Aspiring lawyer? Here’s an interesting statistic for you. 👇
A recent survey revealed that 71% of senior legal staff would recruit a trainee with commercial acumen/experience and a 2:1 degree over an otherwise comparable candidate with a first-class degree.
It follows a string of evidence that commercial awareness is a critical skill to develop to stand out as a candidate.
For this episode of the #MoreFromLaw podcast, I spoke to writer and news analyst Peter Watson, creator of Watson’s Daily. In this episode, we discuss:
- What commercial awareness is
- How to source your information
- The three levels of complexity when analysing a commercial story
- The world of finance and understanding the market
- Some thoughts on the effects of COVID-19
And more! An incredibly insightful episode packed with actionable tips. Listen to the full episode via the links below!
Show Notes and Further Resources
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This episode’s show notes are free and available to read for all!
Understanding Commercial Awareness in Law
- Commercial awareness is the appreciation and understanding of how companies and industries work in the wider environment, and how they make money.
- You must be able to go beyond basic knowledge about an issue – i.e. link facts from different stories together to better understand a current situation and predict future developments, such as implications about an industry/company/geographical area etc.
- This skill requires daily involvement – you can’t pick it up overnight.
The Three Levels of Commercial Awareness
Low-level answer: knowing some facts about a topic and having a basic opinion – usually with a human focus – which is not robust enough to be questioned.
Example: airlines are currently having a crisis due to COVID-19. A low level analysis might view Richard Branson as an ‘evil money grabber’. The ‘human’ approach therefore focuses primarily on job losses.
Medium-level answer: knowledge is more solid, but the opinion is still lacking the robustness to be questioned. Candidate tend to think about the individual or company immediately concerned without making links, and short-term implications only.
Example: airlines – including flag-carriers and budget – are having a crisis due to COVID-19. A medium-level answer knows that some should receive Govt. money, but are unsure of specifics. Knows that the issue will continue for at least this year and that consumer choice of airlines will be limited.
High-level answer: has solid knowledge and an opinion where they can argue both sides of an issue and consider multiple stakeholders.
Example: Govt.’s should protect flag-carriers and give money to better performing budget airlines. Regional airlines might be sacrificed. Questions why, where and when normality will return.
How to Approach and Analyse an Issue
Using a mind map or a white board: start with the central theme. Look at the individual components and break them down further.
Example: central theme – airlines are having a crisis due to COVID-19.
- Identify the individual components – aeroplane makers, customers who fly, airlines themselves and insurers.
- Break them down further – aeroplane makers (Airbus and Boeing), customers who fly (business customers and travellers), airlines themselves (flag carriers and budget airlines), and insurers (business interruption and holiday).
- Approaching issues from different perspectives
Then, consider time as an element:
- Daily/weekly: use a small mind map.
- Monthly: pick a theme/industry and break it down using a whiteboard – this will allow you to make broader connections.
- Yearly: break down the G20 countries – examining elections, key facts, and issues – using a white-board (or several!).
Why is commercial awareness important?
- Applying real life examples to your work will enhance your studies.
- Recruiters want applicants to know what is going on in the real world – it is therefore vital for application/interview success.
- Make sure to reach a conclusion to the question after applying the facts and explaining your opinion.
- Summarise what your view is, how you reached it, and be prepared to defend it in a rational way.
- This is part of the screening process when looking for commercial awareness in candidates.
- Recruiters will ask simple/innocuous questions to try and gauge whether the applicant read the news in-depth and can therefore give a robust opinion.
- Example: asking “What do you think about Volkswagen?” after the emissions scandal took place.
How can aspirant lawyers develop knowledge on finance?
- It is important to have knowledge of financial markets when practising, especially for commercial or corporate law.
- Christopher Stoakes’ book, ‘All You Need to Know About the City’, summarises how different elements of the city work together. Having an awareness of this will help you to categorise news material.
- Pick information sources and devote daily time to them to build your knowledge. Newspapers provide consistency and accountability. Every source is arguably biased in some way i.e. politically, so use more than one to try and neutralise this.
- The Guardian (unique business stories/points of view)
- The Financial Times (generally impartial due to its business focus)
- The Times, The Telegraph, The Wallstreet Journal
- BBC News can sometimes provide effective analysis on complex issues
- Watson’s Daily – summarises the newspapers above into easy-to-read articles
How to Read Coronavirus Trends
- Although no one knows what the future holds, you might still be expected to extrapolate and try to predict what will happen.
- Categorise information into different industries and think about the implications on individual companies.
- Example: In terms of supermarkets (industry), Tesco (company) have started to sack temporary workers taken on due to the March upsurge, as elements like ordering and stock levels begin to normalise.
- Any industry to do with working from home e.g. computing, Zoom and Microsoft, are doing well.
- Take a top-down political approach to your analysis.
- Example: the UK is likely to be in debt for years – this means that the Conservative manifesto might have to change, causing uncertainty. Furlough money will soon have to be repaid to the Gov: there is talk of a ‘second wave’ of financial concern as individuals/companies begin to face this.