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You are here:   Ultimate Law Guide > Careers Advice > Demystifying commercial awareness

Demystifying Commercial Awareness

You will have no doubt heard the phrase 'Commercial Awareness' bandied about by now at law careers fairs, law firm presentations, websites and recruitment brochures. Commercial awareness is the buzz phrase among those competing for training contracts at the leading law firms because commerciality is frequently highlighted as the key characteristic sought by law firms. The graduate recruitment managers of law firms often inform ULG that a lack of commercial awareness is the reason for rejecting many bright students, largely due to not being as up to date on commercial awareness as they could or perhaps should be. The challenge for many students is the uncertainty about what commercial awareness is and whether they have any; it is this lack of understanding about commercial awareness which often causes anxiety for students because there is no one definition and this really hinders the employability prospects of otherwise good applicants.  So do you know what commercial awareness is? Or, more importantly - are you commercially aware?

What is Commercial Awareness?
 
Broadly speaking, when law firms say they want students who are commercially aware; they mean having a degree of understanding and an interest in: the key issues facing the business of a law firm, their clients, the wider macro-environment in which they both operate and the role of a commercial lawyer. Becoming commercially aware begins with developing a basic understanding of business:

  • How companies are organised.
  • The issues and challenges businesses face. 
  • The role of people within a company; from CEO's to marketing directors.
  • How various departments function and inter-relate with each other.
  • What factors influence a businesses success or failure? Strengths, weaknesses, opportunities and threats.
  • Who are the competitors in this market sector?

 
Commercial awareness also includes being able to apply common sense to solve a business issue or problem, which often requires students to take a step back and view a situation from different angles, asking themselves "Who are the key stakeholders in this situation? What would they be concerned about? What questions should they ask?" Every organisation has customers, suppliers, competitors and has to work within legal regulations, whilst the focus may be different; every organisation needs an awareness of the market and wider economy within which it functions if they are to survive and grow.

 
Great lawyers are business minded and understand the commercial context in which they provide legal advice to the client; by appreciating not only their clients' legal needs, but also the business needs and wider environment in which those clients operate. Commercial lawyers add value to their clients business by putting the client at the centre of everything that they do; are great at networking, building and maintaining relationships with their existing clients, so that they become an entrusted adviser. Great lawyers are also able to cultivate and develop new business for their firm. Law firms want applicants who are able to think from a commercial perspective and in a business like manner because commercial awareness is really important for the role of a commercial lawyer, and the success of a law firm.


Why is Commercial Awareness so important?
 
Commercial awareness is an outlook; there is no one all-encompassing definition because it has various meanings, is open to interpretation and is a fluid concept which is constantly changing to reflect the current market conditions. It is more important that you understand why law firms ask for commercial awareness and how you can demonstrate your business savvy during the training contract application process. Commercial awareness is considered an essential competency for two principal reasons:
 

1. The role of a commercial lawyer and the business of a law firm: It is important that you show a genuine long-term commitment and interest in becoming a commercial lawyer. The role of a solicitor in the modern legal arena has evolved from being a sound technician of the law to a sound business advisor (with a portfolio of business skills). This helps to explain why it is no longer enough for intelligent students with excellent academic grades to be guaranteed training contracts at the leading law firms. These law firms now want more, and search for candidates who have an all-round portfolio of skills and - above all - who are commercially aware.  The main reason for this is because a commercial lawyer must be able to assist clients to achieve their business aims, by delivering a pragmatic, solutions-orientated commercial steer to their clients. 

Commercial awareness also involves being up to speed with the political, economic and social framework in which the law operates. This is why commercial law firms will only offer positions to candidates who are commercially astute or those who are at least able to demonstrate the potential to possess commercial awareness in their applications. As an applicant, firms will want to know you will become commercially aware once you have benefited from their training. It is therefore important that you show signs of being business savvy throughout each stage of the application process. 
 

