If you had a pound for every time someone told you that “there isn’t a concrete definition” of commercial awareness or that commercial awareness “means different things for different law firms”, you might have a trainee solicitor’s salary within a week.
Aspiring solicitors are told to read The Economist and the Financial Times regularly and to keep up with the markets. However, while these activities are not counterproductive, you should also know that there are key aspects of commercial awareness that law firms look for in their prospective trainees.
How do I show commercial awareness?
To demonstrate commercial awareness, you need to show an understanding of business. You are not expected to know everything about it, but you should make the effort to do some research.
Graduate law recruiters expect candidates to know the answers to questions such as: Where are our offices? What are our main practice areas and specialties? How are we doing financially? Which deals and clients are we engaged with?
You also need to be able to take that information and apply it to real-world scenarios. What happens if there is an economic downturn? How might it affect a law firm’s clients, and how can the firm continue to keep them satisfied? Which departments are likely get busier and which are not? And, perhaps most importantly, when are things likely to pick up again? You aren’t expected to know the definitive answer to any of these questions, but you should be able to discuss them intelligently. You can practise doing this with our commercial awareness toolkit.
What is an example of commercial awareness?
Say a client wants to sue a supplier for £1,000, for example. A law firm could do that, but what if the supplier was about to go bankrupt, or the court fees would amount to £2,000? What if maintaining the relationship might be more important, in the long term, than litigation now?
Clients expect law firms to know the law, but they also need to be able to “add value”: to build a relationship and demonstrate that they understand their business and its complexities.
In this scenario, litigation may not be the best idea. A law firm would be expected to both spot and suggest that. You need to understand what’s important and relevant to the client, rather than merely what the law is. What is the answer to their problem? How can they do what they want to do?
How do I become commercially aware?
Develop an interest in business and finance
If you want to be a solicitor in a commercial law firm, you should cultivate an interest 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.
You might try to follow the hackneyed advice of reading the Financial Times and keeping up with the news—this will certainly be beneficial. But if this isn’t something you’ll enjoy doing, it will be difficult for you to stick to it. Try to develop an interest in business by finding specific areas or news stories you’re interested in, and look beyond just reading the newspapers. Maybe you could watch some informative documentaries and YouTtube videos, or maybe you could find friends with similar interests to discuss these issues with.
Learn about 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 City firm how you want to make a difference to the local community. These firms work with the biggest corporations in the world, and while they may have a Corporate Social Responsibility and pro bono programme, you need to understand the firm’s primary purpose. You will also need to understand how client need dictates why a certain firm has offices in certain cities.
Accurately understand the work of a solicitor
Working as a solicitor involves business development, marketing, networking, chargeable hours targets and client care and management. You need to understand these aspects of the role and also demonstrate that you have the necessary soft skills to excel in these areas. Strong communication skills are crucial to deal with clients, for instance, and you should both be aware of their importance and be ready to provide evidence of your aptitude.
There’s a lot to consider here, but it’s important to remember that being commercially aware is not something you’ll achieve simply by reading the news. While this is certainly important, remember that you’ll also need to understand exactly how law firms work and what exactly the place of the solicitor is within them.
How do I show commercial awareness in an interview?
If you are asked why you want to work for a law firm, a near-perfect answer would be: "I am keen to gain international experience—working in your Dubai office, for example—because I would enjoy the corporate work done there [give reasons and/or examples and link it to your work experience if you can]."
Then, as the conversation develops, you could mention your awareness of some of the issues affecting the Gulf region. For instance, if the region is being affected by a major recession, corporate clients may choose to wait before setting up businesses in the area. If a number of law firms have set up offices in Dubai recently, they may provide more competition for the limited work that is available, so there may not be as much demand for lawyers at present.
However, you could also mention that you would like to work in litigation, and that this area may become busier in an economic slowdown as clients seek to recover unpaid money and companies resort to litigation to protect their interests. This response shows awareness of both the current marketplace and the law firm you’ve applied to.
You don’t need to walk into an interview and immediately start explaining the causes of the recession in Dubai. However, you need to be prepared to deal with that if you are asked. Read law firms’ websites, work out who they compete with, read the business press, and get copies of industry magazines.