee Member and Partner at Penningtons Manches Cooper LLP
LEGAL COMMENT OF THE WEEK
TOPIC: The controversy over how Waitrose treated a young man with autism undergoing work experience
COMMENT BY: Jo Martin, employment lawyer, Bellevue Law
“I am concerned that work that has evidently been of real value to Waitrose has been accepted from this individual for many years, without him being paid. From what I can see, his mother is right to question the fact he hasn’t been paid, as this isn’t work experience in any true sense, (this requires the person to be genuinely “work shadowing”, for the employer to avoid incurring the duty to pay at least the minimum wage). I also can’t see how this would qualify as genuine volunteering, as the work isn’t voluntary in nature, and Waitrose is not a charity.
My experience representing individuals with autism overcome problems in the workplace has shown that they tend to find the advocacy of a parent or well-known person essential when discussing terms and conditions with their employer and appreciate structure and known patterns. I can see that Tom would have needed his mother’s support and input in this situation, as autistic people tend not to be rule-breakers or want confrontation, and as such I imagine Tom wouldn’t have felt able to advocate for himself.“
…and, on his subsequent recruitment by ASDA, Jo Martin added
“Changing routine can be very difficult for people with autism, so it is reassuring to see that Asda have the credentials and experience to back up their offer to Tom, including making it clear that they will be flexible if he struggles whilst adjusting.
The Tribunals expect to see employers making reasonable adjustments for staff with neurodivergent conditions, to ensure they have a level playing field at work, but this should never be taken as an indication to treat those staff poorly, or to take them for granted. There’s also an expectation that the employer will seek more information about an employee’s neurodivergent condition, once they are aware of it, to make sure all necessary support is in place.
Employers should remember that “if you meet one person with autism, you’ve met one person with autism”, as the condition differs across the spectrum for each and every autistic person. I’d recommend taking the time to get to know your neurodivergent staff, find out what they struggle with, what they excel at, and keep an open mind about how best to accommodate them. Without wanting to stereotype, autistic people are often very committed, hardworking, pleasant and reliable employees – and no employer should be wasting such valuable talent through poor management or discriminatory practices.”
TOPIC: Potential support for technology-based companies in the forthcoming budget
COMMENT BY: Charlotte Sallabank, Tax partner, Katten Muchin Rosenman LLP
“Rachel Reeves has stated that she is committed to support growth and investment and to cut ‘red tape’. Whether this will extend to tax red tape is another matter – the increased paperwork required to substantiate R & D credit claims since the press exposure of the exploitation of R & D Credit claims by unscrupulous advisers is a very real handicap for genuine R& D credit claims in the tech industry. Some relaxation here would be very helpful. Specific tax incentives for technology adoption have also been hinted at, but it is important that the incentives are not so hidebound by conditions as to make them unattractive for investors who may choose to seek easier markets for their funds.
For SMEs 15% employers’ secondary Class 1 National Insurance Contributions are a heavy burden – introducing a reduced/zero rate of secondary Class 1 NIC for certain industry sectors such as tech (in addition to the current incentives in Freeport or Investment Zone special tax sites) could also help stimulate growth and investment in the tech sector.”
COMMENT BY: Mark Tan, International Tax partner Spencer West LLP
“£6 billion saved by scrapping paperwork? It’s administrative form filling dressed up as an economic growth plan. Businesses aren’t held back by forms – they’re held back by short-term policy swings and the absence of a coherent tax and investment framework. OECD States are converging around the 15% global minimum while Ireland, Singapore and the Netherlands sharpen their incentives regimes. While others compete by creating a competitive tax environment for investment and growth, the UK seems to believe that growth will come from rewriting its reporting templates.”
TOPIC: The Government’s proposed reform to the 1989 Children Act so as to repeal the presumption of parental involvement
COMMENT BY: Rebecca Broom, Solicitor, family team, HCR Law
“The reform represents an important step being made within the family court, reinforcing that the welfare of the child is the priority and goes some way to protecting children from preventable harm. However, there is a risk that this could open the floodgates and increase the opportunity for parents to make false domestic abuse allegations during proceedings in order to frustrate the other parent’s contact with their children. Therefore, it will be key that this is closely monitored, with strong fact-finding and robust safeguards in place. If implemented effectively, the reform should increase protection for children whilst also maintaining public confidence in the family courts.”
