Introduction to commercial awareness

This article provides a high-level introduction to commercial awareness, including recommendations of the sources and strategies you can use to build your commercial awareness over time.

Commercial awareness is generally one of the most feared aspects of an interview process. However, this tends to be more because applicants don’t really understand what commercial awareness is, which can make it very difficult to prepare. This article aims to clarify what is meant by commercial awareness, how it can come up in interviews and how you can prepare.

What is commercial awareness?

To broadly summarise, if a person is ‘commercially aware’, this means they have at least a foundational understanding of how businesses operate, as well as a general awareness of the broader economic, political and commercial factors that can affect businesses and the industries in which they operate.

This could include an understanding of the types of strategies that businesses pursue (for example, an understanding of why and how businesses raise finance or engage in M&A activity) and the risks and threats that businesses face. It can also include knowledge of current affairs, industry trends, political events and the economy, as well as a foundational understanding of how these factors can affect firms and their clients.

Why is commercial awareness relevant to lawyers?

Commercial awareness helps lawyers to understand their clients, including those clients' businesses, their priorities, their competitors and their industries. It involves having the ability to consider not only the legal, commercial and financial issues that affect clients, but also the potential commercial impact of the economic climate, political environment, industry trends and other developments that affect clients’ industries more broadly.

This can all help lawyers to provide informed, contextual advice that maximises clients' opportunities and minimises their exposure to risk. Lawyers are therefore generally expected to have at least a basic awareness and understanding of the most topical issues affecting their clients’ businesses and industries.

Why is commercial awareness important for applicants?

Commercial awareness can provide you with essential context that enables you to better understand commercial case studies and business-related assessment centre questions. It can also help to prepare you for internships and ultimately, a training contract.

For example, commercial awareness can help you to participate in informed discussions with interviewers and supervisors, better prepare for mock presentations and research reports, and better understand the context of the work you’re set. Being ‘commercially aware’ can therefore help to demonstrate your interest in and enthusiasm towards the firm’s clients and the work it carries out.

How can commercial awareness come up in interviews?

These days, graduate employers tend to look for commercial ‘interest’ as much as (if not more than) commercial ‘awareness’. You won’t be expected to detail every single commercial, political and economic event that’s happened over the past few years, but you’ll likely be expected to demonstrate an interest in business and the broader commercial factors that might affect the firm and its clients.

There’s more on commercial awareness in this Feature: ‘The ultimate guide to commercial awareness’.

Commercial awareness can be tested in various ways during interviews. You may be asked to define ‘commercial awareness’ and explain its relevance to the firm’s employees. You may be asked to speak about a particular news story that’s interested you or be asked point blank about a specific event that’s recently occurred. However this kind of question is phrased, be ready to put forward an opinion and explain how the story or event could impact the firm and its clients.

You may also be presented with a commercial case study or fictitious client/business scenario, which will require you to demonstrate your understanding of various business, financial and (depending on the context) legal concepts.

These types of assessments may require you to complete a written report, deliver a brief presentation on information that you’ve been provided and/or answer a number of questions on business issues and how a firm can assist its clients. As part of this process, you may need to identify certain risks and suggest how these could be mitigated; draw out potential opportunities and suggest strategies that could be employed to capitalise on each; recommend which steps a fictitious client should take; or compare various options (eg, potential acquisition or investment targets), then form an opinion on which to pursue and justify this decision.

How can you demonstrate commercial awareness?

You may well have demonstrated commercial awareness even if you haven’t previously worked for a business. If asked to discuss a time when you’ve demonstrated commercial awareness, you could try to draw analogies between the fundamental processes that businesses follow, and some of the roles you’ve taken during your previous experiences.

These processes might include creating a product (or defining a service), branding and marketing your offering, budgeting, setting prices that allow for a profit, dealing with customers, recruiting and managing others, and a broad range of other considerations.

For example, if you’ve arranged a university ball, then you’ll likely have been involved in:

• creating a product (the ball);
• branding that product (deciding which theme to go with and how to reflect this theme in the decorations and entertainment);
• setting the ticket price and budgeting (you’ll need to ensure that ticket sales and sponsorship will at least cover the cost of hiring a venue, catering, entertainment and decorations);
• marketing (trying to persuade people to buy tickets);
• customer service (responding to questions from prospective attendees);
• recruitment (recruiting junior executive committee members to help out);
• managing others (making sure team members are fulfilling their roles on time); and
• a range of other commercial activities.

Learn more about how law firms operate as businesses with the Oracle.

How can you build commercial awareness?

Trying to cram commercial awareness right before an interview isn’t an ideal approach, as you’ll likely only pick up a shallow understanding of the commercial topics that you read about. If your understanding is shallow, you’ll also likely have little interest in what you’re reading about and discussing, which won’t come across well during an interview.

Think about the first few pages of a dense novel. It’s harder to maintain your interest at the start, as you don’t yet understand the context or the history of the characters. It’s the history and the developments that draw you in, meaning stories tend to become far more gripping once you start to understand how the sections you’re reading fit into the broader context of the book. It’s the same with commercial awareness.

