The legal world looks very different as we turn our gaze to 2026. Privacy penalties have escalated dramatically, signalling a new era of enforcement. A brand-new merger control system is reshaping corporate deals nationwide. Courts will be issuing their first formal guidance on AI use in litigation.
These aren’t minor tweaks. They’re fundamental shifts in how law is practiced across Australia –affecting firms of every size, in-house teams, and practitioners in every jurisdiction.
In December 2025, Thomson Reuters’® Practical Law Australia brought together its expert legal team to shine a light on what legal professionals need to keep an eye on in 2026. The panel identified five critical areas Australian practitioners need to watch, from privacy and employment law to corporate transactions and intellectual property.
1. Privacy penalties just got serious
Privacy enforcement has shifted gears. “In a landmark decision last year, the Federal Court handed down the first ever civil penalty under the Privacy Act against Australian Clinical Labs for nearly $6 million following a major data breach. But that penalty was determined under an earlier regime where penalties were lower.
Rebecca Brown, Senior Lawyer Writer for Data Privacy & Cybersecurity at Practical Law, put it bluntly: “If that breach occurred today, the organisation could be facing penalties of $50 million or more.”
The first wave of privacy reforms were introduced at the end of 2024 and included a three-tier penalty system and new infringement notice powers. This makes it easier for the regulator to pursue breaches as the barriers to enforcement have lowered. But more changes are coming.
“The Attorney-General’s Department has said they’re progressing the second tranche of privacy reforms, and they expect to conduct targeted consultation on draft legislation,” Rebecca explained.
What’s likely in the second tranche? Removing the small business exemption. Introducing a “fair and reasonable” test for how companies handle personal information, and giving individuals more rights over their information, similar to Europe’s GDPR.
The Office of the Australian Information Commissioner has already signalled that they will use their new enforcement powers to robustly enforce privacy obligations. Their 2026 regulatory action priorities include a focus on the rental and property, credit reporting and data brokerage sectors, and advertising technology like tracking pixels.
Bottom line: Every client needs robust privacy governance and proactive privacy risk management.
2. Australian courts regulate the use of AI in litigation
This year marked intensified scrutiny on the use of generative AI tools in litigation. The Supreme Court of New South Wales led the charge in early 2025, as Senior Lawyer Writer for Dispute Resolution Jacqui Ogden noted, when it issued the “first of its kind” AI practice note. This has prompted other courts, including Queensland and Western Australia, to follow suit with their own formal guidance.
Across each jurisdiction, there is an emphasis on the existing professional obligations of legal practitioners, ensuring accuracy and being transparent about the use of AI.
Looking ahead, it is anticipated that this dynamic regulatory environment will continue to evolve through 2026 – formal guidance will be handed down by the Federal Courts regarding the use of AI and that there may be a shift in the use of AI by the judiciary itself.
3. New merger control regime changes everything
Starting January 1, 2026, corporate deals face a new reality, Australia now has mandatory merger control and certain acquisitions will need ACCC notification and approval before completion.
These reforms will fundamentally change how people engage with, and get clearance from, the ACCC. If you’re required to notify the ACCC and get clearance, and you don’t, the transaction is legally void.
Michelle Wibisono, Senior Lawyer Writer for Corporate, emphasised this affects more than just competition lawyers: “It’s really a live issue for corporate lawyers, or indeed, any lawyer involved in a deal.”
The regime now also captures intellectual property asset acquisitions. This expands its reach significantly. “Deal teams are going to be working out if the new regime applies, but they should also be looking to front-end all of the document structure and timing risks,” Michelle explained.
Deal teams now also face very immediate pressure. Deals that received informal clearance before July 1, 2025 must close by December 31, 2025. Otherwise, they’ll need to reapply under the new system.
4. Focus on wage compliance
Kirinya Khamsone, Senior Lawyer Writer for Employment, didn’t mince words about 2026’s top employment priority: “A key area in terms of risk management remains wage compliance.”
Why the focus? Criminal wage theft laws for intentional underpayment came into effect in 2025 and, as Kirinya noted, “while we haven’t seen any prosecutions yet, we’ve continued to see very significant underpayment matters including those involving large employers”.
Recent court decisions have also effectively upped the ante on underpayment matters. There has been a focus on section 323(1) of the Fair Work Act, which requires employees to be paid in full for work performed in each pay period, and strict application of record-keeping requirements.
Payday super reforms also start on 1 July, 2026. This requires a shift to superannuation payments within seven business days of each payday. “This will require businesses to perform significant adjustments,” Kirinya noted.
5. AI regulation takes shape (sort of)
If you’ve been waiting for clear and concrete AI rules, I’m sorry to disappoint, but you’re going to waiting a bit longer. But that’s not to say that there has been some efforts towards regulation.
Gavin Adkins, Senior Lawyer Writer for Intellectual Property & Technology, confirmed one surprise: “There’s no text and data-mining copyright infringement exemption coming for Australia.”
This is important because it means that Australian businesses using AI tools can’t just follow the European playbook for data acquisition. They are going to need a different approach.
Meanwhile, trademark disputes are exploding. “At both high-value litigation and high-volume digital platform enforcement, volumes are surging,” according to Gavin. Currently there are three High Court decisions are pending.
Its important to note, there is also an increase in convergence between IP issues and other practice areas including employment (ownership disputes), corporate transactions (IT system transfers), and the new merger control regime (IP asset acquisitions).
Practical Law: new resources for new challenges
To support practitioners navigating these developments, Practical Law Australia launched over 200 new resources in 2025, including two entirely new practice areas:
- Data Privacy & Cyber Security: Including a new toolkit on managing vendor and service provider cyber risk.
- IP & Technology: Featuring a trademark litigation practice note, full suite of pleading documents, AI regulatory development tracker, and generative AI workplace policy.
Additionally, Practical Law content is now integrated directly into CoCounsel, enabling users to access expert guidance while conducting research, drafting documents, and managing workflows – all in one place. The newest integration brings Practical Law directly into Microsoft Word through CoCounsel Drafting, allowing you to access clause guidance and legal concepts without leaving your document.
Watch the full webinar on-demand
This article highlights key themes from our comprehensive 2026 Horizon Scan, but there’s much more detail to explore. Watch the full webinar on-demand to hear directly from the Practical Law Australia team.
Attendees may be able to claim 1 CPD point for viewing, depending on jurisdiction.
The year ahead will challenge legal professionals to balance rapid technological adoption with heightened regulatory scrutiny, all while managing evolving client expectations. The teams and organisations that invest in understanding these changes today will be best positioned to navigate the complexities of 2026.
