LSB publishes further research on legal needs of SMEs
The Legal Services Board has published its third research report focusing on the legal needs of small businesses and looks at how their views have changed – and the legal services market has responded – since similar research was conducted in 2013 and in 2015. It is the largest ever survey of small firms’ interactions with the legal sector drawing on over 10,000 responses.
The research tracks how an individual or business responds when faced with a problem that can be resolved using legal processes.
Key findings from the research include:
- Around a third of small businesses had a legal problem in the preceding 12 months – representing a fall from 36 percent in 2013 to 31%
- The most frequent issues across the three waves of the survey are:
• late or non-payment for goods or services provided
• goods and services not as described, and
• liability for tax owed.
- Around half of small businesses reporting a legal issue said it had a negative impact
- Total annual losses to small businesses due to legal problems is estimated at £40bn, and over 1 million individuals in small businesses suffered ill health.
The report goes on to state how engagement with legal service providers remains limited for SMEs, and that:
- There has been a significant increase in the proportion of small businesses doing nothing when experiencing a problem (10%)
- proportions adopting strategies including handling alone (50%) or using an advisor (24%) have changed little between 2013 and 2017
- Less than one in 10 employed in-house lawyers or had a retainer. When advice was sought, accountants were consulted more often than lawyers
- For those that did use a lawyer, 22% shopped around to find a provider. 50% of those who shopped around found it easy to compare different providers.
One aspect worth noting is that views on cost effectiveness of lawyers have not improved with just 11% of small businesses believing that lawyers provide a cost effective means to resolve legal issues (this is down from 14% in 2015) while satisfaction that law and regulation provide a fair trading environment increased from 30% in 2013 to 44% in 2017.
The full report can be accessed here.