Commercial Awareness: Why it’s important, and how to develop it

For students looking to secure training contracts at the end of their studies, the term ‘commercial awareness’ is likely to be familiar: it is one of the key skills that firms and graduate recruiters will want you to be able to demonstrate, both in the early stages of application cycles and throughout your career. While it is a core skill to develop for application cycles, it is also important to understand that commercial awareness will be essential if you practise as a solicitor. Similarly, it is required for many other roles in various sectors. It is, therefore, important to ensure you regularly develop this awareness. While most large firms will test your commercial awareness during your applications, very few advise on what commercial awareness is and how you can increase or boost your skills, so it is important to have considered and researched this in advance.

 

What is commercial awareness?

Commercial awareness is often described as a ‘knowledge of how businesses make money’ and knowing ‘what problems there are in a particular area of business’ (Cambridge English Dictionary) . It is an understanding of businesses as a whole, including how they work and what their customers want. In the context of the legal sector, it is about understanding the environment in which both law firms and clients operate.

Commercial awareness is generally seen as most necessary in roles involving finance and/or law, but it is applicable to all career paths. For example, if you are working in an estate agency or marketing, it is crucial to know who your main competitors are, whether there are currently any market trends impacting the sector, and what your customers want in order to be successful.

Why is commercial awareness important?

Commercial awareness is not something you can gain to be tested on in an interview and then be rid of. It requires ongoing development throughout your career to ensure that you are up to date on what is going on in the sector you work in. This means regularly updating your knowledge and keeping up to date on the latest trends and news.

Developing good commercial awareness has many benefits, a key one being that it allows you to understand your business better: if you are regularly updating your knowledge on your competitors, market trends, how your organisation operates and makes a profit, and how the company is performing, you can make informed decisions and look at the bigger picture. This also helps with career progression: demonstrating an understanding of the industry you work in and how your firm fits within the industry will show that you are interested in progressing in your role and desire to learn and grow.

A strong commercial awareness is also necessary to ensure that you provide relevant advice to your clients. If you are unaware of global issues impacting the sector that one of your clients’ businesses is in, it will be difficult to represent them properly. Demonstrating to your clients that you understand how their business operates from an internal point of view is a clear value add; therefore, keeping your commercial awareness up to date is essential.

How to develop commercial awareness

There is no ‘quick fix’ for developing commercial awareness: it can take a while to gain a strong understanding and awareness of the sector in which your business operates. However, there are many resources that you can use to boost your awareness.

  1. Work experience

Undoubtedly, the easiest way to learn something new is often ‘on-the-job training’. Working in a law firm is an easy way to naturally develop an awareness of the sector in which the firm operates. While it is, of course, preferable to gain hands-on legal experience to boost your commercial awareness, any work experience will help with this. Simply working in a business setting in any sector will allow you to understand how a business operates, what customers want, the kinds of challenges that businesses may face, and how businesses make their money. This is a great way to develop commercial awareness, as it also gives you relevant experience to discuss when it comes to TC applications.

  1. Subscribe to a business publication

Getting a subscription to a business publication such as the Financial Times or the Economist doesn’t have to be expensive - if you are a university student, both publications offer subsidised memberships for students, and many universities offer membership for free to their students, so it’s worth checking this before signing up! These types of business publications are a great resource to provide you with relevant commercial awareness; you can filter the content so that you are only seeing articles that are relevant to you, and you can also opt just to read the daily briefs that offer highlights of today’s news if you are short on time. Regularly reading these sorts of publications will give you a demonstrable knowledge of current affairs, technology, international business, and politics.

  1. Read blog posts from legal publications

We may be biased (!), but reading blog posts and articles from legal publications is a great resource for developing commercial awareness. Many legal publishers will have a blog that they regularly post advice on or may have a monthly newsletter that you can sign up for. If you are no longer a university student, subscribing to a business publication can often be expensive, so utilising these free resources can be a great alternative for continually developing your knowledge - just setting aside a bit of time each week to read newly published articles and newsletters will keep you up to date with current trends and business news in your sector.

Similarly, various publications designed to boost students' commercial awareness are free to access. An example of this is Little Law, which is a 3-minute newsletter that breaks down current news stories into easily digestible content, enabling students to easily understand how these stories affect the sector they are working in. This is a great way to develop your skills, as it just takes ten minutes to read through the commercial awareness updates and make notes on the most important stories. You can then refer to these notes when applying to law firms to demonstrate your ability to apply theoretical commercial issues to real-world examples.

  1. Read the news every morning

If you are a full-time student who struggles to carve out time to focus on building commercial awareness, it is important to realise that this awareness does not need to be developed through long, weekly revision sessions and testing yourself on commercial topics. Simply taking 20 minutes each morning to read the news will gradually develop your awareness. This can be done while on your morning commute or having breakfast - it doesn’t need to take much time out of your day! Apps such as BBC News allow you to follow topics that are of particular interest to you, so you can open the app and read any relevant news stories each morning before starting your day.

  1. Read books that are focused on commercial topics

If you prefer to learn through reading, studying and making notes, why not buy books focusing on developing commercial awareness? There are a variety of books that focus on boosting these skills, some of which are specifically designed for students. You can also look at general books focused on understanding the economy and read industry trade journals and financial reports, depending on which type of resources best suit your learning style. You will also be able to gain some level of commercial awareness from law textbooks: revising topics such as commercial law and competition law will give you an understanding of how businesses operate and the rules that govern them.

  1. Research law firms

Researching law firms will assist in developing commercial awareness and help you prepare if you plan on applying for training contracts. This is one of the easiest ways to gain the right commercial awareness for your sector, as you are researching firms that you want to work for, so it ensures that the content you are learning is up-to-date and relevant. There are some key things to look for when researching firms, including:

  • Who are the key decision-makers within the business?
  • Review the firm’s annual reports
  • How does the firm compare to its competitors?
  • What practice areas does the firm offer?
  • Who are some of the firm’s clients?
  • Locations that the firm operates within
  • Any recent mentions of the firm in news publications
  • Look for examples of recent work that the firm has been involved in
  • How does the firm stay current?
  • Innovation and technology

If you can compile a document answering all of the above points for any firm you are interested in working for, not only will you be prepared when going into an interview to talk about how the firm is performing and any challenges it may face, but you will also be able to look at the firm objectively from a commercial awareness standpoint; highlighting how current trends may be impacting the firm, and demonstrating an understanding of the types of work the firm has been involved in, including any recent news stories that relate to the firm.

If you can carry out similar research for between five and ten firms, as well as regularly engaging with business and legal publications, and using some of the resources outlined above, you will have a clear, demonstrable commercial awareness and be able to highlight many relevant current affairs topics, challenges impacting law firms, examples of recent deals firms have worked on, and a strong understanding of the sector in which your business operates. Once you have a baseline for your commercial awareness, it is very easy to maintain and develop this simply through reading relevant news stories. Still, it is essential to ensure that you have built this foundation first to succeed.

 

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