what are firms looking for when they say commercial awareness | commerically aware students

For those who question the importance of this trait in modern legal practice, look no farther than Magic Circle firm Freshfields – who recently ‘subjected’ (using the term in the strictest sense) their LPC cohort to a lengthy test on a range of Commercial subjects, including both Credit Derivatives and interest rate policy in the UK.

So what are firms actually looking for when trotting out this eponymous term? A particularly popular retort to this question would be to read the broadsheets of national papers such as the FT, the Times or publications including The Economist.

This is no doubt correct; however, it’s not just simply a case of reading the latest on bank equity issues or restructuring processes.

Demonstrating a keen commercial awareness requires one to explain (methodologically) how events (whether political or economic) influence each other, and therefore how law firm clients could benefit or suffer.

For example, falling interest rates traditionally result in an increase in domestic consumer spending and business investment, a straightforward observation that is entirely correct.

However, what if the law firm you are applying to have a client reliant almost entirely on exports? One would then have to look more broadly, at how falling interest rates affect that company’s exports. In this case, falling rates act as a disincentive for foreign investors to buy Pounds Sterling in foreign exchange markets, weakening the currency in the process.

This has the consequent affect of making exports cheaper for foreign consumers – benefiting our original client export company.

The aforementioned publications are a great place to start understanding how markets work, interrelate and react to extraneous events. It is also useful to have conversations with friends or family members about current commercial events.

It is also important to note that it would be foolish to expect results overnight, building a deep commercial understanding can take years – although most firms will only initially expect you to display a broad understanding.

Having said this, certain US and Magic Circle firms may expect/ or appreciate a more detailed understanding of markets and business, as many of those firms rely heavily on their Finance and Corporate practices.

Furthermore, firms will each have their own way of testing your commercial awareness. Whether through application forms or in Partner interviews, more often than not firms will ask you to give a brief analysis or description of a recent issue. So you're probably thinking it’s a lot to ask whilst studying full time!

Although undoubtedly true, one of the best ways to impress Graduate Recruitment is to integrate into your CV a commercially relevant work experience placement.

This can encompass anything from working administratively in a small business, to presiding over a University Society as a Treasurer.