News stories and commercial concepts aren’t generally interesting in isolation, but once you start to understand how it all fits together – and the impact this can have on industries, firms and their clients – you’ll likely find it all a lot more interesting and become more confident talking about it in interviews.

It’s better to get into the habit of building your commercial awareness on a regular basis, and even five minutes per day can make all the difference. You’ll be surprised at how much more interested you become in business news and commercial concepts more generally once you’ve started to understand the bigger picture. To that end, here is a collection of recommended resources that you can use to help build your commercial awareness.

Discover the business and global issues to stay aware of with this Feature: ‘Trending commercial issues to know about in 2022’.

Business news

You should get into the habit of reading the news daily, if only for a few minutes. You’ll soon build a comprehensive knowledge and understanding of what’s going on in the business areas relevant to the organisations to which you’re applying. There are many sources you can use to build your awareness, knowledge and understanding of current affairs.

BBC Business News (online) is probably my favourite source for readings about the news, as the articles are short, concise and (generally) jargon-free. Helpfully, these articles also tend to include a series of related links at the bottom which can help you to trace back the history of a particular event or trend, and access supplementary information (such as the range of opinions around a particular story). Reading these related articles can help you to build a more comprehensive understanding of different topics.

Commercial digests

The Financial Times and The Economist similarly provide solid insights into some of the most relevant topical issues affecting the business, finance and political worlds. I strongly recommend subscribing to The Economist’s free weekly digest email, as this succinctly summarises 8–12 of the key news stories from around the world. If you’re interested in tech and the investment landscape, I’d also strongly recommend the free weekly digests available from CB Insights and AngelList and I’m sure there are also countless other digests covering the full spectrum of business-related news.

Business books

There are so many books available to help you build your knowledge of commercial, financial and legal concepts. My City Career Series career-focused handbooks aim to provide you with a solid grounding in the technical concepts that you may be required to understand and apply when tackling commercial awareness interviews and case studies in the context of commercial law, investment banking and consulting commercial awareness interviews.

However, one of my favourite ways of learning about how businesses operate is by reading books about the history of well-known businesses and founder biographies. I particularly enjoyed The Upstarts by Brad Stone, which charts the entrepreneurial journeys of Uber and Airbnb, from the early days of knocking on doors and absorbing rejection after rejection, right through to them joining the realm of tech superstars. I’d also recommend Brad Stone’s The Everything Store (which covers the founding and growth of Amazon) and Shoe Dog by the founder of Nike.

If there’s anything in these books that you don’t understand, the Investopedia online dictionary provides really great explanations of thousands of key business terms, commercial concepts and City jargon.

You can find a full list of these recommended resources on the City Career Series website.

Christopher Stoakes

Christopher Stoakes is the author that inspired me to set up City Career Series and write my Commercial Law Handbook. I personally used his book All You Need To Know About The City when preparing for my interviews, and I can’t recommend it enough.

As a former financial journalist, City lawyer, management consultant and top trainer, he knows the business and financial worlds inside out. His engaging style and ability to explain complex concepts with surprising simplicity meant that his books played a significant role in helping me to prepare for interviews. As such, I strongly recommend that you supplement your commercial awareness journey by reading some (or all) of his books.

Anyone who works in business these days needs to understand the financial world. All You Need To Know About The City is the best-selling guide that students and young professionals use to get up-to-speed quickly and painlessly. It uses the simple analogy of a market to explain who the participants are (issuers, intermediaries and institutional investors). It looks at what they buy and sell, from shares and bonds to foreign exchange, derivatives and securitisations. It examines the lifecycle of a company and the anatomy of a global bank. And it explains why interest rates change and how they drive markets. In short, it enables you to understand the financial markets with no prior knowledge.

If you want a job in the business world you need to be commercially aware. What is it, and how do you get it? All You Need To Know About Commercial Awareness tells you. It explains what matters to businesses, how they’re funded, the importance of cash flow, the purpose of strategy and the quest for customers. And it explains how companies and professional service firms are organised and what they are looking for when you apply for a job.

This article is an excerpt from the latest edition of the Commercial Law Handbook. You can find out more about this and City Career Series’ other law career-related handbooks via The Commercial Law Academy website.

Jake Schogger is a qualified lawyer, best-selling author, career coach, copywriter and consultant. He’s the founder and CEO of City Career Series, a publishing and e-learning company that’s sold around 50,000 handbooks designed to help students secure City careers, including the best-selling Commercial Law Handbook and Training Contract Handbook.

He trained at Freshfields Bruckhaus Deringer LLP and now acts as a legal adviser to start-ups and scale-ups, whilst also working as a career coach and delivering career-related presentations at universities across the UK. In addition, Jake works with tech start-ups and runs a variety of his own businesses, including a comprehensive e-learning platform for aspiring commercial lawyers. Find out more at the Commercial Law Academy website.