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Commercial awareness. Anyone who has so much as considered a career in law will no doubt have come across these two words. Notorious for its ability to strike fear into prospective training contract applicants, this illusive concept is actually a lot more straightforward than some will have you believe.
In order to have commercial awareness, and to signpost an interviewer to this fact, it is key to first understand what commercial awareness is. There are two parts to commercial awareness, each as important as the other.
Awareness of the environment in which clients operate
One limb of commercial awareness concerns the environment in which clients operate. This is about understanding the business of the client and their industry. This is a key skill throughout a career in law as it will help you to identify clients’ real needs and address them in a suitable way. This is about seeing the bigger picture and the context surrounding the particular piece of work.
For training contract applicants, this means having an awareness of current affairs which might impact on clients within a particular sector and considering how that will impact on the provision of legal services. An example of this, would be understanding that in times of economic uncertainty and hardship clients may want to take a more resolute stance in the face of payment defaults whilst also recognising that they may not have the resources to run up extensive legal bills.
Awareness of a law firm as a business
Another limb of commercial awareness is about understanding that a law firm is like any other business. It needs to bring in money. It does this, by attracting clients and then charging them for work undertaken for them. To survive, it needs to bring in more money than it spends.
In this sense, commercial awareness is about understanding the impact that various factors will have on the business of the law firm. To fully understand this, you will need to be familiar with how it is that law firms make money and what might impact on their ability to do so.
How to improve commercial awareness?
There are lots of different ways you can develop your commercial awareness. This will help you to answer application and interview questions alike.
Here are my top 5 tips.
- Reflect on all of your existing work experience (especially non-legal experience). This will help you to focus on what it is that clients ultimately want. If you know what makes them happy and what makes them unhappy, that is a good starting point to identify how a law firm needs to act in order to keep its client base on side.
- Think about how a law firm makes money. If you have spent time in a law firm, you should have gained an insight into how the firm generates its revenue. Charging clients based on time spent (the billable hour) is the tried and tested approach but by no means the only way and not always the best solution.
- Keep on top of the news. Staying on top of current affairs is essential if you are to understand the environment in which the firm and its clients are operating. I would suggest picking a selection of stories that you are interested in and tracking their development over time. This will help to focus your reading whilst also allowing you the opportunity to see any impacts as an event develops.
- Find news sources that suit you. If you are interested in business, then the Financial Times is a good starting place. Alternatively, there are a number of podcasts and other publications which should help you to find what works best for you. Also, make sure that what you are reading is relevant to the areas in which your firm specialises – there is no point spending time reading about something unrelated to your chosen firm if you are pushed for time.
- Assess the impact on a firm/client/sector. To do this, ask yourself the following questions as a starting point.
- Will this increase or reduce costs for the provider?
- Will this increase or reduce the money brought in?
- Will this make things easier?
- Will this make things more challenging?
If you have any questions about commercial awareness, or the Training Contract process at Michelmores, please get in touch with our graduate recruitment team.
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