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Why many small businesses don’t seek legal advice from law firms
May 24, 2013
Almost 90% of small businesses in England and Wales don’t contact law firms for advice when faced with legal problems. That’s the damning conclusion of a report called In need of Advice?, which has just been published by The Legal Services Board.
The report is based on an online YouGov survey of 9,703 small businesses, which took place in December last year, that suggests that 38% of small firms face many legal problems that impact on their day-to-day operations and growth, but only 12% of those legal problems led small firms to seek professional legal advice from solicitors, with 52% of respondents opting for a ‘DIY approach’.
Small businesses’ legal problems were mainly caused by disputes with other businesses (48%), individuals (18%), Government (17%) and employees (10%).
While more than half (54%) of respondents agreed that legal processes are “essential for businesses to enforce their rights”, only “13% agreed that lawyers provide a cost-effective means to resolve legal issues”.
Whether most small firms are well placed to provide their own reliable legal counsel is another question, of course. Only 5% of respondents had “an in-house legal expert”; while 8% had legal retainer contracts; and only 2% of small firms had both.
“Reliable, accessible, good-value legal services are as important to growing small businesses as bank finance,” says Chris Kenny, chief executive of The Legal Services Board. “But this research shows that law firms are missing this opportunity to contribute to growth – and to grow themselves.
“So the findings serve as a wake-up call. It isn’t meant to criticise. It’s intended to highlight the gaps that exist and the opportunity that presents. There is a huge section of the business community whose legal needs are not being met. Meeting those legal requirements represents serious opportunities for legal firms that can respond flexibly and innovatively to the needs of small businesses.”
According to Kenny, this research reveals what small firms’ key legal needs are. “It [shows] what small businesses want and the forms in which they need it. Legal advice shouldn’t just be seen as the last port of call – one that is only turned to if absolutely necessary.
“Law firms need to reflect on both the nature of the services they offer and how they explain and communicate them, so perceptions are challenged. The findings of this report help to point the way. If legal firms act on it, the benefits to all concerned could be huge.”
According to the most up-to-date figures available from the Department for Business, Innovation & Skills:
- There were more than 4.8m private sector businesses in the UK at the start of 2012, the highest estimate since 2000.
- They employed an estimated 23.9m people, and had an estimated combined annual turnover of £3,100bn.
- The majority (62.7%) of private sector businesses were sole proprietorships, 28% were companies (ie incorporated) and 9.3% were partnerships.
- At the start of 2012, SMEs (small and medium-sized enterprises) accounted for 99.9% of all private sector businesses.
- SMEs also accounted for 59.1% of private sector jobs and 48.8% of private sector turnover at the start of 2012.
Top tips for tracing business debtors
August 31, 2011
In business, companies provide products or services to customers and if all goes well, you have little cause to actively chase for payments.
Unfortunately, you may face a situation where a debtor simply seems to vanish.
Prevention is better than cure
There are a number of things you can do to reduce the likelihood of a client going astray.
- Collect detailed information about your client at the start of your working relationship. Make sure you have the company’s full address, phone number and a named contact – you may also need the details of accounts department information for payments.
- Run a company credit check.This will tell you if the company has a good payment relationship with other suppliers. You can run a credit check using specialist software such as RiskDisk or via online services like those offered by First Report.
- Keep track of your customers. Regular contact with clients – particularly those who have outstanding debts – will mean you quickly become aware if something is not right or if they have suddenly relocated.
If a debtor disappears
If your protective mechanisms fail and a debtor vanishes, there are still things you can do to trace them:
- Run a credit check again. This may reveal a more recent trading address than you have on your records.
- Check with Companies House. You can run an online search to view the current registered address of any active company.
- Send a reminder by recorded delivery. If you are receiving no response, or letters are being returned by Royal Mail marked “No longer at this address”, it doesn’t mean the company isn’t there. Send a letter that requires a signature will give you an idea if they’re simply hiding.
- Contact the local Royal Mail sorting office. If the company has indeed moved on, Royal Mail may have a forwarding address for the company.
- Contact other suppliers or clients. Have a look on the company’s website or marketing material and see if you can identify any other suppliers or clients who may hold a forwarding address.
- If all else fails, seek help. If your chase leads you nowhere, you may wish to seek professional advice from debt collectors. They track and trace companies and individuals on a daily basis using a variety of methods, and could help you re-establish contact and recoup the payment you are owed.
Anita Brook is MD of Debts Assist, a credit control and debt recovery firm, which helps businesses improve cash flow while keeping business relationships intact.
Coming in August: great IT advice for businesses
May 25, 2010
I’m pleased to report that the wraps are off: The IT Donut, a new website for small businesses, will be launching the week of 23 August.
