Good morning. The biggest legal shifts rarely arrive dressed as legal theory. They show up in business stories. A retail investor discovering their “equity” sits last in the waterfall. A federal court reminding executives that consumer AI chats aren’t confidential. A regulator fining nearly half a million pounds for ignoring an information notice.
Each is a reminder of the same structural truth: legal risk becomes real through commercial decisions. Cap tables are built long before exits. Tools are adopted long before litigation. Processes fail long before enforcement.
This week’s stories make the abstract real. They’re examples of how governance design - or the lack of it - compounds over time. This is the briefing that resonates with the exec. 🎯
— Philip
If you read one thing this morning, read the Briefing Room. Everything else is optional.
BRIEFING ROOM
The preference share trap: BrewDog and the cost of loyalty
BrewDog appointed restructuring advisers AlixPartners, in a process expected to result in a sale or break-up of its 72 bars and four breweries.
The move follows a decade of aggressive “Equity for Punks” crowdfunding, which raised approximately £75m from around 220,000 retail investors. In 2017, a private equity deal with TSG Consumer Partners introduced preference shares granting the institutional investor priority in any exit.
In a downside scenario, that waterfall means the preference holder is paid first, in full, before ordinary shareholders see a return. Analysts estimate TSG could claim up to £800m from a deal, potentially leaving the retail base with nothing.
Retail investors have since lamented having bought “useless ‘shares’”
Don’t go chasing waterfalls
GCs and senior legal teams will recognise this as the “community-led” growth model reaching its structural limit.
For years, BrewDog used crowdfunding for capital, but also as a low-friction method to turn consumers into a grassroots marketing army. But once institutional preference rights sit on top of a vast retail cap table, the structure becomes two-tier. The loudest advocates carrying the most subordinated risk.
Inside organisations, this may cool the appetite for “customer-owner” schemes. The immediate PR benefits of a community round can be reversed by long-term governance and reputational liability if those investors are structurally positioned to lose.
Lawyers for Punks - GC lens
The story gives GCs a topical angle to bring cap table and equity finance to life.
🔹Information asymmetry. Frustration from investors and staff learning of a potential sale through the media reflects a familiar tension: sensitive processes constrain disclosure, but silence can corrode trust when a shareholder base feels personally invested.
🔹Valuation drift and liability. Large gaps between headline funding valuations and secondary market reality raise questions about disclosure standards. Governance teams may start treating crowdfunding documentation with IPO-level defensiveness to mitigate future claims.
🔹Culture as financial risk. Highly publicised allegations of a “toxic” workplace environment and a “culture of fear” underline how internal governance failures accelerate brand deterioration. Boards protect long term value by narrowing the gap between external brand image and operational reality.
Community goodwill is powerful. But it rarely survives a waterfall designed for someone else.
RISK RADAR
🇺🇸 US Federal Court: consumer AI use undermines privilege. A judge in the Southern District of New York (Judge Rakoff) ruled in United States v. Heppner that documents generated using the consumer version of Anthropic’s Claude, and later shared with counsel, were not protected by attorney-client privilege or work product. The decision turned on confidentiality. The consumer tool’s terms allowed prompts to be used for model training and contemplated disclosure to authorities. As a result, the court found there was no “reasonable expectation of privacy”, a prerequisite for privilege to attach.
Why it matters: This is one of the clearest judicial statements to date that consumer GenAI tools are not protected channels for legal communications. Privilege depends on confidentiality. Consumer AI platforms: do not establish a lawyer-client relationship; owe no professional duties; expressly disclaim providing legal advice; and reserve rights to use and disclose user inputs and outputs. GCs already understand that internal use of non-enterprise AI tools for sensitive matters can compromise privilege before counsel is even engaged. As teams increasingly treat AI bots as informal sounding boards, this judgment provides a clean reference point for policy, training and procurement decisions.
🤖 UK Supreme Court resets the UK test for AI software patents. On Wednesday, the UK Supreme Court unanimously allowed the appeal in Emotional Perception AI Ltd v Comptroller General of Patents. The case concerned an AI-based music recommendation system using an artificial neural network (ANN); and whether an invention implemented through that software was excluded from patent protection. The Court held that although an ANN can fall within the definition of a “computer program”, the claimed invention was not excluded as a program “as such” because it necessarily operates through technical hardware. In doing so, the Court moved away from the long-standing Aerotel framework and brought UK law closer to the European Patent Office’s approach.
