Assessment Days – Fear Not the 'Commercial Awareness' Question

  1. What are some of the major factors that influence the treatment of stock options and restricted RSUs in an M&A deal?
  2. Which consumer lending platform has partnered with PayU to offer a cardless EMI payment option to consumers?
  3. What is the fair value of a futures contract with a storage cost of 2%, an interest rate of 4% and a spot price of $800 over a 1-year period?

…These are but a few of the questions that will never be asked in the commercial awareness stage of your interview.

If, like me, on first encountering the phrase 'commercial awareness', you imagined that your interview might require you to opine on the matters in the 'Companies' and 'Markets' pages of the Financial Times, or to have absorbed the discussions in BBC Business and The Economist; you'll be relieved to find that this is not what your assessors are interested in. For the purposes of your assessment day or interview, being commercially aware means appreciating that the firm to which you are applying is a business operating across multiple industries, competing in the market of legal services.

A typical question that invites you to acknowledge this might refer to a firm's strategy for growth, its position in the market, or the economic pressures or disruptive forces with which it must contend. When meeting a question like this, it is helpful to remember that demonstrating commercial awareness is one part what you know, and two parts how you think.

What you know

It is undoubtedly true that having a firm understanding of a broad range of commercial topics (business media, corporate finance, political/current affairs) and keeping up with headline legal developments will put you in good stead to field many 'commercial-awareness-type' questions – and you should certainly aim to achieve this. But on assessment days, as in practice, commercial questions are personal, not general. They require, above all, that you know the firm and its clients.

- The Firm

To take an example from the list above, a question on a firm's strategy for growth cannot be answered without specific knowledge about, for example, the firm's core practice (is it national or international?), its client-base (mostly private or corporate?), its history and ambitions (has it expanded organically, or does it favour acquisitions?). Much of this information will be available in websites like Chambers Student and Lex100, but your first port of call is the firm's own site and publications.

If the question relates to external factors—economic challenges, disruptive technologies, legislative intervention—the same principle applies. Are recent changes to legal aid relevant to the firm in question? How has the firm responded to advances in legal technology? How would further liberalisation of legal services impact this firm at this time, and why?

- The Clients

More important than the ability to list the recent deals or key clients of a firm, is proving that you understand the sectors within which they operate. As I write this, I am approaching the end of my final day in my first seat – Construction and Engineering. I have found that while my legal studies prepared me for the nuts and bolts of my role as a trainee, getting to grips with the industry as whole—learning its vocabulary, recognising the main players, discovering trade publications and media—was essential to forming an appreciation of our clients' goals and circumstances. This too is commercial awareness.

Whether or not you've decided precisely what sort of practice area you would like to specialise in, it is worthwhile dedicating some time before your assessment day to thinking about your interests generally. Technology, property, energy, education… Whatever you're curious about, investigate the industry as a whole, and consider how it intersects with legal services, and especially with the work of the firm.

How you think

With the best of intentions and many hours of preparation behind you, you might still be asked about a topic that is outside your comfort zone. This is no disadvantage if you approach the question with a few core principles and assumptions in mind. If you don't have the facts and figures at hand, remind yourself that your interviewer or assessor is looking not only for future trainees, but future partners – business leaders who consider the implications of various commercial pressures for their firms, and who recognise the strategic benefits of maintaining strong professional relationships with clients.

You may not know much about artificial intelligence, for example, but you can consider the competitive implications if some law firms can adapt to or develop new technologies, and others can't. Maybe you didn't read about a ground-breaking new precedent referred to by your interviewer, but you can acknowledge that it provides an opportunity to reconnect with those clients for whom it may be relevant. Commercial awareness encompasses considerations like these, that draw connections between the commercial issues of the day and the services that we can provide.

Key takeaways

  • Being 'commercially aware' does not require that you learn the ins-and-outs of every item in the business pages of your go-to news source.
  • Commercial awareness means appreciating that a law firm is a business operating across multiple industries, competing in the market of legal services.
  • Demonstrating commercial awareness means drawing connections between the issues of the day and the services that we provide.
  • Approaching commercial awareness questions is not only about what you know; it is equally important to think like a business leader.
  • When confronting an unfamiliar topic, consider how it relates to the bottom line, and the challenges or opportunities it presents to client relationships.