Talk to a lawyer: the ROI of legal advice
What do legal and regulatory issues cost your business each year? And - perhaps more worryingly - what is the cost of those commercial and contractual disputes that could have a legal resolution, but which instead go unresolved?
Nationally, according to a YouGov survey and analysis by the Centre for Economics and Business Research, these costs could total an impressive £13.6 billion a year.
The typical small business, it transpires, encounters legal issues with a commercial impact roughly eight times a year. These range from regulatory matters and tax issues, to problems with employees and software providers, and disputes with customers, suppliers, and contractors.
Sometimes, these issues are resolved with the help of lawyers. But often, businesses elect to live with the pain, rather than seek a legal resolution.
A costly reluctance
Why are businesses so reluctant to engage legal help? Even when—paradoxically—the survey found that they often recognize that the early involvement of lawyers can reduce overall losses?
The answer seems to boil down to businesses’ attitude to law firms.
82% of respondents thought that legal documentation wasn’t easy to understand, just 11% thought that legal fees were good value for money, and only 30% found law firms to be responsive to their needs.
Even so, almost two-thirds of respondents had no idea how much they had spent on lawyers in the previous year. But of those that did know, over half reported spending under a thousand pounds a year.
And yet, over 40% of the legal issues that these businesses were on average experiencing resulted in losses of £5,000 or more.
Put another way—as the survey acknowledges—businesses ought to regard expenditure on lawyers as an investment, not a cost.
Analysis by the Centre for Economics and Business Research quantifies the return on this investment, as for every additional 10% of expenditure on lawyers the relative risk of commercial legal issues was reduced by 90%.
Put another way still—as the survey also acknowledges—there’s a good case to be made for regarding legal expenditure as an insurance.
And what’s more, as a more effective insurance than expenditure on such things as insurance against fire and theft. Because while just 9% of small businesses make an insurance claim in any year, such businesses—as we have seen—typically experience eight legal issues a year.
What might make these businesses more likely to pick up the phone and talk to a lawyer?
Again, the survey makes this explicit.
Lawyers who took a more commercial approach, for instance. Lawyers willing to take a more bespoke approach to businesses’ needs. A greater ease of communicating with lawyers. A greater sense of value for money. And faster service.
In each case, over three-quarters of respondents expressed such views.
Expertise on tap
Here at The Legal Director, that’s how we already work.
Put another way, it's like having your own in-house corporate lawyer, available whenever you needed them. Already budgeted for, already factored into the cost of doing business. Always on-hand and available for whatever legal challenges come along. And always striving to provide clear-cut, actionable advice, delivered in business-friendly language.
Either on a project basis, or on a fixed-fee retainer, we agree a scope of work and a fixed price with our clients. There are no hidden surprises, and clients know in advance what the cost will be.
And our name provides a strong clue as to the nature of the relationship that we aim to build with you. Quite simply, we strive to become part of the management team—an on-site, on-tap legal director, working with you for as many days a year as you require.
To find out more, get in touch.
Posted Friday, June 22nd, 2018 by Warren RylandTweet
Other Articles In This Category
- Planning an Exit Strategy to sell your business?
The Legal Director is proud to be co-sponsor of the latest Informed Funding workshop on Wed 4 July, where you'll be able to discuss with experts and other... read more
5th of June 2018 by Warren Ryland
- Is your business facilitating tax evasion?
Is your business facilitating tax evasion? Put like that, most of us would automatically answer ‘no’. But let’s re-phrase the question. Does your... read more
8th of May 2018 by Warren Ryland
- IR35 and the private sector: are changes on the way?
As the government considers extending to the private sector its public sector reforms of the rules relating to the engagement of contractors through so-called... read more
22nd of March 2018 by Warren Ryland
- GDPR: 3 practical questions facing businesses like yours
In just a few months—on May 25th—compliance with the General Data Protection Regulation (GDPR) becomes mandatory. The biggest change to data protection... read more
1st of March 2018 by Warren Ryland
- I'd like to work from home, says an employee. Now what?
Conversations about employees working from home were once very short. In those rare instances where employees did venture to enquire about the possibility, the... read more
8th of January 2018 by Warren Ryland
- Is a domain squatter set to steal your brand?
It’s fair to say that many businesses are unprepared for the new .uk Internet domain - which is unfortunate, as from June 2019, they could find that their... read more
5th of December 2017 by Warren Ryland
- Did you negotiate your last loan agreement - or just sign on the dotted line?
