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What’s commercial awareness, and why does it matter?

If you’ve been looking into a career in law, you’ve probably heard the term ‘commercial awareness’. This slightly nebulous term seems to be unavoidable, mentioned at virtually every turn throughout careers events, firm recruitment materials and interviews. When I was applying for vacation schemes a couple years ago, I found myself feeling a little bewildered by the concept at times. While there are countless ways to interpret commercial awareness, for me being commercially aware really just boils down to understanding the factors and principles involved in running a profitable business – which is ultimately what all law firms hope to be! There’s a need to be aware of the legal, social and economic factors that can affect a company’s commercial viability.

Head to our Commercial Awareness hub, sponsored by Mayer Brown International LLP, for everything you need to know about commercial awareness.

Firms clearly care quite a lot about commercial awareness and, if you’re cynical, this alone may be reason enough to develop your understanding. It might not be immediately obvious exactly why firms would care – you’re a (prospective) lawyer, what role can you play in a firm or any other company’s commercial development? Why should you have to worry about it? It’ll depend somewhat on the area you practice in, but invariably law firms are commercial entities, and like any other business they’ll be aiming to increase profits. As a consequence, business development is often a key part of a lawyer’s role. As such, while you might have certain targets for billable hours of work, you may also be expected to devote time towards building and developing client relations, and other profit-making opportunities. 

Perhaps more obviously, it’s also very important for you to have good business acumen when you’re working with clients, to better tailor your advice to them based on their industry area and relevant contemporary issues. You should be able to provide clients with holistic solutions, utilising a solid understanding of their objectives and market conditions. Legal solutions don’t exist in a vacuum, and the challenges that your clients face will rarely be monocausal. Therefore, while the black-letter law remains important, you can’t mindlessly apply regulations and precedents to multifaceted commercial issues. The key to good advice is understanding the different legal and commercial implications certain strategies might have.

What firms are looking for

Firms expect you to have a solid understanding of the sectors in which they specialise. Research and stay updated on current events, key players and trends that shape the business landscape. This includes knowing about regulatory changes, significant mergers and acquisitions, and market developments.

Interested in learning more about law firm mergers? Check out this Feature, which includes insights from Jessica Kolhorn, counsel in the corporate and securities group at Mayer Brown International LLP.

Firms and recruiters value candidates who can analyse complex situations, identify legal risks and provide commercially viable solutions. They want to gauge your ability to apply legal knowledge in practical contexts. Your commercial awareness needs to be effectively communicated to clients, colleagues and stakeholders. Recruiters look for candidates who can articulate their understanding of commercial issues and convey legal advice in a manner that’s accessible to non-lawyers.

Developing commercial awareness

So, what’s the next step? There are many ways to build commercial awareness every day:

• Stay informed! Read reputable business publications, legal news and industry-specific journals to keep up with the industry. Keep an eye on the financial markets, business trends and regulatory updates. Many firms will have some form of “current affairs” analysis task in their vac scheme or training contract recruitment process, often requiring you to discuss a recent news story. 
• Study real-life legal cases, particularly those with significant commercial implications. Analyse the underlying commercial factors and the legal strategies employed. This exercise will improve your ability to identify and navigate complex commercial considerations.
• Attend industry events, seminars and conferences to expand your commercial knowledge and professional network. You can also engage with online courses, podcasts and webinars. These can deepen your understanding of commercial concepts and industries. You should develop a habit of seeking knowledge beyond your academic curriculum.
• Seek internships, work placements or part-time jobs, whether specifically legal or not. Experiencing the day-to-day operations of a business can provide valuable insight to commercial decision making.
• LinkedIn might be an obvious one. You can follow companies in your area of interest and connect with industry leaders – their posts and updates can provide insights into current trends and challenges. Also, look for LinkedIn groups related to your practice area. By engaging in discussions, you can deepen your knowledge and find different perspectives. You can also follow legal professionals on other platforms like TikTok (I’ve seen this termed ‘LawTok’). Many share valuable insights about the business aspects of law practice. A lot of firms also have active social media accounts, usually for recruiting outreach, and often share tips regarding their applications. 

For more on influencers and podcasts to follow to build commercial awareness, check out this LCN Says.

Commercial awareness is vital for aspiring lawyers, and it can significantly enhance your prospects in the profession. By developing your commercial awareness, you can demonstrate to firms your ability to think strategically, understand clients' needs and provide well-rounded legal advice. Remember: like any other skill, commercial awareness requires ongoing development. Continuous learning and engagement with the business world will allow you to stay ahead in an evolving legal landscape.