If you had a pound for everybody that told you there isn’t a “concrete definition” of commercial awareness, or that commercial awareness “means different things for different law firms”, you would have a trainee solicitor’s salary within a week.
Aspiring solicitors are told to read The Economist and Financial Times regularly and to keep up with the markets. However, whilst these activities would not be counterproductive, you should also know that there are five key aspects of commercial awareness which law firms look for in their prospective trainees.
Interest in business & finance
If you want to be a solicitor in a commercial law firm, you should be interested in business and finance. Firms will also expect you to understand the nature of the advice clients want from their lawyers and the importance of factors that affect the way they do business – including key economic, regulatory, and commercial drivers.
Economic drivers refer to the effect of wider economic conditions on businesses and new start-ups. These might include interest rates, inflation, the availability of debt finance, and the strength of the pound. Regulatory drivers might include issues such as competition laws or changes introduced by regulatory bodies. Commercial drivers might include the stance that a competitor has taken on a particular issue or the company’s short and long term strategic plan.
Knowledge of the varied working practices, culture and clients at different law firms
You need to be aware of the type of clients and workload you will encounter at a particular firm before applying for a vacation scheme or training contract there – there’s little use explaining to a Magic Circle firm how you want to make a difference to the local community. These guys work with the biggest corporations in the world, and whilst they may have a Corporate Social Responsibility and pro bono programme, you need understand the firm’s primary purpose. You will also need to understand why client need dictates why a certain firm has offices in certain cities.
Appreciation of regulatory and commercial challenges
Awareness of the challenges that face lawyers and the impact of recent regulatory reform is key. For instance, hourly billing is being ditched by some firms in favour of fixed-fee work in order to make billing more transparent and some firms are looking to reduce overheads by outsourcing certain services such as due diligence reporting.
You also need to be aware of the implications of the Legal Service Act 2007, which allows for Legal Disciplinary Practices (organisations that only provide legal services but in which up to 25 per cent of the advisors are non-lawyers) and Alternative Business Structures (ABS) (legal practices owned by non-lawyers which may provide just legal advice or a combination of legal advice and other services).
The introduction of ABSs in particular has paved the way for existing commercial organisations (often retailers) to apply their consumer centric business models to the provision of legal services by offering lower cost services based on fixed fees, greater accessibility and flexibility, and often the added comfort of being backed by a household name.
Awareness that law firms are businesses
Aspiring solicitors should understand the importance of fee earning and the payment of bills. When on a vacation scheme, it may be an idea to ask your mentor about their own billing and chargeable hours targets. Different firms will have different structures in place, and the six-minute unit is one you will have to be familiar with. Try to get a look at time recording software and have your supervisor explain the different parts of an invoice.
Accurate understanding of the work of a solicitor
Work as a solicitor also involves business development, marketing, networking, chargeable hours targets and client care and management. You need to understand these aspects of the role and also display in your application that you have the necessary soft skills to excel in these areas.
There’s a lot to consider here, but the fact of the matter is that to become commercially aware you need to read a lot and keep up with the industry and the clients served by the legal sector.
If you liked this set of helpful tips, there’s plenty more where they came from! From Student to Solicitor: The Complete Guide to Securing a Training Contract by Charlotte Harrison is published by Sweet & Maxwell and is an incredibly useful tool in the arsenal of any aspiring solicitor!