What Is Commercial Law? A Guide for Aspiring Solicitors

Most descriptions of commercial law give you a high-level definition. They tell you it’s the law that governs business, then list a few of the practice areas it includes.

That’s broadly accurate. But in my experience coaching aspiring solicitors, it’s far too general an understanding to succeed in the training contract recruitment process.

The truth is there’s no single definition. “Commercial law” is an umbrella term that covers a lot of different things. Even seasoned commercial lawyers, when you ask them what they do, often fall back on generic descriptions that don’t fully tell you what it is.

I practised as a commercial lawyer for 10 years, and I’ve spent the years since explaining commercial law to my career coaching clients. In this article, I’ll give you a clearer, more practical understanding of what commercial law really is, including what it relates to and how commercial lawyers help their clients with it.

So, what is commercial law? Let’s get into it.

What “commercial” really means

A critical part of this is to get clearer on what we mean by “commercial”.

Commercial is about commerce, which simply means the buying and selling of goods and services.

Commerce is engaged in by a variety of organisations, most of which are businesses (aka companies). But not all are. For example, public sector bodies, charities, universities and other not-for-profits all buy, sell and enter commercial deals and have to operate “commercially”.

This is where most definitions go wrong. They focus solely on who is doing the buying and selling, and they talk only about businesses. But commercial law follows the activity itself. It applies to the buying, selling and dealing, whoever is doing it, plus any key commercial aspects within an organisation (for example, its IP).

So it could be a business selling stationery to a local council, a charity shop renting its premises from a landlord or a business seeking to protect its inventions with patents. All of these are “commercial” activities. And all are covered by different parts of “commercial law”.

Consumers sit inside this world too. When a business sells to the public, that’s still commercial activity. Most businesses selling to consumers have terms and conditions that a commercial lawyer can advise on, and consumer protection laws govern those business-to-consumer sales too.

However, the majority of commercial law work involves business-to-business transactions or advising a business on non-transactional matters (for example, IP or regulatory matters).

What commercial law relates to

The most useful way to understand commercial law is to look at the commercial aspects it relates to.

You can think of it as touching on four main commercial aspects:

1. Making deals happen
2. Building and protecting value
3. Navigating the rules
4. Sorting things out when they go wrong

One thing to hold in mind as we go. These four are what commercial law work relates to. Practice areas are something different. They’re the broader labels a firm uses to group its specialisms, and any one practice area can involve more than one of these four commercial aspects.

Take employment as an example – one practice area can involve three of them:

• Drafting a contract of employment is making a deal happen.
• Advising on discrimination law is navigating the rules.
• Defending an unfair dismissal claim is sorting things out when it goes wrong.

Finance works the same way, often making deals happen, navigating financial regulation, and occasionally resolving disputes.

Different commercial lawyers in the same practice areas work on the different aspects to achieve two things:

• Managing risk (protecting against the downside)
• Seeking reward (helping maximise the upside)

By reward I mean the gain or value from the activity, not just profit. Even a charity wants to get the most from its money.

You’ll see both risk and reward elements in a single contract. An indemnity that protects your client if something goes wrong is a way to manage the downside. A bonus that pays the other side more if they sell over 100,000 units of a product is intended to incentivise them and increase their reward from that commercial relationship.

Let’s take each aspect in turn. I’ll focus on businesses, but the same applies to any organisation engaged in commercial activity.

(1) Making deals happen

Commercial agreements are recorded in contracts and governed by contract law.

A commercial contract sets out the terms of an agreement between two or more parties. It’s how a deal actually gets done, because both sides can negotiate terms they’re happy with and then know where they stand around the commercial activity.

At its core, a deal is buying and selling. And that goes wider than it first looks. Raising or lending money is buying and selling too, where the thing being traded is money rather than goods or services. Even buying or selling a whole business, in a merger or acquisition, is the same idea on a larger scale.

Whatever the structure, the deal is documented in a contract, with terms both sides have agreed.

The risk is managed by drafting terms that outline what happens if things go wrong, such as late delivery, missed payment, or one party using the other’s IP in an unauthorised way. The reward is built in, too, through pricing, incentives, and exclusivity that help a client get more out of the deal.

