2 December 2015 01:00
SMEs need affordable legal support, says report
New research reveals that most UK SMEs only get legal advice as a last resort; and industry bodies are calling for legal service providers to offer more affordable advice to small firms.
A new report by the Legal Services Board (LSB) has found that few small business owners think that legal services providers offer value for money. The LSB's latest research comes two years after it last studied the sector, and when it comes to the ease with which SMEs can access the support and advice they need to thrive, it says that little has changed.
The research found that the number of legal problems reported by small businesses has reduced significantly over the past two years, reflecting better trading conditions. However, total annual losses to small businesses due to legal problems is estimated at £9.79 billion, and one in five business owners who reported legal problems said these led to health problems.
Only 13% of small businesses viewed lawyers as cost effective - little improved since the LSB's last survey in 2013. And almost 50% of respondents strongly agreed or agreed with the statement that they use legal service providers as a last resort to solve business problems, compared with 12% who disagreed strongly or disagreed.
Sir Michael Pitt, LSB Chairman, said:
"These findings suggest that small business access to and use of legal services has improved little since we first looked at the issue two years ago. Access to good quality and affordable legal services helps small businesses to start up and grow." This represents an opportunity for the UK's law firms, he added.
"Many of these issues can be avoided by accessing legal help at the right time. The legal sector needs to look at what it can do to fill this advice gap. In doing so it will create the customers of the future."
Mike Cherry, Policy Director for the Federation of Small Business (FSB), said:
"We know from the FSB's own legal advice line for members that getting the right advice at the right time can save small firms money in the long run. Given so many small business could benefit from making more use of legal services, we hope today's report will encourage service providers to explore and develop their offering to small businesses - focusing on how they can deliver real value for money."