LSB calls for government support plan as small businesses face legal struggles

Small businesses continue to face a significant access to justice gap and are not empowered to access legal services meeting their needs, according to Legal Services Board (LSB) research.

A survey of over 10,000 small businesses, published in May, showed around one-third (32%) experienced a legal issue annually, including those involving employment relations, tax, regulatory issues and trading issues such as late payment.

Only a quarter of small businesses used professional help in response, while around half either sought to resolve their legal issues entirely on their own or took no action at all.

Just 10% of respondents viewed lawyers as cost-effective and almost one in five small businesses who paid for legal services used personal savings to meet these costs.

The LSB called on the government to develop a legal support strategy to help small businesses recognise their legal needs and access legal services when they need them.

It should, said the LSB, address the need for early information and advice provision, foster innovation in the delivery of legal services and access to information to make the market work better for small businesses, and give access to better dispute resolution mechanisms.

The LSB also proposed a focus on “capacity building through networking with larger businesses to resolve legal issues”.

LSB chair Dr Helen Phillips said: “Small businesses are vital to the UK economy. We want to see an environment where small businesses, from your local café, builder, retail owner, to sole traders like self-employed musicians or designers, are able to identify their legal needs and seek legal support when they need it.

“Our research shows that higher legal capability and access to legal advice are linked to better outcomes in dealing with legal issues. Then, they can more easily focus on being successful businesses, that contribute socially and economically to our communities.”

“While small businesses face similar problems to individuals, unlike for individuals there isn’t currently a legal support strategy for small businesses. What we are calling for is a collaborative approach which goes beyond regulators and has cross-governmental coordination.”