(2) Building and protecting value

Every business has value it needs to build and protect.

Sometimes that value is obvious and physical, like products or buildings. Often it’s intangible, such as a film studio’s intellectual property, a tech company’s customer data, or a manufacturer’s trade secrets.

Commercial law helps on both sides. It’s used to create and grow that value, for example by registering a trademark or patent so it becomes an asset the business owns. And it’s used to protect that value, both through the protections the law offers and by taking legal action against anyone who breaches it. A lot of this also gets written into the commercial agreements a business enters into with others.

(3) Navigating the rules

Every business operates inside rules it doesn’t get to choose. These are the laws and regulations that apply, whether they like them or not.

Some trade in heavily regulated sectors, where the government has set specific laws for how they operate. Others face regulation simply because of their size, for example, rules designed to keep competition fair. Some common areas are:

• Tax
• Employment
• Immigration (business)
• Competition
• Data protection
• Consumer rights
• Health and safety
• Environmental
• Advertising
• Licensing

The work here covers both risk and reward. On the risk side, the lawyer keeps the business compliant, thereby avoiding the downside of getting it wrong. On the reward side, they arrange the company’s affairs so it can maximise its commercial reward within those rules. A tax lawyer structuring a company’s affairs tax efficiently is doing exactly that.

A business has to keep up with the rules that apply to it and comply with them. Get it wrong and significant fines, sometimes criminal liability, and reputational damage can hit the value of the business. For example, when a regulator fines a company for failing to protect its customers’ data.

(4) Sorting things out when they go wrong

Running a business means dealing with things that go wrong.

Sometimes that’s down to the business and sometimes to another party, whether that’s someone they have a contract with or a third party they’ve never dealt with. The work often involves enforcing a contract or rights, resolving a dispute, or handling a regulatory investigation.

Managing it well needs a clear-headed look at what’s gone wrong and the options for fixing it. It often means building arguments to support a client’s position. And it always involves weighing the financial/commercial risk against other factors, such as the time and cost of pursuing the matter, the relationship with the other party, and possible reputational damage.

All of these four commercial aspects map onto what I was doing as a commercial lawyer, with some more prevalent than others. And the same will be true for any commercial lawyer you come across, each with a different mix.

Commercial law vs corporate law

When candidates are getting to grips with commercial law, a big source of confusion is how it relates to corporate law.

The two terms are often used interchangeably for the same thing, so it’s no wonder people get muddled.

Here’s the simple way I get my clients to think about it:

• Commercial law = what a business does day to day, the commercial transactions and trading relationships it runs, and other aspects that affect the commercial value of the business (for example, IP, disputes, regulatory compliance).
• Corporate law = how a business is structured, owned and governed (forming the company, shares, directors, mergers and acquisitions, group structures, complying with the Companies Act 2006).

I think of corporate law, like finance law, as a sub-category of commercial law.

For more on this, see my guides on what commercial lawyers do and what corporate lawyers do.

Why this matters in the TC recruitment process

Getting a solid grasp of what commercial law is really matters if you want a training contract with a commercial law firm.

Once you understand the main aspects of what commercial law relates to, your next step is to learn about the different types of commercial lawyer and work out which of them suit you best. All of that feeds into one of the most important questions you’ll face on applications and at interviews: Why do you want to be a commercial lawyer?

You can’t show a firm your genuine motivation for a career you don’t yet understand and can’t yet describe. And this is a big reason why many candidates get rejected.

I was one of the many who learnt this the hard way. I once sat in an early TC interview trying to explain why I wanted a career in commercial law, without really knowing what commercial lawyers did. It’s an uncomfortable place to be and, not surprisingly, it led to another painful rejection.

The bottom line

So, now you can see that commercial law is an umbrella for any area of law and legal practice that relates to a business or organisation’s commercial activity and other commercial aspects.

At its core, lawyers use the wide range of commercial law areas to help clients do two things. Manage risk and maximise reward within their commercial environments. This shows up in different forms, from making deals and protecting value to staying compliant and sorting out disputes.

As you explore the profession, commercial practice areas, and commercial firms, be curious about the commercial aspect of everything you read.

That will give you the foundation that will set you apart from the crowd.