Table of Contents

• EDITOR’S RAMBLE 🗣

• FEATURED REPORT 📰

• TOGETHER WITH FLEX LEGAL* 🤝

• A BIT OF FUN 😄

• IN OTHER NEWS 🗞

• AROUND THE WEB 🌐

• STUFF THAT MIGHT HELP YOU 👌

EDITOR’S RAMBLE 🗣

LittleLaw’s aim is simple: make business news accessible for aspiring lawyers.

Here are a few things we do to achieve this.

1. Our newsletter is completely free

2. We write every business news story in simple language

3. And now, you can *listen* to our newsletter (not just read it)

Yup — if you hit “Listen online” at the top of this email, you should be able to do just that.

If you’re someone who has trouble reading (or just prefer to listen to stuff) you can!

Reply to this email — let me know what you think.

- Idin 

FEATURED REPORT 📰

💩 Thames Water's dirty secret

What's going on here?

It’s been a bad week for Thames Water (a major utilities company that serves 16 million households). Last week the industry regulator Ofwat proposed a fine of £104 million (their largest ever given) over Thames Water’s past sewage spills. The next day, Thames Water was set to get another fine for a breach of its licence — but managed to avoid it.

Why does Ofwat want to fine Thames Water?

Historic sewage spillages: Water companies need to meet certain levels of service (like providing their customers with clean water!). The guaranteed standards scheme sets out these minimum expectations.

Ofwat found that Thames Water has:

1. Let untreated waste be released more often than it should

2. Didn't properly take care of its wastewater treatment plants, causing lots of spills

3. Didn't improve its infrastructure to keep up with growing population demands

Releasing untreated sewage is a huge health risk for people. Plus, it also harms the environment. Wastewater contains lots of “nutrients” – when these are released into a river, it causes a bunch of algae to grow. The algae use up all the oxygen in the river, which then kills fish and other animals.

Ofwat can impose a fine of up to 10% of the company’s annual revenue. For Thames Water, they fined it 9% of its annual revenue (£104 million).

Breach of licence: To be able to be a national water provider like Thames Water, you need to get a licence (permission) from Ofwat. One of the conditions of the licence Ofwat gives to companies like Thames Water is that they need to be financially stable. Specifically, they need to have two “investment-grade” ratings (showing the company’s safe to lend money to) from credit agencies (organisations that test the financial stability of companies).

Last month, Thames Water’s credit rating was downgraded to “junk” (ouch) by a credit agency.

Why did its rating drop? Well, it didn’t have enough liquidity (available cash) to cover its expenses between now and next year. For example, Thames Water has a £660 million debt that it has to repay. Plus, Ofwat requires it to spend £1.95 billion in infrastructure upgrades and repairs.

Because it’s been downgraded, Thames Water’s technically in breach of its licence. This means Ofwat can again fine it 10% of it’s turnover. But another fine will make the company’s liquidity issue even worse.

So, Ofwat’s come up with a new solution. It’s demanding tighter scrutiny over how Thames Water operates. Here’s a few things it wants to do:

• Appointing an independent person to review Thames Water's reports and check on its progress

• Making Thames Water create a business plan and hire new directors to oversee what it’s doing

• Requiring Thames Water try to raise significant investment

What law firms are involved?

Earlier this year, Ofwat discussed nationalising Thames Water (this would mean it’s taken over by the government). It also suggested splitting it into two smaller companies to make it more manageable.

In the end, neither of these happened. But while this discussion was taking place, Thames Water hired the Magic Circle firm Linklaters to help them (the chairman of Thames Water, Sir Adrian Montague, used to work at Linklaters).

Creditors (anyone who lent money to Thames Water) were going to be represented by Freshfields, another Magic Circle law firm.

Credit: Laura White

TOGETHER WITH FLEX LEGAL* 🤝

🫵 You can change the legal industry (in less than 5 minutes)

The legal industry’s got its problems (you already know that).

And that’s exactly why Flex Legal’s running this survey – to hear your thoughts on what’s broken.

Why do it?

• It’s anonymous – so, you can speak freely

• It’ll make an impact (The Law Society and other organisations are partnering on it)

• It’ll take you less than 5 minutes (took me in 4m 33s)

* This is sponsored content

A BIT OF FUN 😄 

interviewer: why do you want to join our firm?

me: i heard the snack game's strong

IN OTHER NEWS 🗞

• 🤖 A Dutch judge admitted to using ChatGPT to help decide a case about solar panels. The judge asked the AI about the lifespan of solar panels and electricity prices, using the answers as part of the verdict. This move worried some tech and legal experts, who argue that AI isn't reliable for decisions like this. They pointed out that ChatGPT isn't a database but a tool that predicts words, which might give the wrong answers.

• 🍃 The UK’s introducing a new law regulating agencies that evaluate companies’ ESG (environmental, social, and governance) performance. These agencies are currently largely unregulated, but their ratings influence which stocks and bonds make it into investment funds marketed as “sustainable”. The aim of the new law is to increase transparency around the how agencies determine their ratings.

• 👶 A law firm has launched free fertility testing for its lawyers and their partners. The newly-appointed managing partner at London-based Osbornes Law, Jo Wescott, has launched this as part of the firm’s health benefits programme. The test is taken at home and includes an assessment of ovarian reserves (it also screens for up to 18 health conditions which impact fertility).

• 💻 CrowdStrike (the company responsible for last month’s tech outage) has hired Quinn Emanuel to handle the legal fallout. A faulty update from the cybersecurity firm CrowdStrike crashed Windows systems around the world. Now CrowdStrike’s hired Quinn Emanuel to get ready for the legal battles. US airline Delta was especially upset with the issue, claiming the glitch grounded over 5,000 of its flights and cost them $500 million. Delta has brought in its own legal powerhouse, Boies Schiller Flexner, to prepare for potential litigation.

AROUND THE WEB 🌐

• 🌍️ Statistics: A collection of live statistics to visualise what’s happening every day

• ⌨️ Typing: Practice typing by retyping your favourite books

• 📽️ Animation: This *really cool* site shows how animated films are made

Credit: r/internetisbeautiful

STUFF THAT MIGHT HELP YOU 👌

• 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.