Small businesses in the UK increasingly doubt lawyers provide value

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Small businesses in the UK increasingly doubt that lawyers provide value in legal disputes.

According to the Legal Services Board’s (LSB) “Legal Needs of Small Businesses 2013-2017” study, just 11% of small business surveyed believed lawyers provide a cost-effective means to resolve legal issues. That figure is down from 14% in 2015.

“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 CMA recommendations on improving transparency should help address these issues over time,” said Dr Helen Phillips, interim chair of the LSB.

“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,” she said.

The study also found a significant increase in the proportion of small businesses doing nothing when experiencing a problem, which was found to be true for one in 10 businesses.

The study, which drew over 10,000 responses from small businesses, found that the proportions of those adopting strategies like handling alone (50%) or using an adviser (24%) have changed little between 2013 and 2017.  Less than one in 10 of the surveyed organisations had an in-house lawyer or had a lawyer on retainer.

The LSB also discovered that when businesses sought advice, they consulted accountants more often than lawyer. Among those who did engage the services of a lawyer, 22% shopped around. Half of those who shopped around found it easy to compare lawyers.

Legal work has also decreased, with 31% of small businesses having a legal problem in the last 12 months, down from 36% in 2013.

The total annual losses incurred by small businesses because of legal problems are estimated at £40bn. The LSB said that more than 1 million individuals in small businesses suffered ill health.

 

Related stories:
Lawyers must strike value balance for clients
Transformation is both a fast and a slow game

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