How your law firm can crack the SME market

December 09, 2019

New research reveals SME perceptions of legal services. Document highlights areas firms should address to attract more clients.

You may know that the UK has about 5.4m private sector businesses and that most (99.9 per cent) of them are small and medium-size enterprises (SMEs). They sustain about 60 per cent of all private sector jobs and their combined annual turnover is £1.8 trillion – almost half of UK private sector turnover (source: the Federation of Small Businesses).

Yet, as a larger organisation, how much do you really know about the wants, needs and challenges of UK SMEs? If you heard what many UK SMEs have to say about the services they receive from law firms – you might not like what you hear.

Mixed response

SMEs undoubtedly make an enormous contribution to UK plc, yet a survey published in October by the Legal Services Board (LSB) found that attitudes among small and medium sized businesses to legal service providers were “mixed”.

  • Only 13 per cent “viewed lawyers as cost effective”, showing “little improvement” since the LSB’s 2013 survey.
  • Almost half of respondents “use legal service providers as a last resort to solve business problems”, with just 12 per cent disagreeing with this summary.

The LSB found that engagement with legal service providers by the UK’s small firms was limited. Most respondents had little contact with legal advisers, with “use of solicitors in the previous 12 months markedly down when compared to 2013”.

And, according to the report, legal problems faced by small businesses “appear to have declined in incidence, but remain costly”. Total annual losses to SMEs as a result of “legal problems” is estimated [to be] £9.79bn reports the LSB, with one in five owners saying legal problems had caused them health problems. 

Business opportunity

LSB chairman, Sir Michael Pitt, said: “Access to good quality and affordable legal services helps small businesses to start up and grow. This research – the largest ever survey of its kind – provides further worrying evidence that their legal needs are not being satisfactorily met. These findings suggest that small business access to and use of legal services has improved little since we first looked at the issue two years ago.”

But this, he stressed, provided an opportunity for law firms. He explained: “There continues to be a huge section of the business community whose legal needs are not being catered for. This is an opening that the legal sector should be addressing.

“Legal problems can have serious negative financial and health consequences for small businesses and their owners. Many of these issues can be avoided by accessing legal help at the right time. The legal sector needs to look at what it can do to fill this advice gap.”

Value for money

Mike Cherry, FSB policy director, commented: “Unnecessary legal action is costly, time-consuming and for some businesses highly risky. It’s therefore important for small businesses to have access to appropriate and affordable legal services and advice.

“The report suggests some worrying trends around value for money. However, we know from the FSB’s own legal advice line for members that getting the right advice at the right time can save small firms money in the long run.

“Given so many small business could benefit from making more use of legal service, we hope the report will encourage service providers to explore and develop their offering to small businesses – focusing on how they can deliver real value for money.”

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