2. Law firms view the trainees they recruit today, as the firm's partners of tomorrow: City law firms recruit their trainee solicitors two years in advance and this decision is based on a projection of your ability and understanding of the role of a commercial solicitor. The cost to a law firm in training and developing each trainee during a training contract is in the region of £250,000. It is therefore vital that firms are confident that their money is being invested wisely when they offer you a training contract and that you can justify why a firm should invest hundreds of thousands of pounds in training you. Once you have benefited from their first-class training, you will hit the ground running; understand how the firm operates, be able to relate to clients by putting them at the centre of everything you do, because at its heart, commercial awareness is about being able to communicate effectively and relate to clients, by talking to them, finding out what they want, why they want it, what they will do with it and what they are prepared to pay, and then delivering it in the way they want.  

Law firms also want their trainees to be able to think from a commercial perspective, business-like manner and be able to contextualize their legal advice so that the firm will receive an immediate return on their investment. Many law firms aim to hold on to this "investment" beyond the training contract period, as they regard their trainees as the future partners and life-blood of the firm, which is why firms expect you to show a real commitment to spending your future career at the firm.
 

Raising Commercial Awareness
 
Lawyers in all sectors of the legal profession need to be commercial in outlook and more skilled than ever before. Law firms want to know that you have the potential to be commercially aware and look for evidence of business savvy through your experiences. Commercial awareness is a way of thinking that must be developed over a period of time; it cannot be learnt by reading the FT the night before the interview. If you wish to pursue a career as a commercial lawyer, you can only do this by dedicating time to getting to grips with the world of business and finance. We advise students that commercial awareness can be developed through the following:

 
1.    Follow the business news: With worsening economic conditions, no student is immune from the effects of the downturn. Commercial awareness is a fluid and dynamic concept which is constantly changing and it is really important for aspiring lawyers to keep abreast of the major business issues of the day. Reading the business pages of a good quality newspaper will provide a useful background to current affairs in the commercial and legal arena. The business pages of the BBC website, the Times, the FT and the Economist are very good at providing useful insights into the major issues facing businesses.
 
Watch or listen to business related programmes in the media (TV and Radio). For example, Working Lunch, the Apprentice, Dragon's den, Panorama, world business review, and the Money programme can all contribute to developing your understanding of business and wider issues in the business world. Regularly following the above sources of information will help you develop your current awareness, but rather than just reading / listening to abstract material, the key is to analyse how various business issues inter-relate and influence each other and contextualise what you've read. It is important to remember that students only begin to become really marketable, useful and a possible future asset to an employer by being able to harness an understanding of commercial activity and implement it into their role as a commercial lawyer.

* The e-learning section of the Ultimate Law Guide website offers topical articles from the legal and commercial environment; this provides the tools to develop your business acumen to prepare you for the challenges of life in legal practice and help to facilitate your smooth integration into the working life of a law firm.



2.    Keep up-to-date with news in the legal market: Read articles which cover the law firms that you intend applying to; keep a file on the research you have collated in preparation for your invite to an interview at any of those firms. Carefully read the content of law firms' websites, graduate recruitment brochures, research the recent deals firms have acted on and research what is happening in their client's marketplace?
 

3.    Research: Use the search navigation space on websites such as, lawcareers.net, Lawyer2B and Legal Week to keep up to speed on developments in various legal sectors. Ensure you are aware of the major current issues affecting the legal market: recent transactions, forthcoming legislation and consider the commercial implications for law firms and their clients business.
 

4.    Consider your own commercial/legal experience: Gain work experience at a law firm and companies; this will provide a useful insight into working life in a legal office environment.  If you are unable to get legal work experience, obtain commercial experience. For example, working in retail or the local pub to fund your university tuition fees will be valued by law firms. Candidates are likely to have gained experience of working in a customer-facing environment and an insight into the commercial reality of running a profit-making business will also develop your communication skills, understanding of customer care, the competitors, suppliers and the reputation of the business.
 

