Are you commercially aware?
An author on the subject offers some guidance for young lawyers on the need for commercial awareness, the facets it contains and the types of knowledge and skills it may require
Have you ever been sacked by a client in the middle of a transaction? I have.
I was a junior lawyer. I was acting for an English company that built marinas or, as I called them, “car parks for boats”.
I had acted for them for about a year when their chief executive mentioned he would be in Scotland the following week. I’d never met the chief executive. I’d sent him letters. I’d emailed him. We’d chat briefly on the phone. But we’d never met. So I asked if he wanted to meet for lunch. He said yes.
We met. We chatted away. I had fish and chips. And the next day he phoned the partner I worked for and sacked me. “I don’t want Andrew working for us again,” he said. “Get rid of him. Get rid of him NOW!”
Now, he didn’t sack me because I’d made a mistake. I’d never missed a deadline, never overcharged him or made a fatal mistake like buying the wrong port. He sacked me because he met me. He sacked me because he thought, to be blunt, I was a dick. Which, to be fair, I was.
Although I was a junior lawyer – keen, eager to please, with a keen interest in the law so that I could tell you all the ways you could apply to the Lands Tribunal under s 90 of the Title Conditions (Scotland) Act to discharge a title condition – that wasn’t enough. Being a lawyer required something that couldn’t be found in any statute. It needed something I’d soon realise was known as “commercial awareness” – a combination of knowledge and skills that together can send a warning signal from your brain to your mouth to stop you telling a client that his precious marinas were “just car parks for boats, you know”.
But what is commercial awareness, and how do you avoid the mistake I made and make sure you say the right things to your clients at the right time?
That’s a tricky question to answer. To misquote Justice Stewart: “Commercial awareness is like pornography – you know it when you see it.” But do we? When we describe someone as being “commercially aware”, what are we describing?
I think if you ask most people, they will say commercial awareness is the difference between knowing cases and statutes, the legal knowledge we all learn, and knowing your clients, what they want, what they’re trying to achieve and how your legal knowledge can help them with those goals.
You might know the Companies Act inside out, but none us write academic essays about minority shareholders. When we offer advice, we understand that advice has real consequences for real people and businesses. Clients will divorce spouses, cut people from wills, buy a home, change their business or even face jail based on what you tell them. It’s not enough to say, “This is the law”; instead you may say, “This is the law – and this is what it means to you.”
But that’s not the only answer. if you ask a second person, they may tell you that commercial awareness has nothing to do with clients. Instead, they’ll say it refers to working as a business person. You’re not just a lawyer acting for clients: you’re also a business person. And commercial awareness is the knowledge and skills you’ll need to work in a business, whether in a law firm or in-house. Do you know finance, strategy, operations, marketing and HR? Can you read a set of financial accounts? Do you know the difference between profit, cash, capital and debts? Can you manage people and work in a team?
Finally, ask a third person and they may say that commercial awareness is neither about clients nor working in a business. Instead, you will have neither – no clients and no business – if you are not a professional first. You are a lawyer and commercial awareness is knowing and following the Law Society of Scotland’s professional standards. Are you honest? Are you discreet? Do you put your client’s interests ahead of your own?
All of the above
Who is correct? What is commercial awareness? Is it the first person who believes that commercial awareness is about clients? Is it the second, who believes it’s about working in a business? Or is it the third, who believes it’s about becoming a professional?
I would argue that commercial awareness is a combination of all three: it’s about knowing you are a lawyer who acts for clients as part of a business.
Think about how you work. Let’s assume a client phones you and asks for advice. What happens?
First, you’ll need a phone. And, unless you’re using a mobile, you’ll need an office with a phone line. That office will need lights because you don’t answer calls in the dark. And you’ll need a computer because clients expect a letter or email to follow that call. And you’ll need money to pay for all of this – your office, your computer, electricity, a phone line and, most important of all, your salary, or you wouldn’t be there.
And when you answer the phone, you need to be professional. You’re a lawyer. You’ll be honest, discreet and independent. You won’t start by telling your new client about your five other clients in identical circumstances and all the mistakes they’ve made that you can help your caller avoid. You’ll follow professional standards. And when your caller tells you that they’re looking for someone to help them with a contract to purchase a business, or to write a will or sell a house or the thousand other tasks that only you, a lawyer, can do, you won’t talk about conveyancing, intestacy or contracts.
You’ll ask questions. You’ll want to know more about the business they want to buy so you can help them decide what the contract should include. You’ll show empathy and compassion when discussing their family and how a will can protect them. You’ll try to help them understand the consequences of what they want, the options they have – and, because you are a business, how much it will cost to help them. In short, you are a lawyer who acts for clients as part of a business.
What knowledge and skills do you need for this?
Again, there is no single right answer. We all work in different areas of law, in different parts of the country and for different types of law firms or businesses. We’re also at different stages of our careers.
A trainee, fresh out of university, may need to work on how to prepare for and lead client meetings. As a young lawyer, they may need to concentrate more on recording time, making money and passing work to other people, while a partner may need to understand marketing and business development so they can attract more business.
Everyone is different, but if we all understand that commercial awareness is a combination of understanding clients, business and your profession, you have the starting point to develop the knowledge and skills you need to become a modern lawyer, who is commercially aware, and who will always say the right thing.
Andrew Todd is group director – general counsel and company secretary for listed housebuilder Springfield Properties plc, and co-author of Commercial Awareness for Lawyers (2nd ed), now published