The IT Donut will be the fourth in a family of websites. You might already have seen the Marketing, Law and Start-Up Donuts. Its aim will be to demystify every aspect of business technology.
Expect heaps of advice about choosing, using and generally not getting totally frustrated with IT in your business.
I’ve taken on the role of editor (the next few months are looking to be very busy), but thankfully there’s a whole team of great people from BHP Information Solutions working hard on the site too. And because you can’t substitute for first-hand knowledge and experience, we’re on the hunt for experts who know all about IT at the sharp end of business.
You see, when businesses use IT, there’s an ideal world, and there’s what actually happens. The two often differ quite considerably.
The IT Donut isn’t going to live in the plain sailing, smooth running and largely theoretical ideal world. It will acknowledge the situations and challenges businesses face every day with their IT.
Although the team behind the website is packed with experience (I’ve been writing about small businesses and IT for years now), we need people who’ve been there and done it to help us cover every area. These IT experts are the people who’ll really bring the site to life.
So if you know a bit about IT in business, I want to hear from you. You might be an expert in web hosting, networking or accounting software. Or you might be a business that’s experimented with cloud computing, open source software – or gained some other knowledge that you’d like to share.
Whatever your expertise, give me a shout. It’s your chance to be involved in one of the most exciting projects I’ve ever worked on – and to get some great PR while you’re at it.
John McGarvey is the editor of the forthcoming IT Donut and is happy to discuss ideas and opportunities with you.
Will you foot #debill?
May 20, 2010
There was a big fuss about the Digital Economy Bill when it was rushed through Parliament in a two-hour session last month. But now that it’s been enacted, what will its implications for business be? asks David Impey.
It’s becoming clearer which businesses could be affected, what the main risks are and how you can reduce them, so let’s try to put this new law into perspective.
Crucially, the act — or #debill as it’s still referred to in generally hostile online comment — gives the government power to protect copyright owners against online breaches of their copyright.
For example, if it can be shown that a website has been or is likely to be used “for or in connection with an activity that infringes copyright”, then under the new act the government can get a court order telling the ISP (internet service provider) hosting the website to block access to it.
What’s covered by copyright? Words, images, podcasts, videos, music, tables, databases, diagrams, photographs — the list goes on and on and on…
You don’t even have to publish copyright material to your website to potentially fall foul of #debill. If you — or anyone using your computer or network — can be shown to have repeatedly infringed copyright (for example, by downloading copyright-protected music or videos), then your ISP may be required to suspend your Internet connection.
What risks does the Digital Economy Act present?
“That certainly sounds scary,” you might say, “but it doesn’t affect me.” Well, you may know that you never breach copyright online, and you may think you know that no-one else on your website or Internet connection is doing so. So where’s the risk? Well, here are three possibilities.
First, just how sure are you that no-one else is breaching copyright? If you share your web connection with another business or even with partners or colleagues, there’s a risk. If you work from home and your kids also use your computer, there’s a risk.
Second, if your business provides an Internet connection for your customers to use (such as a free wi-fi network), you’re the one who could end up in trouble if the connection is used to infringe someone else’s copyright, even if you knew nothing about it.
Third, if you allow user-generated content on your site, you need to consider the chances of copyright material belonging to someone else being posted on your site by someone else.
Safeguards for small businesses
Now, to be fair to the act it’s not the case at all that every business that finds itself in a scenario like the three above would see their website or Internet connection blocked under the new law.
For one thing, it’s not clear yet how widely the new law will be interpreted. And in any event there are safeguards in place. For example, before suspending a subscriber’s Internet connection, their ISP would be required to notify the subscriber about the infringement that has taken place and tell them what they can do to stop it continuing.
So in practice, the Digital Economy Act, as it’s now called, may not be a pressing issue for a large majority of UK businesses. But in sectors with a core online focus, it will have made the regulatory environment more uncertain than it was a month ago. And that’s not just bad for businesses that are already operating — just as important is the potential disincentive effect it might have on innovative start-ups.
More on IT law and intellectual property
Online customer confidence
April 07, 2010
UK shoppers spent £38 billion over the Internet last year, almost 10 per cent of their total retail spend for the year. That’s double the European average, according to a recent report by the Centre for Retail Research.
But if you think that suggests the nation’s consumers are a savvy, confident bunch you might be wrong. Earlier in March, a government survey also revealed that:
- 77 per cent of customers aren’t aware of the differences between their online and high-street rights
- 60 per cent are less likely to return goods bought online than goods purchased on the high street.
