Here is the commercial awareness advice I am tired of hearing: read the Financial Times, research companies, watch the news. It’s not that this is bad advice, it just doesn’t help you see the end goal. It doesn’t show you what being commercially aware actually looks like. Or, how to show off your commercial awareness in an interview.
So with the hope of getting some fresh, new, practical advice, I found a group of people who have really nailed commercial awareness, and then I hassled them until they answered my questions.
Let me introduce to you my commercial awareness experts:
Giovanni Parcou has previously worked as a recruiter, sourcing individuals for Associate and Partner positions. He has completed a vacation scheme at Fox Williams and currently works as a Legal Assistant in the property department of Bennet Griffin.
Vikash Vaitha is an alumnus of the University of Birmingham. He has worked as a Paralegal at a firm called Shakespeare Martineau, which has the best firm name I’ve ever heard. And he is currently a Paralegal at Pinsent Masons.
Mitan Patel has had a career so complex it warrants an article of its own (hint hint). But most relevant is his triumph at the Aspiring Solicitors Commercial Awareness Competition in 2015.
Roxanna Sarkar-Patel, Natalie Batra and Ryhs Morgan make up the winning team of the 2016 Aspiring Solicitors Commercial Awareness Competition. Roxanna and Rhys are future trainees at Mayer Brown, and Natalie will join Travers Smith as a trainee later this year.
How do you build up commercial awareness and prepare for an interview?
Mitan: You need to know what the big stories are. When I was in the final of the Commercial Awareness Competition, it was around the time of the Spring Budget. It was obvious they were going to ask us about that, so we knew it inside out.
However, I think commercial awareness is less about knowledge of particular things, and more about showing you are commercially-minded.
If you are genuinely interested in business, you will have some background knowledge you can draw from. Building up your commercial awareness should come naturally; you shouldn’t have to force yourself. If you really don’t know where to start, then that suggests you’re perhaps not that interested in the commercial world. And then, is commercial law the right career for you?
Roxanna: The main reason I joined the Commercial Awareness Competition was to force myself to understand what commercial awareness was and to actually gain some. Winning the competition in 2016 was an amazing achievement for my team and it was undoubtedly the best thing we did in preparation for vacation schemes and training contract interviews. Preparation for each round was only possible with strict and effective teamwork…and lots of reading. I think I had The Economist and a copy of the Financial Times next to my bed for six months!
Rhys: I recommend identifying about 5 underlying trends (for example; the rise of Asia, US economy, Brexit, emerging markets, oil prices) and then forming an opinion them. This will enable you to make an educated guess about anything.
Take for instance oil; if you know the trends in the oil industry (the output and price movements in particular), then you can make educated guesses about shipping costs, which are relevant to almost all consumer goods. You can also make educated guesses about energy costs, the price of certain stocks and the effects on different economies.
Also, you should track a few specific stories and companies so that you have areas which you can talk about in depth. You can use these as examples to support your points. It’s easiest if you choose companies and stories that you are in regular organic contact with, as then you’ll have a deeper understanding of the situation.
And finally, I think it helps to know some specifics about initial public offerings, mergers and acquisitions, equity and debt financing and how law firms operate as businesses. These topics tend to come up in interviews at commercial firms.
Giovanni: Commercial awareness can be built up in numerous ways. I think one of the best ways is through experience. Now, that doesn’t mean getting a top-flight corporate role somewhere in the City. What it does mean is getting experience through employment and extra-curricular activities where you are making an impact on a business. Working part-time in retail as a Sale Assistant is a great example. Demonstrating your understanding of how good customer service impacts customer loyalty and brand reputation shows commercial awareness. As a recruiter, I found that the best commercial awareness came from candidates who could draw on their strong performance in a previous role, and emphasise how this could be mirrored well as a legal professional.
How do you demonstrate it well in an interview or an application, even if they don’t ask commercial awareness questions?
Giovanni: To demonstrate it well in interviews, candidates need to acknowledge the fact that law firms are businesses, and that clients are customers to whom the firm provides a service. What doesn’t impress me in an interview is a candidate who says they want to do litigation because they like arguing, or they want to do corporate work simply to advise big blue chips. To me, this sort of response elicits a ‘bums on seats’ image of solicitors. And it shows absolutely no understanding of what a solicitor does or how they contribute to the business.
Vikash: I always try to approach commercial awareness questions strategically and make my answers relevant to the firm. I’ll think about which of the firm’s sectors are the most profitable, where it wants to expand and what the market is like in that sector. Also, it’s good to remember that when it comes to commercial awareness, you do not need to know everything.
And you don’t have to be a commercial whiz to talk about the commercial impact your work has on your employer’s business. And the fact you can justify the importance of your role to the business is what makes you stand out. That understanding demonstrates more than just knowing what Brexit is.
Mitan: They will inevitably ask a question along the lines of, why do you want to do law? And you can say something like, ‘I did research on [commercial legal topic] and talked to these people about it. And here’s what’s interesting about that…’ For example, I was following the botched merger of Pfizer and AstraZeneca, and what I found fascinating about it was the way Freshfields advised AstraZeneca.