5.    Travel: A gap year of international travel can increase your commercial awareness and broaden your outlook, by helping you to develop an international perspective on business issues. Traveling around various different countries can also provide an insight into different cultures and business etiquettes from around the world. From a commercial point of view, planning your traveling schedule may have also developed your budgeting, financial forecasting, cost-cutting, scheduling and cash flow projections, which are all important skills to running a profitable business.
 

6.    Extra curricular activities: Anything that you do supplementary to your studies shows you are a pro-active, well-rounded individual who likes to get involved in activities. Many students undertake a Young Enterprise Scheme, a business game or become a member of a university committee organising and co-ordinating events such as book sales for charity, or a law ball. Your role may have been the chair or treasurer; where you were involved in: finance, sales, marketing and PR and accounts, which increased your understanding of the factors which contribute to making an enterprise successful.
 

7.    Use the application form to showcase your commercial awareness: Demonstrating your understanding of commercial awareness starts with your application for a training contract. The best way to showcase your commercial awareness is to include your commercially relevant work experience and extra-curricular activities in your CV, applications and be able to speak confidently about the skills and experiences you developed.
 

There are usually sections on the application form that will ask you to comment on a recent commercial transaction. This is an opportunity to demonstrate your interest and understanding of the key business issues, so that your commercial awareness will resonate through your application and land you an interview for a training contract. For further information go to Apply yourself - application forms
 

8.    Evidence your commercial awareness at the interview: Your understanding of business will be tested and even challenged at the interview. Law firms will usually ask you to provide a succinct description and analysis of a recent commercial issue:

  •   How do you keep up to date with developments in legal business?
  •   Tell me about a recent corporate deal you have read about?
  •   Tell me about what is going on in the business world right now?
  •   Describe a particular business story that has caught your attention recently, and why have you found it interesting?


At the interview stage, you may also be given a case study to prepare before the beginning of the interview. The case study will be a business scenario where applicants will be expected to prepare answers to questions on business issues facing a hypothetical company in order to test your appreciation of the commercial factors within the exercise. The partners interviewing you will ask questions on the case study, probe further to assess the depth of your understanding and analysis. Here, the law firm will be looking for you to be able to draw from your commercial experience and apply it to a set of given facts. For further help - see the commercial awareness chapter and commerciality test in our Guide, the Ultimate Guide to Training Contract Success.


Our Top Tip: Saying you know who a firm's clients and direct competitors are will not be enough to convince a firm to offer you a training contract. Law firms want more! You must not only keep abreast of some of their deals which have captured your interest, but also consider the commercial implications of a deal for the client, the law firm and the wider industry. This means having a proper understanding of what commercial law firms do and how they interact with other city players. The person reading your application form is thinking "does this applicant know what we're all about"? i.e. Do you know the kind of work the law firm undertakes? This doesn't mean memorising a list of deals from the firm's website; that won't impress anyone, what you need to be doing is finding out:

  • What role did the firm play on the deal?
  • What were the implications and outcome of the transaction?
  • Did it involve a key new client or established long-term client?
  • Why was the deal significant for the parties?
  • What was the significance on the wider industry? How did the deal impact on the market?

 
You need to be able to tell them a story in your own words, adding in your own opinions and conclusions. This is the only way to show firms that you have the potential to think commercially, that you are able to see the bigger picture of a deal. For example, what commercial / legal advice would you give a friend wanting to set up a new restaurant business in this current economic climate? Legal advice sometimes takes on a business element and clients will expect you to understand what is going on in the business world and what the legal/commercial implications of the economic downturn will mean for their business. If you are not able to do this, you will only highlight a massive weakness in your application. Avoid commerciality at your peril! Success in your career depends on it!

[Sign up for free commercial awareness articles and newsletters here]

The Ultimate Law Guide in association with the Practical Law Company (PLC), (the leading provider of know-how for business lawyers), will bring you articles on topical commercial issues from the wider legal and business environment every month. Our e-learning will help you increase your commercial awareness, enhance your employment potential and provide you with a competitive advantage in what will now be a highly challenging legal recruitment market to access this year.