Why is commercial awareness important for law students?
August 8, 2020
3 min read
“Commercial awareness”… These are the two words you will see splashed across the graduate recruitment websites of law firms, and it’s continuously listed as an essential trait. But have you ever wondered why firms insist on students having commercial awareness?
Aside from the fact that it can help you get one of the coveted training contracts, commercial awareness is a skill which you will use and develop throughout all stages of a legal career. Contrary to what many people think, commercial awareness is not just reading the news, it is a way of thinking quite broadly about a business problem and is a skill which is developed over time. Your ability to demonstrate commercial awareness is likely to be equally important as you move up the ranks within a firm and become more responsible for the advice given to clients.
Clients don’t just want legal advice, they want advice that applies to their specific situation and for it to be workable in the market. There is no use in giving a company advice which does not suit the realities of its industry, or which immediately becomes irrelevant. For example, if a company wants to invest in a new building project, and current interest rates make it expensive to take out a regular loan, this would need to be reflected in the way you advise them. This way, you can give practical suggestions that are reflective of the current position that they are in (maybe by considering alternative financing options). This is why it is important for lawyers to understand the wider market, and how it will affect the business of the client. So you can see how the role of a good lawyer is not only one of a legal advisor, but also a business advisor. A lawyer needs to be able to help a business achieve its business aims, and this means providing legal advice which is tailored to the needs of the business and the market that it operates in.
This means, you’ll need to have an understanding of:
- how a client’s business works – How does the business function internally? What are the businesses’ ethos? What are their goals?
- who its competitors are – How does a client’s business interact with competitors? How does it perform compared to competitors? What does the client’s business have that makes it more or less successful than others in the same industry? What are the competitors doing and why are they doing it? How can the client remain competitive?
- what external factors the business is influenced by – How can the business remain successful in light of political, legal, social, and economic changes? Will it be affected by any of these and, if so, how can it work to mitigate or harness any changes?
- the industry the client operates in – Are there any rules or customs specific to this industry that need to be considered?
- the future – What do you think will happen in the future? Can market trends be predicted? How will this affect the client?
By understanding these areas, lawyers will be better able to provide advice which is not only legally correct but is also appropriate for the client’s business, its aims and values. This kind of advice is important for firms, because it means that its clients will have successful businesses and will keep coming back to that firm for advice. This is important because a law firm is itself a business at its core. Firms also need to retain clients, and generate revenue. As an employee, you need to be able to add value to the business of the law firm in this way. Being commercially aware demonstrates that graduates, who may not have loads of industry experience, are ready and able to work in a business environment. Thus firms look for these traits in candidates so that they know they are hiring someone who is right for the role.
In order to show that you would be a good lawyer, and an asset to the firm, you need to be able to show that you are capable of thinking commercially, and able to provide advice that will keep clients coming back for more.
Report written by Julie Lawford
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