Josh Richman - Commercial awareness: what does it mean and how do I show firms that I have it?
Want to read this article later?
Just tap MyLCN+ to save it to your account
Commercial awareness is a term that can be daunting due to its vagueness, but it is actually fairly simple and there is no need to feel as if there is secret code which you haven’t been given. Training contract applicants are not expected to already be commercial gurus (that level of expertise only comes with experience); just that they will understand the basics and will be able to demonstrate some informed commercial ‘common sense’.
The first step to possessing commercial awareness is understanding what the term means, beloved as it is by recruiters and training principals. Commercial awareness means two things for the junior lawyer:
- understanding the aims and objectives of your client and the business conditions in which the client operates; and
- understanding the law firm as a business.
Understanding the client and its aims
A lawyer is above all a trusted legal adviser, so to be a successful lawyer, you have to give good advice to your clients. To do that, you have to understand them – how their businesses work, which sector(s) they operate in and what they are trying to achieve/what the problem is when they come to you for legal advice. Clients will feel that they have been given a good legal service according to 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.
Let’s say, for example, that your client is the owner of a small, start-up company asking your firm to draft a simple, accessible contract that gives it some room to be flexible. The commercial lawyer who actually understands this desire will not then draft a 100-page document that the start-up company will not be able to implement properly without the benefit of an in-house legal team, and which does not afford the necessary flexibility.
A good lawyer will also be proactive in looking at ways to add value to the service, perhaps by identifying a potential problem further down the line and coming up with a solution, thus ensuring value for money. 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 senior, experienced level to help them to achieve their business aims.
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. You should also always be mindful that you will encounter very different personalities in the course of your work, 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 money and provide a good service, or they will suffer. A commercially aware lawyer will appreciate that most work has to make the firm a profit and understand how firms bill their clients.
When researching a firm before making an application for a training contract or vacation scheme place, be sure to pay attention to 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
As we can see, 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 the decisions of governments and other businesses affect everyone. And frankly, 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 to pursue.
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 from article to article.
The more you learn, the more everything makes sense and fits together to improve your understanding of current affairs and the world around you. It’s actually very interesting, so developing your commercial and wider awareness shouldn’t be much of a chore.