Josh Richman - Commercial awareness: how to show firms you ‘think business’
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Commercial awareness is understanding that being a lawyer involves much more than just knowing the law – you have to know your clients’ businesses and the sectors they operate in to be able to help them achieve their commercial aims. As someone looking for a training contract or work experience, demonstrating commercial awareness is not going to be the same for you as for a partner with 20 years’ experience – no one expects you to be an expert. Above all, you need to show that you are interested and that you have the ability to ‘think business’.
For candidates, commercial awareness means two things:
- understanding the aims of your client and the business conditions in which the client operates; and
- understanding how your law firm or other potential employer works as a business.
Understanding the client and its aims
A lawyer is a trusted legal adviser. Whether the advice you provide is good generally depends on two factors:
- the outcome of your work (ie, whether it has helped the client to achieve its aims); and
- whether the service you provided represents value for money to the client.
For example, your client is the owner of a start-up asking your firm to draft a simple, accessible contract that gives it some room to be flexible. The commercial lawyer who understands what the client needs will not then draft a 100-page document that the start-up will need an in-house legal team to implement, and which does not provide flexibility. A shorter, simpler contract would suit the client’s needs much better.
A good lawyer will be proactive in looking at ways to add value for the client, for example, by identifying a potential problem further down the line that the client has not identified and coming up with a solution. This example also shows how these principles apply even if you are not interested in the corporate side of things and want to be, say, a private client solicitor. Many private clients are themselves small business owners, so you need to be able to engage with them on their level to to give them the help they are looking for.
Good communication is also key – if your client has been running her or his own small business for 30 years and has a set way of doing things, then communicating in the most current corporate jargon may not come across as that impressive. And remember that you will encounter very different personalities in the course of the job, which will each require a slightly different approach.
Understanding the law firm as a business
Law firms are themselves businesses, of course – they have to make a profit. A commercially aware candidate appreciates that the work solicitors do has to make their firm money and encourage clients to keep using the firm, and understands how firms bill their clients.
When researching a firm before making an application for a training contract or vacation scheme place, look up its practice areas and clients, any recent mergers or plans for expansion, where its offices are located and its profits. Key objectives for law firms are retaining their current clients to ensure repeat custom and winning new clients by pitching work to them – bear all this in mind as you research a chosen firm and think about how it applies to that firm specifically.
Building your commercial awareness
Commercial awareness is not general knowledge. However, knowing what is going on in the wider world of business and politics is essential to be able to provide good commercial advice. Law firms and their clients do not operate in a vacuum and laws passed by governments and decisions of other businesses affect everyone. Lawyers play a key role in all of this, so if you are not interested in what is going on in wider society, you have probably chosen the wrong profession.
This means that you should keep up with what is going on in the business world through the press – Legal Futures and the Financial Times are good sources of legal and commercial news, but watching a good news programme such as Channel 4 News and reading more generalist outlets such as the BBC and other broadsheet newspapers is also highly valuable. Websites such as TED Talks are also a great way of learning about current business concepts and getting you thinking along commercial lines. Doing all of this should stand you in good stead when writing applications and answering questions at interview.
A good place to get started is our Commercial Question section, which analyses business, technological and political issues from a legal perspective, and offers both broad overviews and forensic detail.
The more you learn, the more everything makes sense and fits together to improve your understanding of current affairs and the world around you. So get reading, listening and watching – and follow your interests.