By Stephen Turner
Why commercial awareness is essential for your success in the law in 2016 and beyond.
The harsh reality is that 60% of law graduates do not find a job in the legal profession. Competition is intense and with the changes happening now in the legal market the competition for training contracts is only going to get more intense. Law students are increasingly finding that having excellent business awareness is the key factor determining success in the legal market.
The future – less junior lawyers
Some predict that in five years, the number of training contracts available will have dropped to a quarter of the current numbers. Others are more optimistic and point to more varied opportunities for young lawyers: working in-house, working in law-tech start-ups or for other providers of legal solutions operating as alternative business structures (as permitted by The Legal Services Act 2007) where non-lawyers invest in and provide legal solutions and services.
What is clear is that the times when training contracts were available to most law students and it was easy to get on a placement scheme have passed.
The march of AI and the fee-savvy client
There are two drivers pushing change in the legal market.
Firstly, there is the adoption of automated systems and artificial intelligence (AI). This driver may only be in its beginning stage, with early adopters leading the way, but increasingly we will see that much of the work performed by junior lawyers will either be replaced by super-efficient, super-fast and scalable technology solutions and or it will be outsourced to third party providers.
I’ve spoken to CEO’s of tech start-ups and they all report that it is not the firms that are pushing the adoption of AI, it’s the clients telling their panel law firms that they are now going to be using it – whether they like it or not! Tech solutions companies are going straight to the clients and forming relationships with them. Some commentators say that 50% of the work done by junior lawyers can now be replaced by AI/automated systems, others put the figure even higher.
The second factor driving change is pressure from clients for law firms to slash their fees and provide fixed fee solutions. This driver is well underway and all law firms are feeling the pressure. The days of the billable hour as the most common fee model are numbered. Clients have wised up and know that the billable hour promotes inefficiency and keeps costs high. Put simply, with the billable hour as your fee model, your incentive is to take longer and drag things out to earn more money. With the fixed fee, the incentive is to do exactly the opposite: the pressure is to get the work done well and quickly.
‘Efficiency’ is the new buzzword.
‘More for less’ puts pressure on training
The pressure on firms to provide more for a lower price and in less time means that training budgets are being squeezed. Clients are no longer willing to pay for firms to train their employees. As an example, clients commonly stipulate that no first year associate time will be billed to their account. This is a huge change.
You have probably heard of the battle between Big Law and New Law. Well, fees are the battle ground, with New Law promising the same quality service, but for much, much less. As one tech-start up CEO put it to me the other day, if you are a client and you are offered a Magic Circle former partner at the cost of a Magic Circle trainee, might you be interested? Most definitely! And this is what is happening now, with New Law increasingly showing clients that law does not have to be so damned expensive.
There is another way – the New Law way.
You must become a business person and a lawyer
The current reality is that just having good grades is no longer enough to ensure that you get a job. Employers are seeing a mismatch between the narrow legal skills that students get from university and the broader commercial and interpersonal skills that employers need students to demonstrate from day one. In simple terms, there is a skills gap and the employers will no longer have the funds to train to bridge this gap. The onus is therefore on the law student to make sure that when they apply for a training contract they have excellent commercial awareness and soft skills that the firms need. If they don’t, they will be passed over in favour of students who are commercially aware and fully skilled.
So what do we mean by ‘commercial awareness’?
There are a range of skills and competencies that come under the banner of commercial awareness. You need to:
• Think like a business person. You need to make a fundamental shift in thinking to a point where you are primarily concerned about increasing sales, developing the product ecosystem, marketing products and promoting the brand. Then you bring your legal knowledge in to play to help build a better business for your client.
• Think of yourself as a person of influence who has a brand and a business. This means that you need to publish your ideas, tell people about your value and promote your brand via social media. You need to form yourself into an irresistible prospect for clients and employers
• Form strong relationships with clients and employers. This means that you need to build a network of potential clients and business professionals and to do this you need good relationship skills and emotional intelligence, the ability to empathise, persuade, sell, collaborate and influence – and you need to use all the tools that the modern digital, social media world has provided for you – free of charge!
• Communicate your knowledge, ideas and value. This means that you need to be comfortable presenting and speaking to clients and lawyers and to do this you’ll need excellent presentation and communication skills.
• Work in a team – and lead it! This means you need to be comfortable seeking opinions, promoting discussion, delegating action – and most importantly, taking decisions and owning the consequences!
The most common complaint from law firms about trainees
I hope you can now see that commercial awareness is essential for all law students. You see, the biggest complaint that law firms make about trainees is that they think too much like law students and not enough like business people. That law firms are making this complaint is evidence that they have made bad hires – and these can be very expensive mistakes.
With the pressure from clients on costs, law firms will become pickier about who they hire and will demand from their hires the full range of commercial skills.
If you are to success in the law in 2016 and beyond, it is therefore essential that you change your outlook from being student of the law to being a business person who thinks like a client, understands what motivates the client, uses the language of the client, is an excellent communicator – and who also knows the law. And the sooner you make this change, the better for your prospects in the legal profession.
It sounds like a lot to learn!
It’s true, making the change to think like a client is easier said than done. You cannot just read it in a book. It takes time, practice, research and commitment. Then, once you have business awareness, you need to be able to communicate it in meetings and presentations to groups of clients, lawyers or other authority figures.
You also need to know how to promote your own brand, your views and value and how to build your network of contacts.
You need to think of gaining commercial awareness and the related soft skills, e.g. presentations, as a long-term project which you develop over time. Projects are hard to develop on your own but they become much easier when you have help, guidance and encouragement.
Become the irresistible prospect
At the end of all the hard work, once you have put in the hours, you will become the irresistible prospect that firms need. The truly commercially aware and fully formed legal business professionals find themselves on the fast track to success. If you dedicate yourself to the task, it’s no exaggeration to say you should be able to achieve in three years what other law students may only achieve in ten.
But you will need help to do this. So let’s get started.
Join the Lawyers of Tomorrow business awareness webinar
Learn how to think like a business person and understand business models, product eco-systems, income streams and how clients leverage brands using the new arts of social media.