To persuade a recruiter of your commercial awareness, you need to develop a genuine interest in the business world. Without one, you are unlikely to maintain enthusiasm for a career in commercial law or properly understand what your clients want to achieve. Even if you intend to train as a private client lawyer, you need to be able to understand clients who are themselves business owners. A candidate who enthusiastically engages with the daily gyrations of commerce represents a future lawyer with the capacity to develop new client relationships and, perhaps, even new legal products and services. In short, they represent a safer investment.
What is it?
Commercial awareness essentially means understanding the business environment within which a law firm and its clients operate. For commercial lawyers, it is the ability to understand a client’s business needs and provide legal advice which helps the client meet those needs. It is also about understanding the business needs and drivers of your own firm. Whichever area of law you decide to go into, you will need to demonstrate that you are commercially aware in order to convince law firms that you are going to be able to help drive their business forward, beyond just securing your training contract.
To break things down, you will need to demonstrate that you understand the importance of client relationships and the need for businesses to be cost effective. A commitment to your firm's strategic vision and a good grasp of market factors (internal and external) are really what’s required. With this in mind, you need to be able to demonstrate that you can:
- manage your time effectively;
- demonstrate initiative;
- work well within a team;
- develop good client relationships; and
- demonstrate a good understanding of the current economic conditions and well-developed legal knowledge.
There are things that you can do to help increase your levels of understanding. It is important to focus on the word 'awareness' and not mistake it for the word 'knowledge'. Remember that you are going to be a trainee and are not expected to know everything about the law firm or its clients’ businesses from day one.
Commercial awareness for a future lawyer can be split into two categories: things that relate to law firms as businesses themselves, and things that affect the clients for whom the firms work. In the first category, a student should have at least a basic understanding of the purpose of the Legal Services Act 2007, and a general understanding of what a partnership is and how law firms are traditionally structured. It will help, too, to have a sense of how legal work and clients are sourced and charged. If a student hopes to work for an international law firm, then it’s essential to have a sense of what a target firm's international network looks like and why it is shaped as it is. This is easier if you have a reasonable understanding of the shape of the world economy. What are the BRICS? What is an emerging market? What have been the consequences of the 2008 financial crisis for businesses and regulators? What caused that financial crisis? Why is austerity the watchword of this decade? What are the alternatives? These topics are covered extensively in the media, often very well.
However, a last-minute skim of the Financial Times before your interview will be of limited use. You should get yourself into a routine and then stick to it. This approach enables you to develop genuine interest and a knack for spotting themes and trends. You will eventually be able to see things from a business person’s perspective and develop a more connected understanding. In short, you will take on the media habits of a good professional before you become one.
Below are some recommendations of good places to start learning:
Radio: BBC R4 and the World Service
Today is the most influential news programme in the United Kingdom and sets the day’s political agenda each morning. If you want to quickly build awareness of current affairs in politics, business and society, listen to this programme.
The World Tonight
Broad coverage of international news and business.
The Bottom Line
Evan Davis' roundtable interviews get to the heart of business thinking.
Peter Day’s World of Business
Veteran business journo Peter Day’s show includes on-the-ground stories from around the world.
Today in Parliament
Discover whether or not our parliamentarians are out of touch or have their finger on the pulse.
World Business Report
Daily stories from around the world.
The World at One
Eddie Mair presents an irreverent, but probing look at the day’s issues - excellent journalism and interviews with leading figures.
One of BBC R4’s main flagship news and current affairs programmes, along with Today and PM.
The hour-long show allows time for special reports to explain issues more deeply – probably the best news journalism on British TV.
The BBC’s business and economics team contributes regularly to BBC News and also has blogs and stories on the BBC website.
Look out for reports and blogs from Kamal Ahmed. Follow him on Twitter. Tune in to The Andrew Marr Show on Sundays for interviews with leading figures from politics and business – or its ITV rival, Peston on Sunday. The Beeb also makes some good one-off documentaries/short series about world economics and business.
Bloomberg West is a tech-tastic one-hour show, offering all the news from Silicon Valley.
Try discounted trial or student subscription for full access, or choose your limited free reads carefully. The app is free to download.
Partial pay wall. Many people (even lefties) really rate the Saturday edition.
Pesky pay wall! The Times Law supplement is published on Thursdays.
Pay wall (can read some material free). Good international features. Interesting opinion pieces.
The Guardian law section used to be very well regarded, although there are claims of a slip in quality since it lost its dedicated team of writers. But there’s no pay wall!
Heavy on the financial markets and good for fast news reports.
Wall Street Journal
Interesting to read about European issues from another perspective.
BBC News website
Pitches many stories at the non-expert, but this can be really helpful.
Another way of assessing your levels of commercial awareness is to think about what you already know. Consider your employment history and see whether you can identify any previous examples of commercial work experience. For example, have you worked in a service environment? Did you gain insight into how the business you were working within was run? Have you ever undertaken a specific project or devised a solution to a business problem? Was there a particular challenge that you had to overcome?
It is not only your employment history that counts as commercial work experience. Positions of responsibility can also demonstrate that you have the necessary skills. Did you belong to any societies at university and if so, what was your role? For example, if you were the treasurer of a sports club, this can be used to demonstrate your ability to manage finances and budgets.
