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 Thursday, June 21st, 2018 by Warren RylandTweet
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