Hey - yes, of course! I completely understand, and, as a non-law, this flummoxed me in the former half of my application days. Although even if you are a law student and are unfamiliar with the technical knowledge required - please do read on!
I'll answer this question as if addressing everyone, so I do apologise if this covers some stuff that you already know or is irrelevant, and so on.
Preamble (please read!)
So - first, consider the name of the career being pursued:
commercial law. The 'commercial' comes first! Now, I know this might seem like a rather redundant statement, but what I would try and encourage candidates to consider is that this is as much of a corporate/commercial career as it is a legal one. Hence, your commercial knowledge needs to be up to scratch when it comes to applications/interviews and, dare I say it, your future career.
Now, most candidates recognise this and, to bulk up their 'commercial awareness', they read the Financial Times and Bloomberg. There is nothing wrong with this, and I encourage all candidates to do it - it is an essential part of preparation. However, in my opinion, this is not the core of 'commercial awareness' (or at least it is an indirect way of learning about and discussing the 'core'). Rather, the crux of commercial awareness, which I see is often neglected by candidates, is the technical aspect.
I'll get onto what the technical aspect is and how I recommend bolstering your technical ability; however, I wanted to include this preamble because it is essential to develop your mindset along this journey. I know the process can often feel like a box-ticking exercise; however, this will be your future career, so you should (if well-suited) grow to enjoy learning and developing your commercial knowledge, rather than just 'having the answers'. Arguably a growth mindset, more than anything, will be instrumental to your sustainable success, not just throughout the application process but also throughout your future career.
Expectation of Technical Ability
Okay, to start this section off: broadly speaking, law and non-law students will be treated equally - both sets of students will be expected to have roughly the same degrees of knowledge regarding commerce and legal
practice. Law students, you might be grilled a little more on the academic legal aspects; however, such moments will be few and far between (normally done in the context of questions about one of the modules you have taken). Crucially, however, I want to highlight that non-law students (and law students, to be fair) are not off the hook!
Law firms expect you to have a 'basic' (the term is relative, I know!) knowledge of core commercial and legal concepts. Furthermore, you should be able to discuss current affairs and explain what commercial/legal concepts are at play within such affairs and what the outcomes are for law firms and their clients (where relevant). Here's the clincher - you cannot just have 'textbook' knowledge of these things. What I mean by that is you cannot simply just have abstract knowledge and regurgitate, 'an indemnity is [...]' - your knowledge should be interconnected, either through synoptic links or, even better, specific ones.
Summary of Expected Knowledge
I will now put down a few lists of things that I would expect candidates to know about -
this is not an exhaustive list!. Note: this is my opinion - I may be completely off-track here; however, I'd like to think I have a small modicum of experience that lends even just a little credence to the following lists! (Also, the divides between what I deem legal knowledge and commercial knowledge are, for the most part arbitrary, they are just there to lend some structure to this section!)
Legal Knowledge
- What are the four basic principles at play in the formation of a contract? (Intention, Consideration, Offer, Acceptance)
- What is a SPA? Why would one have one? What crucial information is in one?
- What clauses are typically in a SPA?
- Representations, warranties and indemnities - what are they? What are the differences between them? When would you use each one? How would you deploy each one?
- What is the process/anatomy of a generic acquisition, from start to finish?
- What are the main types of dispute resolution? What are the differences between them? When would you use each one?
- What is 'disclosure'? (There are two kinds: one in the context of a transaction, another in the context of disputes)
- What is due diligence? What are the different 'types'? Why is each 'type' conducted? (e.g., financial due diligence)
Commercial Knowledge
- Sale purchase vs Asset purchase
- Debt finance vs Equity finance
- Collateral/Security - what are they? What are the nuances between the two terms? What are the different types of security? Pros and cons of using security.
- What happens when a company goes insolvent?
- What are the commercial/economic drivers behind an acquisition?
- What is leverage? Why use it in the context of an acquisition? (an iteration similar to point 2)
- What is the 'process' (for want of a better word) of private equity? How do those who engage with private equity ensure their deals turn a profit?
- How is a private fund structured? Why is it structured that way? What does it do?
- What is a hostile takeover? Why do/not do it?
- What are the basic rules on a public acquisition? (in particular, look at the 30% rule)
- What rights can minority shareholders have? How can minority interests be protected?
- What are golden shares?
- What is EBITDA? Why is it important to know? When would you use it? (think valuations, and so on)
There is so much more I could list - if you want more, see
https://www.thecorporatelawacademy.com/175-training-contract-interview-questions-2/ (see the commercial awareness section & the M&A section) and
TCLA Premium's M&A Course! Furthermore, if even that is not enough, do have a look online, and you'll find a wealth of digital and printed material which covers this as well!
My final point will also be: please know what a trainee does in the main departments of a law firm. Unfortunately, the answer 'a trainee reviews documents' simply does not pass muster. Do your research and find out what exactly a trainee might be expected to do in, for example, Corporate/M&A, and then make sure you understand what those tasks are, what the deliverables that are being produced, and
why all of this is being done. Law firms also want you to display knowledge of the role, why your role is important and how it fits into the overall process.
Right, I've gone on for too long - but I hope that helps! I know it might be overwhelming, but once you start to learn the fundamentals, all the rest 'clicks', and it becomes so much easier!
