Why is commercial awareness important?

Today we're focusing on commercial awareness. But first...

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Why is commercial awareness important for lawyers?

Law firms talk a lot about commercial awareness these days. But why is commercial awareness important for lawyers?

In short, commercial awareness helps lawyers to understand their clients, including those clients'?businesses, priorities, competitors and 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 on those clients’ businesses of the economic climate, the political environment, industry trends, and other developments that affect clients’ industries more broadly.?

Lawyers must give informed, actionable advice

This can provide lawyers with the necessary context required to give legal advice that is informed, practical, actionable and relevant. In other words, advice that?takes into account clients’ objectives and challenges, in order to help maximise those clients' opportunities and minimise their exposure to risk. Lawyers are therefore generally expected to have at least a basic awareness and understanding of how client businesses operate, as well as the topical issues affecting?their clients’ businesses and industries.

To give an example of where broader commercial awareness can be important: if a lawyer is discussing with a client whether that client should pursue an initial public offering, it’s not enough to consider only whether the company itself is ready for an initial public offering (i.e. whether the company is sufficiently large, has a good track record, is able and willing to sell an ownership stake, needs a significant amount of capital, has its legal affairs in order, and so on).

You would also need to look at the broader factors that can impact initial public offerings, such as the economic landscape and – linked to this – investor appetite for shares of public companies in that client’s industry. Without consideration of these broader factors, the advice wouldn’t take into account the reality of the client’s circumstances.

Lawyers must understand their clients’ business objectives

Linked to all this, lawyers also need to take into account their clients’ business objectives when negotiating documents on behalf of those clients. And this would be hard to do if you didn’t understand a client’s key commercial drivers and you lacked any relevant industry knowledge. On that note, lawyers are also expected to know which documents – and which clauses within those documents – are market standard in particular industries, and which specific risks to look out for. For example, commercial awareness can help to ensure that lawyers are aware of any generally accepted wording for clauses that are designed to mitigate specific risks, as well as any common negotiation points.

Lawyers must understand the regulatory landscape

In addition, for lawyers, commercial awareness also means having an understanding of the regulatory landscape and proposed regulatory changes, so that they can advise clients on what they need to comply with, and what they may need to comply with in the future. And finally, commercial awareness can ensure that lawyers are able to get involved in commercial discussions with colleagues, external collaborators and clients – in both personal and professional contexts – including at the start of meetings, and when pitching for work. After all, clients will be more inclined to work with advisers who fundamentally understand, and can demonstrate a real interest in, their businesses and industries.

Why is commercial awareness important for applicants?

Commercial awareness can provide you with essential context that enables you to better understand and tackle 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 supervisors, better understand the context of the work you are set, and prepare for presentations, research reports and written exercises. More generally, demonstrating that you are “commercially aware” can help to evidence your interest in, understanding of, and enthusiasm towards the firm’s clients and work.

Commercial Law Academy offers?seven comprehensive commercial awareness courses ?specifically designed to help build your commercial awareness. This includes courses covering: how to build commercial awareness, example (real) interview case studies, current affairs and industry trends (including monthly wrap-ups of the key business stories), mergers and acquisitions (fully animated!), legal technology, the business of law firms, and how to launch and run a business.

As a reminder,?Commercial Law Academy ?offers 20 in-depth courses, covering: insights into legal careers, firm profiles and interview insights, expert advice on writing applications and tackling psychometric tests, dozens of example (verified) successful cover letters and applications, resources to help you prepare for interviews and internships, example interview case studies, practical content to help you understand and confidently discuss commercial concepts and current affairs, plus tips on how to network, negotiate, deliver presentations and write professionally. Check out this?animated explainer video ?for more information.