What is commercial awareness?
August 1, 2020
3 min read
What is commercial awareness?
Commercial awareness is simply an understanding of how businesses work. This can be broken down into different areas that can be analysed and evaluated:
- An appreciation of what is going on in the world. The focus should be on political, economic, social, technological, legal and environmental issues;
- Understanding different business sectors and industries, and what makes them function;
- An awareness of what affects an industry’s clients, and;
- Any important historical or future events that have already, or may in the future, affect business and industry.
Each of the factors numbered above is important within legal practice. As a lawyer, you are required to be aware of current issues relating to your client’s business. This is far-reaching and includes understanding the impact of deals, transactions and company operations on a client, as well as acknowledging how legal advice might impact a client’s business.
Why is it so important?
Commercial awareness is a basic requirement of anyone looking to enter the legal profession. Yet, according to a recent survey by the Associate of Graduate Recruiters, commercial awareness is the number one skill that graduates lack the most.
It really is no secret that law firms test applicants on commercial awareness often in both the written application form, and at the assessment centre. Such testing can include anything from the list above. It also tends to be very focused on sector knowledge and understanding the impact of businesses on the legal industry. Therefore, it is very important to be aware that commercial awareness is a process of development and engagement. This is because the world is in an ever-changing state. As a lawyer, it is expected that you will be flexible and readily adaptable to the challenges facing individual sectors at any one time.
It’s worth always keeping in mind that the role of a lawyer is primarily advisory. If advice given does not satisfy the client or fails to take into account the client’s business realities, the firm may lose that client’s respect.
How do I develop it?
A good starting point is to read some business news regularly. The Financial Times and The Economist are great for in-depth analysis, however BBC News is a suitable alternative for something more accessible.
Also, if you have a part-time job, it is worth taking some time to think about how that business operates. Factors which contribute to the success of the business such as supply and logistics, employee rights and customer retention may become clear to you in due course, and can tell you how these businesses make a profit (or loss). In addition, your non-legal work experience is a fantastic discussion point on applications and can not only demonstrate commercial acumen, but also a host of other skills including teamwork, communication and initiative that recruiters are looking for in candidates.
Meanwhile, other resources that we can recommend for developing your commercial awareness include:
- LittleLaw (you saw that one coming, didn’t you!). Our reports are specially designed to assist with your commercial awareness development, by breaking stories down into easily digestible sections with a maximum 3 minute read time.
- “All You Need To Know About The City” and “All You Need To Know About Commercial Awareness” by Chris Stoakes. These books break down businesses, financial markets and commercial awareness in a clear way.
- “City Career Series Commercial Law Handbook” by Jake Schogger, for understanding what commercial lawyers do, and impressing in applications.
Becoming commercially aware is not something that can be achieved quickly; it requires persistence and commitment. To ensure that you stand the best chance of impressing recruiters, start early and factor in some time each day dedicated to your development. You will gain the upper hand when it comes to applications, as well as being able to impress throughout your legal career.
Report written by Evangeline Taylor
Share this now!
Check out our recent reports!