The PESTLE formula

  • Last updated Aug 3, 2020 2:44:07 PM
  • By Raphael Jucobin

When embarking on a career in a legal profession, it’s important to be able to demonstrate commercial awareness. By showing an understanding of the business implications and context of a given sector you are working with, you’re able to work more effectively with a range of different clients.

Preparing and being able to show this at the interview stage with a law firm will allow you to stand out as a candidate and show that you have a thorough understanding of their practice areas beyond the theory-based knowledge you’ve gained over the course of your training. When conducting legal analysis and research, the PESTLE formula can help to identify the influence of external factors on a business.

The six factors that make up the formula are: Political, Economic, Social, Technological, Legal and Environmental. Overall, this is a good structure for you to centre your commercial awareness research around.


Here, you’ll be expected to show knowledge of recent political developments and the ways in which they can affect the industry. This can range from new policies at a local level to larger-scale government schemes. A notable current example of this would be looking at how changes as well as the uncertainty brought about by Brexit will affect a company.

A political analysis would also include a consideration of taxation policies and any political decisions leading to changes in business regulations. In some cases, you might also take into account government stability and levels of corruption in your analysis.


This factor looks to deduce the impact of fluctuations in the performance of the economy on the business. This analysis would take into account changes in interest rates, inflation as well as supply and demand patterns. You’ll also need to consider the impact of past recessions and exchange rates, if applicable.

Businesses will particularly value an analysis of economic trends as this enables them to gain a competitive edge in the market and identify opportunities for growth.


A social analysis of an industry might look into market trends and how these are affected by societal attitudes and shifts in values - this can include a growing ecological awareness and general public opinion about certain products or services. On a holistic scale, this would also take into account social differences based on culture, religion and demographics and how these could influence buying habits.


Here, you can chart the latest technological advances and the effect that innovation might have on a given field. It’s important to keep an eye on general global trends that might apply to the sector, as well as looking at legislation concerning them, such as patents and intellectual property laws.


This element will be the most relevant to you as you enter a legal profession, as you analyse the ways in which different laws and regulations affect the sector you’re looking at. This is a particularly time-sensitive aspect to analyse, as you’ll be required to look at when certain legislation comes into force and how this can affect future business.


It’s important to cover the effects a company can have on its surrounding environment, as well as how environmental factors can in turn modify it. This will mean having an awareness of the specificities of the local environment, such as the climate and location.

This is especially relevant as climate change becomes a growing issue and businesses are expected to play an increasing role in adapting their practices, for instance in production methods. As new environmental laws come into force in order to reduce pollution, it’s important to be aware of how a sector is expected to anticipate and adapt to these changes.

If you’re interested in finding out more about how you can improve your commercial awareness, you can head on over to the dedicated section of our website!

More like this

  • Improve your commercial awareness: Case Study Builder & Exclusive Videos Premium content

  • How to become commercially aware Anna Vall Navés

    Developing commercial awareness is crucial for any aspiring lawyer, but it can often be difficult to know exactly how to go about acquiring it. While there are plenty of different methods that can help you become commercially aware, knowing how to read and understand relevant publications is essential.

  • Answering commercial awareness questionsTuula Petersen & Becky Kells

    Commercial awareness has become something of a buzzword in the legal sphere. Lawyers are required to demonstrate an understanding of commercial issues and contextualise current affairs within a legal framework. Consequently, recruiters will be paying close attention to the candidates’ commercial awareness during the interview, assessment centre and the initial written application.

  • Alternative ways of developing commercial awarenessKrishen Muthoo

    Krishen Muthoo runs through some alternative ways of developing commercial awareness. 

  • Using social media to become commercially awareBy Billy Sexton

    Commercial awareness is a buzzword you’re going to hear all the time when you’re applying for vacation schemes and training contracts. In order to be successful in your applications, you need to display a high degree of commercial awareness.

Recruiting? We can help