The Forbidden Truth About Commercial Awareness

Feb 05, 2024

Written By Lewis Ogg

Commercial awareness has been the buzzword of legal applications in recent years, leaving confused applicants scrambling to satisfy criteria they don’t understand, and firms frustrated with answers so wide off the mark. Demonstrating your commercial awareness has become a must for anyone trying to secure a training contract. This article will demystify what firms really mean with the elusive term ‘commercial awareness’ and how it can become a vital component in a successful legal career.

Demystifying Commercial Awareness

The working definition of commercial awareness is the ability to understand how businesses operate within the context of their industry, and how legal issues intersect with these aspects. This is an essential skill because law firms are service providers whose role in ‘adding value’ is more than simply applying the law, especially in advisory practice areas.

When dealing with a client, being commercially aware means: understanding their business environment and how they operate, economic factors which influence their industry, legal regulations in that industry, and, therefore, what legal needs the client is likely to have.

Naturally, having this awareness is essential within commercial fields, but the associated skills are confined to these practices. While the reasoning changes slightly, even family and criminal lawyers still operate within firms where business considerations are deeply interwoven.

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The Forbidden Truth: It’s Not Just About Business

Despite what many people think, commercial awareness goes beyond simply understanding balance sheets and profit margins. What makes a robust application of this skill is being able to relate business strategies/problems to their legal implications.

Regulations are a huge aspect of why businesses might seek advice from law firms over more business-orientated matters. Take, for example, a company looking to use AI-generated images within their advertising but are concerned about copyright. A commercially aware lawyer will be able to understand how their intended business use relates to existing intellectual property regulation and then advise on how these regulations may change in the near future.

Key Components of Commercial Awareness

All successful lawyers must have a degree of business acumen, which allows them to effectively appreciate their clients' industries and the strategies they employ within those industries. It is often overlooked that law firms themselves are subject to economic trends and industry changes, employing their own strategies to handle these fluctuations.

The law is a constantly evolving enterprise, so staying informed about new legislation, landmark cases, or regulatory shifts is integral to providing accurate and practical advice for clients.

When hiring a high-value firm, quality of legal knowledge is taken for granted. So, the company justifies paying the firm’s high rates due to their lawyers’ ability to fully digest the challenges and objectives of their clients to give the most suitable and actionable advice.

Cultivating Commercial Awareness

Because commercial awareness is not a single piece of knowledge but rather an understanding, it has to be developed rather than learned. An effective way of doing this is to integrate reading business journals (The Economist), industry publications (TechCrunch), and legal news (Law360) into your lifestyle. This way, you will not only stay up to date but consistently engage with commercial issues.

If you prefer to learn through conversation and debate, you might find networking a useful way of developing your awareness. Attending industry events or seminars can allow you to build a professional network to discuss commercial issues and gain real-world insights into their impacts.

Imagine you were a trainee working in a tax practice area around the time of the unveiling of a major government budget. Your role is almost exclusively an advisory one, and clients are not paying to be told how the tax code has changed; they want to know how it applies to their business and how it impacts their financials and strategies. Without commercial awareness, a tax lawyer, in this instance, is merely presenting factors rather than giving any worthwhile advice.

Staying Current in a Changing Landscape

Commercial awareness is not a fixed understanding; due to the constant changes in economic life, it can only be maintained through consistent and ongoing learning. There are huge numbers of resources for developing your commercial awareness, whether that is books, podcasts, seminars, courses, or workshops. LinkedIn can also be a handy tool in this regard. The important thing is you take the time to engage with and learn from these resources.

Remember, the best way to stay up to date with the dynamic legal landscape is to surround yourself with it, so you may find a mixture of all these resources to be the right balance for you.

Maintaining your commercial awareness should not be a chore but rather part of your lifestyle, as something that undergoes constant growth and change. Take, for example, how recent technological developments, especially in the area of AI, have caused the legal field and broader economy to start ongoing massive shifts. Keeping your awareness up-to-date is key in the face of globalisation, technological advancement, and economic fluctuation.

Commercial Awareness in Law Applications

Commercial awareness is typically one of the more implicitly assessed aspects of law firm applications. Occasionally, you may get a more direct question like ‘What is your understanding of commercial law?’ or ‘Why is having commercial awareness important?’ but generally, it will be interwoven into the other questions. It is critical that you take the opportunity in the initial application stage to show commercial awareness, even if the questions do not directly address it.

There are many ways to interweave this understanding into your responses. For example, if you get a question like ‘Why do you want to be a commercial lawyer at…?’ take the time to address the market that the law firm is in. So, if you are applying to an American firm (e.g. Akin Gump), it will most likely be London-based high-value transactional work. In contrast, if you are applying to someone like Womble Bond Dickinson, they are a full-service upper-middle market firm with a very strong regional presence.

Especially if you are a non-law student or have little previous legal work experience, commercial awareness can be your ticket to demonstrating the additional skills you would bring to the trainee role, outside of what they might expect of a more typical law applicant.

Conclusion: Embrace the Truth

If you take anything away from this article, remember that commercial awareness is not some mystical and unachievable knowledge that law firms use to bamboozle applicants. Instead, it’s a skill which can be developed and honed through regular engagement with commercial resources.

Once you are on the path of gaining this awareness, bear in mind that there are many elements, whether that be business operations, legal industry changes, and wider economic trends, all of which will fluctuate. When things change, do not be frustrated. Maintaining your interest and mastering commercial awareness might be the critical factor not just in gaining your training contract, but helping you become the best lawyer you can be throughout your career.

Commercial Awareness