For businesses wanting to grow or invest, external finance can be an attractive option: access to the funds that they need, without equity dilution or... read more
2nd of November 2017 by Warren Ryland
- Protecting the value of your newly-acquired businesses can be a challenge
Buying a business is exhilarating. Hard work, to be sure - but undeniably exciting, and with a rich sense of the opportunities that lie ahead. So perhaps... read more
2nd of October 2017 by Warren Ryland
- GDPR. The clock is ticking: a tough new take on data protection is fast approaching
With effect from 25 May 2018—in other words, less than a year away—your business is exposed to a new regulatory regime backed by hefty fines. And by... read more
6th of September 2017 by Warren Ryland
- Persons of Significant Control: important changes to reporting requirements
It’s barely a year since the introduction of the PSC regime - and already, the compliance requirement has been tightened. And at a time when many businesses... read more
23rd of June 2017 by Warren Ryland
- Avoiding conflict when forming a business: probing questions for potential partners
Every year, several hundred thousand new businesses are created. In 2015, according to the Office for National Statistics, the total was 383,000—the highest... read more
28th of April 2017 by Warren Ryland
- Is your business at risk from the Uber decision? Why your self-employed contractors could really be employees
Fuelled by companies such as ride-hailing business Uber and personal courier firm Deliveroo, the so-called ‘gig economy’ is on the rise. So much so,... read more
12th of January 2017 by Warren Ryland
- The Legal Director - Commended for Innovation in the FT Innovative European Lawyers awards
Law firm The Legal Director (TLD) has been commended in the FT Innovative European Lawyers awards, which were announced at the beginning of this month. TLD ranked... read more
28th of October 2016 by Warren Ryland
- Debt versus Equity - Financing for SMEs
The need for additional finance is often the price of success for small to medium-sized enterprises (SMEs) that are looking to grow. The question that faces the... read more
14th of October 2016 by Warren Ryland
- The deceptive complexity of the Modern Slavery Act
At the end of July, Prime Minister Theresa May launched a cabinet-level government taskforce to eradicate modern slavery in the UK. It was, she said, “one of... read more
31st of August 2016 by Warren Ryland
- How our clients will benefit from the Bar Council's escrow account
Outside the narrow realms of consumer technology, there’s often an inevitable trade-off between cost and quality. In other words, you can have something at... read more
7th of July 2016 by Warren Ryland
- As the net starts to close, the Bribery Act prosecutions begin
As we have written before, the Bribery Act 2010 is a law with undoubted teeth. Fines are potentially unlimited, and custodial sentences can be up to ten... read more
1st of May 2016 by Warren Ryland
- New rules on shareholder identification are now in force
New rules on shareholder identification are now in force - and yet many businesses aren’t aware of them. Does your business have corporate or nominee... read more
12th of April 2016 by Warren Ryland
- First SRA-regulated law firm signs up to Bar Council's escrow account
PRESS RELEASE: The Legal Director has become the first law firm regulated by the Solicitors Regulation Authority (SRA) to sign up to the Bar Council’s... read more
31st of March 2016 by Warren Ryland
- Trade marks: the 3 biggest mistakes to avoid
Wander around a supermarket, or browse the advertisements in newspapers and magazines, and you’ll see trade marks everywhere. And it’s likely, too, that... read more
29th of February 2016 by Warren Ryland
- Avoiding flexible working's hidden pitfalls
You don’t have to look too far to see that traditional modes of employment are increasingly giving way to more flexible working arrangements. Returnee... read more
9th of November 2015 by Warren Ryland
- Are you paying your workers the right amount of holiday pay?
A recent ruling by an Employment Appeal Tribunal is set to cause many businesses a headache. Quite an expensive headache, at that. Simply put, it means that... read more
15th of July 2015 by Warren Ryland
- The Bribery Act 2010: are you running a risk of breaking the law?
To see the difficulties that businesses can get into through bribery - or even allegations of bribery - look no further than the reputational damage suffered... read more
11th of June 2015 by Warren Ryland
- It's official: "Lawyers are not cost-effective"
Imagine, for a moment, that when faced with a serious illness, significant numbers of people took no action. And of those who did take action, around... read more
20th of January 2015 by Warren Ryland
- Could a Shareholder Agreement save your business?
Here at The Legal Director, we’ve recently come across a business where the two co-founders have fallen out -- one is now leaving, in order to set up on his... read more
1st of December 2014 by Warren Ryland
- The high-fee culture that's hobbling British business
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at... read more
11th of November 2014 by Warren Ryland
- Is crowdfunding the answer to your business's financing challenge?
As the credit crunch and ensuing recession of 2008 began to bite, lending to businesses dried up. To their shock, even long-established, profitable businesses... read more
2nd of September 2014 by Warren Ryland
- Complying with the Data Protection Act: 3 business bear-traps awaiting the unwary
Visit the website of the Information Commissioner’s Office, and there’s an interesting section entitled ‘Enforcement’. In it, the... read more
1st of September 2014 by Warren Ryland
- What might a Legal Audit reveal about your business?
When we start working with a business we assess their existing legal arrangements to determine how these can be improved and aligned with commercial objectives. We... read more
9th of July 2014 by Warren Ryland