Whether a business is just starting out, or already established, legal advice will be required at some stage. But with the running of a business already an expensive task, the cost of accessing quality legal advice can be a huge financial burden.
As a result, many SMEs are often afraid to seek the help of a professional lawyer. With the Legal Services Board’s latest research finding that half of small businesses only use legal advisors as a last resort due to the fees involved. Stephen Attree, managing partner at MLP Law, looks at the importance of using quality services and how businesses can access legal advice on a budget.
During the lifecycle of a business, legal issues will arise – perhaps there has been a breach of contract by a client, or a disgruntled employee is claiming unfair dismissal. When it comes to addressing legal matters such as this, there is a general fear amongst small businesses about the fees involved to bring in expert advice.
This fear can force some to adopt DIY methods to try and solve their legal situations, rather than opting to bring in a professional. However, this is a risky route to take and more often than not will actually cause the problem to escalate, sometimes even costing more to solve than if a lawyer was appointed at the start.
The growth of the unregulated market
In some cases, businesses may recognise the need to source legal advice when an issue occurs. But when funds are restrictive, this needs to be at a cost that suits them and won’t break the bank. As a result, companies are finding and accessing services in new ways and there is a now a growing unregulated market.
New types of organisations are popping up which are providing a range of professional business services, including HR, accountancy and legal advice, often at a lower price than most registered law firms. These companies are unregulated and can only provide what’s known as ‘non-reserved activities’. This includes will writing, most employment law and providing general legal advice.
The dangers of using unregulated services
The problem with using such organisations lies in the fact that these non-lawyer companies can operate without any formal training or qualifications. So there is no guarantee that the services they are providing are of great quality or are actually accurate.
For example, when these companies are providing legal advice, it is often copied from a stock template that doesn’t necessarily bear any relation to the paying client. Worse still, this information may not be up-to-date, particularly when it comes to areas such as distance selling, consumer regulations and e-commerce, which are all regularly updated and amended.
Quality assurance can only be guaranteed by a professional law firm. These firms are subject to formal regulations set by one of the eight legal regulators – depending on the area of law the firm operates in – and can provide key services known as ‘reserved legal activities’. These activities include exercising the right to appear before a court, administering oaths, conducting litigation and preparing certain documents relating to conveyancing. These services can’t be provided by non-lawyer companies, so if a business needs to take a client to court over an unpaid invoice or is looking to sell its commercial premises, it will need to bring in a specialist lawyer with experience in that specific area.
Spreading the cost of quality legal advice
Accessing quality and affordable legal services is vital in order for small businesses to grow, and getting the right advice at the right time can save firms money in the long run. The key is to have a constant form of protection in place so that if problems do arise unexpectedly, they can be dealt with quickly and efficiently.
This doesn’t have to be expensive – a number of law firms now offer their services on a retainer basis. Businesses can pay a set fee each month instead of having to pay large costs upfront, and will receive support on a continuous basis. Tailored to the company’s specific needs, they will be given a set number of hours to use each month on services such as employment law, HR, dispute resolution, commercial property and general business law.
Retainer packages help to spread the cost of legal services so that businesses aren’t having to source huge fees all at once. It also gives them peace of mind that they will be fully protected in the event of a legal issue occurring. It’s often said that prevention is better than the cure, so by having measures in place early on, it’s less likely that problems will be as financially damaging.
Businesses should not feel limited to the quality of legal advice they can access because of the fear of incurring large fees. Being forced to take shortcuts can end up creating a bigger, more expensive problem so it’s important that companies know what options are available to them. Freeing up businesses to do business benefits everyone and the cost of legal fees should not be a hindrance.
For more information, please visit www.mlplaw.co.uk