What is commercial awareness?

Commercial awareness is an increasingly important skill for lawyers, but what does it mean? Andrew Todd, group director & company secretary of Springfield Properties plc, reflects on how being commercially aware can be particularly important (and challenging) for in-house lawyers.

I’m in the kitchen. I’ve got a bowl of cornflakes in one hand and a pint of milk in the other. It’s not yet nine o’clock and I’m listening seriously as HR asks if I can help with a disciplinary hearing on Tuesday.

I’m at my desk. It’s lunchtime. I’m reading Celtic fan websites when engineering asks if I can challenge a stop notice just sent to a site. They need an answer now as we have to respond immediately. But I’m still trying to work out if Celtic should have sold Boyata in the summer.

It’s Friday. I’m wearing shorts. It’s the middle of a heatwave and we’re all wearing shorts - except for finance who’s just asked me about our banking facilities. They’re in a suit. This is an important conversation but I don’t feel like this is the right time to talk about negative pledge.

Yet, for in-house lawyers, situations like these are very common. We work with our clients. We sit beside our clients. We are available every hour of every day for someone to ask “I wonder if you can help me with this…”. We don’t have the luxury of making an appointment in our finest boardroom, of knowing that our clients are coming in to see us and what they will discuss, or of wearing our finest suit to show them that they are meeting a serious professional. Nor are lawyers in law firms ever likely to give legal advice while making toast. It just doesn’t happen in law firms. But in-house, the people we work with are also our clients and our relationship with them is very different.

Defining commercial awareness

Take commercial awareness. It means different things to different people. In our book “Commercial Awareness for Lawyers” we identify three common definitions. One is that commercial awareness means knowing that you are a lawyer with professional standards that clients expect you to maintain. Second, it means knowing that you have clients and the advice you give is not just about the law but also the impact it has on them and their lives, families and businesses. Third, it means knowing that you are a business person and you need to know business skills such as finance, operations, marketing, sales or HR.

For in-house lawyers, the first definition can be the hardest. It can be hard to be a lawyer and a person. As lawyers the need to follow professional standards and client confidentiality, for example, is key. As a colleague we want to know what is happening with Angela in accounts or Greg in marketing and what they got up to at the weekend. But how does being part of the office gossip build confidence in your colleagues that you will keep their secrets.

Advising in-house clients - a balancing act

It's not just behaviour that matters. There are ethical challenges too. We need to put our client’s interest ahead of our own. But in-house lawyers may need to give advice that the company doesn’t want to hear, knowing that the people you need to tell are the ones who decide your pay, your bonus and perhaps your job.

That’s why I believe commercial awareness plays a vital role in helping in-house lawyers navigate the knowledge and skills they need to be effective lawyers for their companies and organisations. And why I was grateful to the In-house Lawyers’ Committee for giving me the chance to speak to fellow in-house lawyers about commercial awareness. What was clear is that we are always having to balance the advice we give with the fact we are lawyers, that we are clients and that we are business people too and commercial awareness (however you define it) plays a vital part of that.

Also, in-house lawyers are really good at giving advice while making breakfast!