What is commercial awareness and why is it so important?
What is commercial awareness?
Commercial awareness, in simple words, is staying up to date with the ongoing changes which will affect the legal market. It involves knowing about the current deals, transactions, and issues in the business world that might affect a client. Lawyers must have an understanding of the business environment and the operational grid under which business is conducted on a daily basis. In particular, they must be able to put into perspective how their legal advice will affect the client’s business.
Examples of skills or factors that will be demanded regarding commercial awareness skills:
1) As a lawyer, you will have to have an extensive understanding of the sector in which your client operates. The ongoing developments of this sector, factors which may affect it, and its business decisions are all aspects which you need to know about before possibly being able to give legal advice.
2) Know about your client’s business and how it operates, (its core values, etc.)
3) Understand what it means to be successful for this type of business and how the corporation or firm performs and interacts in comparison to its competitors.
4) According to lawyerportal.com: “Have a good understanding of what leads to the success of a client’s business in light of the challenges posed by politics and the world economy”
Why is commercial awareness important?
As it can be inferred from most of the information above, commercial awareness is especially crucial when advising other firms. Therefore, if we are looking at it from a British legal perspective, it will mostly be relevant to solicitors. Furthermore, the fields of law which will most require commercial awareness would be Corporate and Commercial Law and less importantly environmental and humanitarian law. Types of law where commercial awareness is not as important, however, would be sectors such as family and criminal law. Does this mean criminal lawyers should not be commercially aware? Not at all. Although it won’t be as necessary for their work, commercial awareness is still a crucial skill for all lawyers even the ones who won’t require it as much. This is because the skills required to be commercially aware, such as extensive amounts of reading, analytical skills, and work experience, are all abilities that will benefit any type of lawyer as well as make them more knowledgeable and hard working. Yes, there are certain lawyers that will require it to a greater extent and therefore should dedicate more time towards being commercially aware more than others, however, all lawyers should have some kind of commercial awareness.
In fact, according to thelawyerportal.com, “Commercial awareness is important for law firms because they invest a significant amount of money in each trainee solicitor. They, therefore, want to ensure that the trainees that they recruit have knowledge and understanding of the business world so that they can relate their legal advice to their client's interests.” Furthermore, “This is why a part of your training contract interview and application form will be focused on identifying such awareness.”