Small business legal needs

Small businesses are vital, economically and socially. Over 90% of the estimated 5.46 million businesses in England and Wales are small businesses with fewer than 50 employees. Collectively they employ an estimated 12 million people and have a £1.5 billion turnover. They provide us with the products and services we need and are part of the fabric of our communities.

Yet they rarely have the in-house legal capacity to deal with the legal issues they face.

We have run a dedicated survey since 2010 to understand the legal needs of small businesses and how they deal with them. Between July and September 2021, we ran the fourth wave of the Small Business Legal Needs survey. Following a review of the survey questionnaire, by leading international experts on researching access to justice Prof. Pascoe Pleasence and Assoc. Prof. Catrina Denvir, the survey now estimates levels of met and unmet needs of small businesses (following OECD guidance on legal needs surveys) and levels of legal capability. The survey now also measures the impact on small businesses’ legal needs of the UK leaving the EU and the Covid-19 pandemic.

The headlines from the survey are:

  • A third (32%) of small businesses had at least one legal issue in the 12 months prior to the survey:
    • This is not significantly different from in 2017
    • Trading related issues were most common
  • Over a quarter (28%) lost income due to their legal issue, and one in ten (10%) lost a customer or contract
  • Nearly a quarter (23%) said that exiting the EU had an impact on their legal issue and, 41% said that the pandemic had an impact on their legal issue, over a third told us that it had caused their issue:
    • However, as the overall incidence of legal issues is not significantly higher than in 2017, it is also possible that these have prevented other legal issues from occurring
  • Only a quarter (25%) of small businesses with a legal issue used professional help:
    • Those who used professional help were more likely to think the process to resolve their issue was fair than those who did it on their own:
    • Only 28% of those who got professional help shopped around
    • Accountants were the most common source of professional help (22%), followed by solicitors (16%)
  • Small businesses with more staff were more likely to have higher legal capability scores, were more likely to get professional help and were more likely to think that the process to resolve their issue was fair and that the outcome was in their favour
  • Of those with a legal issue, an estimated 12% with an unmet legal need and only 3% had a met legal need

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