COMMENT BY: Shanika Haynes, Partner, Stowe Family Law
“This will be a huge cultural shift within family law, yet there are still potential concerns with the proposed reforms.
Most, if not all, family practitioners will have had at least one case involving false allegations of domestic abuse. This can be hugely damaging to a parent-child relationship. Where there is no presumption of parental contact being in the best interests of the child, preventable mistakes could be made.
It is vital that children remain the centre of all decisions made about how much time a child spends with each parent and a proper risk assessment is carried out by all involved.
It is essential that family practitioners continue to be vigilant; removal of the presumption of contact is a significant change but may come with its own unique issues.”
COMMENT BY: Lydia Andrews, Senior Associate, Children Law Team, WSP Solicitors
“After working with survivors of abuse for a long time, we would absolutely welcome these proposed changes.
Firstly, the family courts can be used by the perpetrator to continue their abuse. The proposed changes appear to turn this on its head.
The second major proposal would apply to every family court case about children, removing the presumption of parental involvement, but whether this will really make any difference remains to be seen.
Survivor-parents are regularly expected to facilitate that contact and communicate with their abuser so that they can continue to co-parent. This ignores the huge, ongoing impact of domestic abuse on both the survivor-parent and the survivor-children. We would absolutely join the call for major systemic change in the family court. But, we aren’t convinced yet that this is going to make any real difference by itself.”
COMMENT BY: Rachel Frost-Smith, Legal Director in the Family Team, Birketts LLP
“The work of the family court is difficult and challenging, particularly given it has been ‘starved’ of resources for years (as Baroness Hale recently remarked). Waiting times for cases to be heard are long and this can mean that the status quo of a child not seeing a parent can last for a long time before the court (having assessed the evidence including information gathered by social workers) can properly assess any risks that have been raised in relation to a child having contact with the other parent.
In this scenario there is no perfect solution: ordering there is contact without proper risk assessment may lead to a child and parent being harmed, withholding it may cause (sometimes irreversible) damage to the relationship the child has with the non-resident parent.
Removal of this presumption is only a small part of the work that needs to be done to improve outcomes for children. There needs to be a shift in education about healthy relationships, between adults and children for all in society, including professionals. There needs to be acceptance that sometimes it is simply not safe or appropriate for a child to have a relationship with a parent.”
TOPIC: The rejection this week by MPs of proposed amendments to the Sentencing Bill on early release
COMMENT BY: Danielle Reece-Greenhalgh, Partner, Corker Binning
“Where prison capacity is concerned, the Government is stuck between a rock and a hard place. Years of under-investment in the criminal justice system, from top to bottom, means that there are simply more offenders than there are prison beds available. Either serving prisoners get released early to make way for those due to be sentenced, or judges may be forced to more frequently use non-custodial options in cases where offenders otherwise would have expected to serve time.
“In reality, many offenders now being sentenced to 12 months or less are having those sentences suspended following guidance from the Court of Appeal, confirming that judges should be permitted to take prison overcrowding into consideration. Currently, the Government is also attempting to introduce a statutory presumption in favour of suspending sentences of 12 months or less for offenders under 21.
“In the current crisis, all efforts are driving away from immediate custody for sentences under 12 months. It is therefore not surprising that this amendment was voted down as it would have failed entirely to tackle the problems at hand.”
LEGAL SECTOR APPOINTMENTS OF THE WEEK
BURGES SALMON
Hamish Corner has been appointed as a Partner at Burges Salmon in the firm’s Commercial & Technology practice. Based in London he will lead the firm’s expanding privacy and data practice.
Formerly at Shoosmiths, Corner specialises in privacy, data and technology law and has 25 years of experience advising UK, EU and international clients regularly advising on complex technology transactions, cross-border data transfers, data breaches and regulatory investigations.
He has particular strength in supporting consumer, retail, finance and other regulated businesses, having previously co-founded and led a US office of a law firm advising American clients on UK and EU privacy and commercial matters.He also acts as the Data Protection Officer for several major international businesses.
“Hamish’s arrival is a major boost to our data, privacy and cyber offering and testament to the significant growth our data, technology, digital and AI practice areas have experienced in recent years,” said Nick Graves, Head of the Corporate department at Burges Salmon. “His breadth of experience across a wide range of client sectors and markets – combined with his international outlook and entrepreneurial approach – make him a perfect fit for our team and our clients. We’re delighted to welcome him to Burges Salmon.”
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