More than a third of small businesses in England and Wales experienced legal problems over the past year, with almost one in five saying the issues had delayed or prevented investment in growth and innovation, new research has found.
The Small Business Legal Needs Survey, published by the Legal Services Board (LSB), is based on responses from more than 10,000 businesses. It found that firms experiencing legal difficulties faced an average of 2.8 issues each, equivalent to an estimated 16 million legal problems across England and Wales every year.
The financial impact can also be significant. Four in 10 legal issues resulted in costs exceeding £5,000, while one in 10 cost businesses more than £15,000.
The findings suggest that unresolved legal problems are affecting not only businesses’ finances but also their ability to invest, innovate and remain competitive.
Richard Orpin, chief executive of the LSB, said: ‘Small businesses are the backbone of the economy, yet too many are losing time, money and opportunities because legal problems are not identified early enough or resolved effectively.
‘Our findings show that legal problems are business problems. They can hold back growth, delay investment and prevent businesses from reaching their full potential.
‘Small businesses are important consumers of legal services, but too many still struggle to find the right help when they need it.
‘We are encouraged that business organisations share these concerns. Helping businesses resolve problems earlier and access the support they need is not simply about improving legal services. It is about unlocking growth, improving resilience and helping businesses focus on what they do best.’
Late payments and disputes over goods and services were among the most common legal problems reported by businesses.
Of those affected by late payment, 35% spent significant time and resources chasing money owed, while 28% struggled to pay their own bills as a result.
The survey also highlighted difficulties in finding appropriate legal support. Accountants and tax advisers were the most commonly used sources of advice, ahead of solicitors and barristers.
Businesses that were more confident in recognising legal problems and knowing where to seek help were more likely to achieve positive outcomes. However, many firms delayed seeking advice until problems had become more serious.
The LSB is calling on government, legal regulators, business organisations and law firms to improve access to advice and help businesses identify problems earlier.
It wants greater attention given to issues with the biggest economic impact, particularly late payments, alongside better signposting and the use of technology to help businesses find appropriate legal services.
The board says making legal support easier to access could help small businesses avoid costly disputes, protect their finances and focus on growing their opertions.
Photo: RDNE Stock project
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