Third of small businesses had legal issue in 2017
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A third of small businesses (c.1.6m) experienced a legal problem in 2017, with just 24% of these seeking legal advice to resolve their issue.
The third biannual survey of small business commissioned by the Legal Services Board, based on an online survey of over 10,000 small businesses found that seeking legal advice is often a last resort, despite the fact that the annual cost of small businesses' legal problems to the UK economy is c.£40bn.
According to the research, almost half (44%) of respondents considered that law and regulation provided a fair environment for businesses to succeed, but only 11% agreed that lawyers were cost-effective (down from 14% in 2015), while 49% disagreed.
However, those who used a legal service provider to address their most recent problem were significantly more likely to agree that lawyers are cost effective (20%).
The survey found that 31% of small businesses had a legal problem in the preceding 12 months, down from 36% in the first survey in 2013.
One in five of them reported trading - issues around goods and services - as the main problem, followed by tax and employee problems. On average, businesses experienced two problems a year, although many did not have a huge impact.
Half of small business addressed their most recent problem on their own, while one in 10 took no action and just a quarter sought legal help.
Dr Helen Phillips, interim chair of the Legal Services Board, said: "While our research suggests the impact of legal problems on small businesses has decreased the estimated annual cost to the UK economy of their legal problems is still very substantial.
"There still remains a perception of legal services as expensive - whether or not that perception is accurate - resulting in many businesses either ignoring legal issues or trying to handle them alone.
"It is hoped that work by regulators and others to implement the Competition and Market Authority's recommendations on improving transparency should help address these issues over time.
"There are so many opportunities for legal service providers to expand their business if they can tailor their services to what this group of consumers need, raise awareness of their services and overcome perceptions of high cost."
You can read the research in full on the Legal Services Board's website.
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