Why it matters: This is a technical ruling, but strategically significant. AI-implemented inventions were never formally barred from UK patent protection. In practice, however, many fell away early under a restrictive eligibility gateway. The Supreme Court has now softened that threshold. For GCs and strategy teams, that means AI-driven products are less likely to be excluded before their technical merits are even examined. The question shifts from “is this even patentable?” to “is it technically inventive enough to succeed?” This is not an immediate operational trigger. But it is a useful reference point in R&D, IP strategy and audit committee discussions about defensibility, valuation and long-term moat.
🇬🇧 CMA fines parking company £473k for ignoring information requests. On Friday, the UK Competition and Markets Authority issued a £473,000 penalty against Euro Car Parks for failing to respond to a formal information notice. The company ignored seven separate requests over three months, only engaging once the CMA signalled it would fine and failed in an injunction attempt to block the CMA from naming it publicly. This is the first use of the CMA’s new fining powers introduced in 2024, which allow for fixed penalties of up to 1% of annual turnover. Notably, the penalty relates solely to procedural non-compliance - not to any underlying consumer law breach.
Why it matters: The fine - set at 75% of the statutory maximum - signals a firmer posture on procedural discipline. Regulators are increasingly prepared to penalise failures in process before any substantive breach is established. The CMA explicitly rejected explanations that internal systems or “spam filter” issues were responsible. For GCs, this is an internal controls flag. Formal notices must be identified, escalated and tracked with the same seriousness as litigation holds or regulatory dawn raids. Real financial risk attaches to failure to respond, not just to the underlying conduct.
FROM THE SIDEBAR
Quick signals worth clocking (optional reading)
🇪🇺 Von Der Leyen targets more “deep regulatory housecleaning” - expect more simplification packages to boost EU competitiveness.
🇪🇺 EU adopts additional measures to limit destruction of unsold clothing, adding disclosure and reputational risk to inventory strategy for businesses in retail.
(Deregulation in some areas; sharper rules in others.)
POLL OF THE WEEK
Last week we asked: When something is framed as a “pilot”, who usually drives the decision? The results so far:
🟩🟩⬜⬜ 🧩 Product
⬜⬜⬜⬜ 💰 Sales
🟩🟩⬜⬜ 📣 Marketing
⬜⬜⬜⬜ ⚖️ Legal
Product and Marketing lead. Legal doesn’t. Most “pilots” are shaped commercially before Legal is even in the room. Is the default structure that Legal is left assessing risk on a structure it didn’t design?
The poll stays open for another week.
When something is framed as a “pilot”, who usually drives the decision?
HIRING BOARD
This week offers senior legal roles in truly groundbreaking tech companies, including a rare opportunity to be relocated to Stockholm.
🇸🇪 Lovable, Lead Commercial Counsel: Commercial legal recast as a revenue system designer, automating contract logic and translating EU AI regulation directly into scalable deal mechanics.
🇬🇧 Google, Product Counsel Gemini: A senior product lawyer expected to make live risk calls on global AI launches, with credibility across privacy, content, competition, and regulatory engagement.
🇺🇸 Anthropic, Frontier Counsel: Legal is positioned as a first-order research constraint, shaping training data, compute choices, and cross-border architecture rather than reviewing outcomes after the fact.
As we’ve often seen in 2026, these roles formalise a shift away from perimeter legal teams towards lawyers who sit inside product, research, and GTM flows. The common expectation is judgement under uncertainty, expressed through systems, playbooks, and design choices rather than memos. The bar is moving from knowing the law to operationalising it, fast, in places where mistakes compound.
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When you’re ready, here’s how I can help
I’m a General Counsel helping tech and SaaS scale-ups navigate digital regulation. I work with a small number of leadership teams as a Fractional GC or through targeted advisory sprints focused on:
AI & Regulatory Strategy: Translating regimes like the EU AI Act into design-level guardrails.
Strategic Triage: Making high-stakes calls with imperfect information to keep decisions moving.
Investor-Ready Foundations: Hardening your commercial architecture and contracts for the next funding round.
Get in touch to discuss a specific project or ongoing leadership support.
- Philip
Too much legal content is dull and jargon-filled. Profiles in Legal is for lawyers who want to think clearly, sound credible in the room and get promoted.
This newsletter is for general information only and does not constitute legal advice. Seek professional advice for specific situations.