Not-for-profit work can also be used to demonstrate commercial awareness as, depending on your role, you may have been involved in promoting events or persuading companies to sponsor you or provide free products. These activities help to show that you have an understanding of basic business processes. Working within the family business or setting up and managing your own business (even online) can all point to commercial nous, as there is no better way to understand the fundamentals of a business than by running one.
In addition to looking at what you have done already, you may want to increase your levels of awareness by undertaking some useful employment while you study or after you have finished your degree or Legal Practice Course. The first step is to assess yourself. Consider what area of law you wish to practise, the type of firm you want to work in and which skills you may be lacking. Next, work out where you could gain the skills that may be relevant to the firm of your choice. For example, if you are interested in banking or corporate finance, then consider gaining experience in a corporate setting (eg, an accountancy firm or a tax office).
Commercial thinking can be developed in any employment setting, particularly if your role allows you access to the rationale for decisions made by your employer. For example, in the publishing industry, you might learn about the challenges faced by print media in light of the growth of online journalism. If you work in retail, logistics or warehousing during your holidays, you could develop an understanding of, say, the seasonality of demand or just-in-time purchasing principles.
Another option is to consider the types of client that you would be dealing with in a corporate law firm and try to gain some experience (eg, in a bank or financial institution). If you can gain insight into how potential clients run their businesses, this will be a strong selling point at interview. Alternatively, think about how a corporate firm is run and the skills you would need to work there (ie, working on large complex deals as part of a large team). Use this basic idea to think laterally about other organisations which would allow you to work in the same way (eg, insurance companies or finance houses).
Ultimately, what matters is that you learn about and understand the environments you work in. Even positions which appear to be at a very low level can produce great commercial insight. It just depends which way you look at it and how well you can explain your understanding to a potential recruiter.
For more on developing commercial awareness, read this short article on how you can access commercial analysis through LawCareers.Net and watch this video on how to make big improvements to your knowledge if you’re just starting out. Meanwhile, our blogging community has shared plenty of commercial awareness advice that’s worth reading.
Commercial Awareness Case Study: Starbucks
At one point or another, all law students and hopeful lawyers hear the mysterious phrase “commercial awareness”. When applying for vacation schemes or training contracts, you might find yourself completely bombarded with this term and yet the meaning remains elusive.
Commercial awareness essentially refers to your general knowledge of business, particularly your work experience, as well as your understanding of a specific industry. However, just understanding the definition of commercial awareness is unlikely to make you more able to demonstrate it to prospective employers. A good rule of thumb is to identify a popular issue, form an opinion on it, and then come up with examples of how companies and brands are dealing with the challenges this issue generates.
However, law firms are sometimes looking for more detailed analysis or expecting you to demonstrate your commercial knowledge by reference to personal experience. This can be quite a daunting prospect but a simple case study will hopefully help you come up with your own examples of commercial awareness.
Commercial Awareness Case Study: Starbucks
Many students have had a part time job in a shop or café and this sort of personal work experience could form the basis of an excellent commercial analysis of that shop or café as a business. Take Starbucks for example.
1. Social Media
Starbucks is a brand which has used social media to its advantage by announcing new drink flavours and reaching out to its customers with a range of online promotions. However, its social media prevalence has backfired in the past, particularly when it was accused of paying minimal corporation tax and customers took to Twitter and Facebook to criticise the brand. This backlash resulted in sale increase for competitor Costa Coffee. Nonetheless, Starbucks used their online presence to mitigate the negative publicity. After issuing a statement and making a tax payment as a gesture of goodwill, Starbucks added a page to their website to explain their tax payments and repair customer relations.
2. Personal Brand
A unique strength of the Starbucks brand has been to build a personal relationship with customers. Its themed drinks and loyalty cards have proven effective when it comes to customer retention. Starbucks has also made the process of purchasing coffee an experience, for instance by writing customers’ names on cups. Even when names are misspelled, customers eagerly post pictures of their Starbucks cups on social media, thus effectively opening up a free form of advertising for the brand. As a result, customers are being persuaded to pay extra just to carry a cup with the iconic brand logo.
3. Innovative and fast-growing brand
Starbucks operates as a franchise business which has the advantage of allowing the chain to spread quickly. However this business structure has its downsides, one of which is that local brand reputation can be easily damaged by individual franchises. Comparatively, Pret-A-Manger is not a franchise, meaning it cannot expand as quickly but also does not need to relinquish any control when it comes to operating its branches.
Starbucks have also sought to remain innovative. The brand was one of the first to trial “Apple Pay” technology which is now widespread. Furthermore, its sustainable coffee farming campaign is designed to promote it as a socially responsible brand.
4. What can Starbucks do better?
In the face of growing competition from individual coffee bars and cafes as well as its established rivals, Starbucks will have to fight for its place in the market. While Starbucks has been criticised for expanding too rapidly and harming local businesses, it is loved by consumers and highly followed on social media. However, as boutique coffee shops are becoming more popular in the UK, Starbucks may have to focus on identifying itself as a brand. Is their focus great coffee or a form of branded fashion? By placing more emphasis on the exceptional quality of their products while maintaining a close connection with customers, Starbucks may be able to maintain their unique market position.
Ultimately, the best lawyers advise their clients in the context of their business. For instance, the importance of Starbucks’ reputation may mean they would prefer to avoid any public litigation or they may require advise on how to draft their franchise agreements for new branches. Ultimately, it is very impressive when a candidate can show true consideration of clients’ businesses.
Words: Mariya Rankin