Why Lawyers Need Commercial Awareness to Advise Clients Effectively

The term ‘commercial awareness’ has been reduced to a buzzword that often strikes fear into the hearts of students, graduates and new professionals in the corporate ecosystem. However, it is not something to be averse to. Being commercially aware is an indispensable necessity for client-facing lawyers, so understanding the need for the skill may assist in killing the stigma that has developed around the phrase. In an article sponsored by Mayer Brown, writer and editor Billy Sexton described the skill of being aware of the ever-moving commercial landscape as the ‘hallmark of any brilliant solicitor or top-rated law firm.’ 

It is expected that those aspiring to train as a legal professional in the corporate sector, must not only understand what commercial awareness is, but also display a proclivity for developing the skill. Clients at “top-rated law firms” will expect that their assigned solicitors will have an understanding of the legal workings of their industry, economic trends and other social developments that will affect their case. This is important to note – lawyers need to have relevant and current knowledge of their client’s industries and how the actions taken in the interest of the client may affect their standing in the market. 

Considering Industry Developments 

As mentioned above, it is critical for lawyers to understand the industry from which their clients hail from. Not only is it crucial for advising said client, but also building trust and developing a longstanding relationship with the client. It should not be forgotten that law firms are businesses, creating a good working relationship with the client can create further opportunities for more work in the future. By being aware of industry developments lawyers can create tailored and accurate advice for the client, eliciting reliability and proving effectiveness, which not only reinforces the reputation of the solicitor, but the firm as a whole. 

In an article by the Lawyer Magazine, attorney Mark M. Bello discusses the need for lawyers to align legal advice with the client’s needs. He states that a lawyer should ‘stand in the shoes of the client’ by ‘understanding the intricacies’ of the company wherefrom the client derives and the commercial sector that said company operates under, to ‘engage in more effective advocacy’. In particular, this allows for risk aversion – it empowers lawyers with the knowledge necessary to mitigate any potential legal disputes and predict both favourable and unfavourable outcomes regarding litigation or negotiation. This knowledge also includes considering where the client and their company are economically and what their goals may be – commercial awareness arms legal advisors with the cognisance to arrange the clients’ priorities. 

Considering Political and Social developments

It is also important for lawyers to appreciate the social and political developments that will affect the client’s commercial sector. Politics affects everything – from policy and regulatory standards to a client’s economic situation. An example of this can be found in the current (Labour) government’s policies – one of which is to boost government investment into UK R&D (research and development) and protect the tax reliefs that cover corporate investment. This particularly benefits projects concerning technology – yet another sector that lawyers need to keep their eyes on. Policies such as this are important to understand – most clients looking to legal advisors to break down what regulations will affect their investments are not likely to have a great depth in understanding the ins and outs of what is contained in those regulations. It is the lawyer’s job to atomise such policies and incoming regulations for worried clients. 

It is also necessary to keep a tab on any social developments that may have economic implications. The rising expectations regarding climate change are an obvious example of a social development that has affected the operation of corporations (and as a result – clients). In recent years there has been a push for lawyers and law firms to position themselves as ‘thought leaders’ (Legal 500) who advise clients on the legal risks, opportunities and regulations surrounding sustainability. 

Commercial awareness covers all the interconnected and changing facets of a client’s economic needs. To not be commercially aware is negligent of one’s role as a legal guide – a decision that affects the client, the lawyer as an individual and the firm as a whole negatively.