What is Commercial Awareness?
This is a question asked by many prospective trainee solicitors – they know it is something they need to demonstrate, but often don’t understand exactly what it means.
Our managing partner, Mark Pelopida, considers commerciality to be one of the most important skills in a future trainee solicitor, and it is equally important whether you are applying for a regional firm like Machins, a City firm, or a High Street firm.
Commercial awareness is very broad and is difficult to define. On one hand, commercial awareness is about understanding your clients’ businesses, the market they operate in, the challenges and risks they face, and any opportunities. A good solicitor is able to adapt and tailor legal advice to each client based on that broader understanding. On the other hand, commercial awareness is also about understanding that the law firm is a business in itself. Our HR Manager Barbara Coppin, who has conducted hundreds of trainee interviews over the years, finds that it is this second part that prospective trainee solicitors, and particularly those who don’t have prior experience working within a law firm, often forget.
Why is Commercial Awareness important?
Clients are unlikely to be interested in the intricacies of the law and clever legal arguments. It is taken as a given that we, as solicitors, have expertise in technical areas of law. Instead, clients seek pragmatic and tailored advice. They want to understand their risks, opportunities and options in any given situation. It is important to research and understand the client and the market they operate in so that you can understand the drivers that are important to them. It is also important to understand the client’s aims, goals and objectives.
For example, if you are acting for an automotive, it is important to be aware of the transition towards greener vehicles. Likewise, if you are acting on behalf of a retail client, perhaps you should be aware of the importance and growth of online sales. Market changes like these might impact the advice you give your client. For example, you may highlight risks in the High Street / retail sector when advising your client who is unsure whether to take a lease out on a large commercial retail unit for 5 years or 20 years.
Further, it is important to act as a facilitator not a blocker. Our Employment Partner, David Rushmere, finds that clients don’t enjoy being told they can’t do something, and instead prefer to hear alternative options or solutions that can help them to achieve their end goal.
As mentioned above, commercial awareness also extends to the law firm itself as a business. It is important that aspiring solicitors understand how the firm makes money, the market/region that the firm operates in, and any risks, challenges or opportunities for the firm. We also look for candidates who can demonstrate that they have the skills, understanding and pro-active attitude to help drive the firm’s business forward and contribute to future growth.
How to develop Commercial Awareness?
Lots of prospective trainee solicitors believe that the answer to this question is to read the Financial Times. Whilst this may be helpful (if done consistently), this may not be enough to develop your commercial awareness on its own. Becoming commercially aware is not something that can happen overnight, it is a process and involves an investment over time.
Here are some tips as to how you can develop your commercial awareness. Remember, this is not an exact science and this list is intended to give you a steer, but is not exhaustive!
- Continue to build your legal knowledge.
As your legal and commercial knowledge improves, your commercial awareness will develop naturally as you are able to make links between business and legal developments.
- Keep up with current affairs.
You could do this by using news apps, watching the news, listening to radio, etc. The important part is doing this consistently!
- Keep up with legal developments
Following legal bloggers, keeping an eye on articles or webinars produced by barrister’s chambers, following solicitors or barristers on social media e.g. Twitter, and listening to podcasts are all great ways to keep abreast of developments in the legal or business community.
- Use multiple sources
It is useful to look at multiple sources of information to keep on-top of new developments in the business world to get a balanced view; newspapers, business publications, TV Programmes (not Suits!) and business podcasts are all useful. Bloomberg and The Economist also do good ‘bitesize’ YouTube videos on business and market developments.
- Work experience
Legal and non-legal work experience are both fantastic ways of giving you more of an understanding as to how a business operates and makes money. Working for a non-legal entity can often give you an insight into how law and business works from a client’s perspective, which can be extremely valuable when you later qualify. Even working at a supermarket stocking shelves can provide useful insight into business operations!
Networking can give you practical experience and help to improve your commercial acumen as you will start to build connections with potential clients or referrers, and may also gain more of an understanding of other markets/businesses depending on who you meet!
Firms will be testing your commercial awareness as soon as you apply for a training contract. You are not expected to be a ‘commercial guru’, but having a good understanding and demonstrating your understanding through the application process is very important.