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By Stephen Smith, Employment Lawyer

FOUR out of ten small businesses have faced a legal problem over the past year – but most were unwilling to obtain advice from a lawyer, according to new research.

A survey by the Legal Services Board of more than 9700 small companies or sole traders found that 38 had experienced a ‘significant’ legal problem in the past year, with trading issues by far the most frequent cause, followed by tax and employment. Of these, almost half (45%) had a tangible impact on their business, with the average financial impact being £6,700.

This equals £100bn when scaled up across all small businesses, according to the LSB, which carries out research in England and Wales.

The vast majority of businesses (91%) took action to respond to their problems, but mostly by either handling it themselves or seeking help from family and friends. Of the minority who sought formal advice, a third went to solicitors, 21% to accountants, and 9% to trade bodies or professional associations and 6% to barristers. Overall this translated into solicitors becoming involved in just 12% of the legal problems facing small businesses.

Their help was most commonly sought for problems with intellectual property, employment and ownership structure, while some other issues – most notably tax – were simply not seen as legal in nature.

LSB chief executive Chris Kenny said: “Reliable, accessible, good-value legal services are as important to growing small businesses as bank finance. But this research shows that law firms are missing this opportunity to contribute to growth – and to grow themselves.

“There is a huge section of the business community out there whose legal needs are not being met. Meeting those legal requirements represents serious opportunities for the legal firm that can respond flexibly and innovatively to the needs of small businesses.”

Contact The Glasgow Law Practice: Lawyers for Small Businesses

*The Glasgow Law Practice acts for small businesses in around the Glasgow area, and offers a free, no-obligation appointment for new clients. Contact