Here Becky Kells, editor of AllAboutLaw, an advice, features and jobs platform for aspiring lawyers, explains why commercial awareness is key.
Far from being a box-ticking exercise, commercial awareness is a way of thinking: you’ll use it not just to get a vacation scheme or training contract, but throughout your law career.
Simply defined, commercial awareness means staying up-to-date on daily happenings and developments in the commercial world in which many of their clients are operating. A lot of students conflate reading the news with being commercially aware, but there are some further steps to take beyond just memorising articles. As you read, you’ll need to think about value; consider how businesses function internally; understand how businesses interact with, compete with and coexist alongside each other; and figure out how external factors affect businesses. Not every article you read will address all of these points, but whether you’re reading a three-line news update or a 1,500 word long-form analysis, these are the concepts you should be on the lookout for.
Commercial awareness is an important trait at every stage of your career, from the training contract right the way up to partner level. You’ll be qualified to give legal advice, but your client is not a legal expert. You’ll need to take your own expertise and match it up with their expertise. This means you’ll need to have a strong understanding of what your client does: how they’re looking to add value, how their business works, who their competitors are, and what external factors they’re grappling with. “Innovation isn’t necessarily the first word which springs to mind when people think of lawyers, but so many working in the legal profession regularly have to think creatively when dealing with legal or business problems for their clients”, says Matthew Kay, director of Vario from Pinsent Masons.
It’s also important to be commercially aware because a law firm is, in itself, a business. Grasping the intricacies of your future place of employment will enable you to add value, make money, and ultimately progress within the firm. “Since joining [my] firm I’ve developed a much more commercial mind—I think about client's problems in the context of their businesses and industries, rather than as an academic issue”, says Amma Boakye, an associate at Hogan Lovells. “Clients expect us to be technically excellent—but they value lawyers who can provide commercially relevant solutions and help them to remain successful.”
The multifaceted nature of the media should show you that commercial awareness can’t be gleaned from memorising a finance article word-for-word to regurgitate at interview. You’ll need to absorb the fluctuations of business and the market over a long period of time, supplementing your academic knowledge with your commercial findings. Which means you need to start now, to prove that you’ve been tracking issues over a period of time.
Sadly, commercial awareness questions aren’t always going to be as easy as “in what way are you commercially aware?”. Some commercial awareness questions will be very specific, asking you the difference between a merger and an acquisition, or to define what private equity means. Other times, you’ll be presented with a case study and invited to analyse it from a commercial perspective. Some application forms won’t even use the words “commercial awareness”, they will expect you to demonstrate it in your answer to questions like “why have you chosen to apply to this firm?”
Whatever kind of question you’re working with, it’s important to look at the context. Think about how value is generated, what external factors are at play, and any competitors involved. The better your commercial awareness, the more you’ll start to unconsciously show it, in what you choose to speak about at interview, and the examples you refer to in application forms.