But saying ‘oh yeah I know about that deal’ isn’t enough. If you’re interested in a deal, think about why. And then you can use it as leverage to talk about things like equity and debt, and why you might want to use one over the other. However, you need to be careful when you’re talking about the firm’s deals. If you go into too much detail, you’ll come across as quite confident and invite awkward questions. You might even be sat opposite the Partner who worked on it. But what you can say is, ‘I’m interested in x deal, and while I don’t know too much about it, what interests me is A, B and C.’
Rhys: It is important to demonstrate commercial awareness even while answering questions that, on the surface, do not seem obviously commercial. For example, ‘why is diversity important to law firms?’ The interviewers will be looking for you to talk about firm revenue and profits. Diversity tends to increase the breadth of experience at a firm, which should lead to an ability to service a more diverse client base. This leads to more successful pitching, increased sales and therefore profits. They really want you to bring it explicitly to profits like this.
Now imagine that the question is ‘what do you think the effects of Brexit will be?’. What they’re looking for is you to say ‘the effects of Brexit will be A, this will impact companies via B, law firms will see more/less work in departments C,D,E.’
And make sure your answers are structured. If the question was, ‘which of the developing economies do you think will see the most drastic change in the next ten years?’ You’d say, ‘I think Iran will see the most drastic change. In order to demonstrate this I’ll first discuss A, B and C, before concluding D.’
Finally, make sure you are definitely answering the question they asked. Big emphasis here.
Are there any websites or news sources you just can’t do without?
Roxanna: The Economist, The Financial Times, Finimize, and Investopedia.com. And City AM is my go to if I want a basic understanding of stories and concepts and a quick recap of the week. It is a beginner friendly site which uses basic language to help build your understanding of current affairs.
Rhys: Finimize is an email list that offers a good way into economic commercial awareness, and I’d recommend joining their list in the run-up to a competition or assessment centre. Pre-competitions I tended to dip into the Financial Times and The Economist (partly because I knew that Aspiring Solicitors used those publications to source questions). For researching specific subjects I read industry sources. For example, I used Coinbase to learn about blockchain.
Natalie: I couldn’t do without Finimise. It shows you exactly what questions you need to ask yourself when looking at an article. My approach was to look at the departments in a law firm, all of them, and think about what part each could play in a deal. This helped me think about cross selling (encouraging my business development acumen).
What is the most challenging thing about developing commercial awareness, and what is the key to your success?
Roxanna: The most challenging thing is keeping up with everything that happens in the world! Realistically, there are some days when you won’t want to read the news or you will have no time. A great way to keep on top is to read the first two pages of The Economist which summarise the world’s politics and business news of that week. Also, set aside an hour on the weekend and flick through the Financial Times Weekend. Similarly, catching up on The Andrew Marr Show is equally as helpful!
Building up commercial awareness takes time and consistency. Inflation rates and central bank interest rates are always changing, so you have to recheck them before each competition or interview. However, if you do this over time the knowledge compounds and you’ll have the data to generate insight you couldn’t before. So that’s very satisfying.
Natalie: The most challenging thing is seeing where all your small micro bits of knowledge fit into the big picture, and that’s just a product of time which is why you should always start early!
Rhys: When answering commercial awareness questions, you rarely operate with anything like enough information. This makes it really difficult to give a professional-sounding answer. So you need to be able to take the information you do know and make it relevant to the question.
For example, imagine the interviewers ask you about construction in China. Even if you have no direct information on China, you can still use your existing knowledge to make an educated guess.
You might know that oil prices are down. Well this is great for construction as it lowers the shipping costs of materials. Or perhaps you know that the Renminbi has been appreciating. This would make imports cheaper thus aiding the domestic construction industry.
It is ok to make assumptions and informed guesses, so long as you state them to the interviewer. And even if you come to a conclusion that’s not right, most interviewers ask questions like this largely to see your mental process. If they see that you are using the information that you do have to build an informed answer, even if the answer isn’t right, they’ll still be happy. So, the key to success is improvisation.
Do you have any encouragement for people who are struggling?
Natalie: For those struggling- start small and don’t follow the crowd. Don’t spend money on The Economist if you don’t understand it. Watch the news everyday, use the Finimise app approach to looking at articles and read CityAm; it’s free and there’s no excuse if you commute! It’s all about connecting the dots from the article to real life, but you do need to give yourself time.
Rhys: It won’t come overnight, that just isn’t how it works. The thing about commercial awareness is that as long as you can remain aware of the big picture, then each new piece of information will interact with and complement all your previous pieces. So whilst commercial awareness may seem like a mountain at the start, it only gets easier.
If you liked this article and want some more tips on commercial awareness, why not take a look at Josh’s article: An Introduction to Commercial Awareness? And if you’ve got an interview on the horizon, here is my favourite technique for preparing for competency questions.