What are we to make of these findings? First, let’s clear up the key difference between distance-selling and bricks-and-mortar customer rights – the cooling-off period – because it’s one that vexes retailers as well as customers. Then we can look at how businesses should deal with customer confusion – and the benefits that can bring to sales.
Clearing up the cooling-off provision
When a customer buys online, they get a seven working-day window during which they can cancel the contract for any reason, including just changing their mind. Broadly speaking, this cooling-off period starts on the day the customer receives their goods, or, for services, the day the contract is concluded.
The rules aren’t quite that simple, though. Various admin details and types of goods can affect, or end, the customer’s rights to a full cancellation and refund. For example:
- a customer wishing to cancel must tell you so in writing (fax or email count) – a phone call isn’t enough
- you must give customers certain written information about their online contract – any delays can extend their cooling-off period by up to three months
- various goods don’t qualify – these include items you’ve personalised for a customer, perishable goods (eg food) and audio-visual products that have been opened
- if the customer agrees that performance of a service should begin before the end of the cooling-off period that would normally apply, then the right to cancel ends when the service starts.
Building trust out of confusion
Many retailers’ response to customers’ lack of knowledge about their cooling-off rights will be something along the lines of “Thank God for small mercies”.
It’s tough times out there and if customers aren’t cancelling orders, then so much the better. At the end of the day, online retailers are required to comply with distance-selling rules, not to provide educational bulletins for customers on them.
True enough. But there’s a bigger picture here.
Surveys show that customers are still wary about shopping online. Trust remains at a premium. So there’s competitive advantage to be found by businesses that outperform their peers at generating it.
Being upfront and accommodating about your rules and procedures about cancellations are an important part of building online trust. Customers want to know you’re not going to suck them into a black hole of non-existent customer service if it turns out they change their mind about a purchase.
Look at Amazon, the self-styled “world’s most customer-centric company”. They bend over backwards to inform customers of their rights and to make cancellation as easy as possible. In doing so, they’ve achieved something close to profit alchemy – turning customers’ lack of knowledge into a way of generating the trust that online businesses crave.
Not for Amazon the dubious benefit of having confused customers hang on to a few items that might otherwise have been returned as cancellations. Instead, they’ve bet on trust and are selling products by the shedload that might otherwise never have been ordered.
Social networking: a blessing or a curse?
September 16, 2009
Many employers realise that Internet usage is important in the work place. I use the Internet every day to carry out my work, often jumping from Twitter to Ecademy to Facebook. These sites can be a double-edged sword for companies though. While they can be effective for business, they are also open to abuse by employees wasting company time by accessing them throughout the day for non-work activities. There can also be legal risks to allowing employees access to social networking platforms. Employees representing a company may post discriminatory or offensive material that may reflect the business in a bad light or lead to a claim. This has been the case with Currys and PC World, who may face legal ramifications after staff posted abuse at their customers via social networking site Facebook. Some organisations such as Portsmouth City Council, have taken action by banning their employees from using social networks. The council previously allowed their 4,500 employees to access Facebook during lunch breaks and non-work hours. Small firms in particular are faced with some difficult questions:
- How can they keep track of internet use by their employees?
- Should they restrict their employee’s use of social media sites even though they can add so much to the business when used effectively?
- Should they allow employees to use the internet at work for personal use?
These are tough questions for a business to answer, but what a firm should do in any instance is ensure they have a clear IT policy in place. This will help you review how online social networking is used in your business and where the main issues (legal or otherwise) may arise. An effective policy will help you to manage risks without missing out on the opportunities social networking can present.
You should see the email I got from Fred…
August 28, 2009
Have you ever sent a non-work email using your business email address? It’s a safe bet that the vast majority of employees up and down the country have, and it’s a source of potential problems that small businesses need to be aware of.
Defining email ‘misuse’ isn’t easy, but it’s something every business needs to think about and communicate clearly to employees. Small businesses in particular can find it difficult to monitor employee email activity, and having a clear set of guidelines in place is a good way of preventing problems from arising in the first place. What should go in your email guidelines? There’s a link at the end of this page to a great set of pointers from the Law Donut, but one thing I’d stress here is that a little common sense can go a long way.
Not all non-work emailing creates the same risks for your business. Some things you need to be very clear about prohibiting – such as emails containing racist, sexist or otherwise offensive material or links. They can cause you serious problems, from reputational damage to potential employment tribunal cases. But what about ‘standard’ non-work emails that an employee sends to friends or colleagues? Here there’s a strong case for taking a much more flexible or tolerant approach. Banning all personal emails probably isn’t feasible or desirable. Employees aren’t robots, so it’s inevitable that personal emails will be sent from time to time. It’s a question of degree – as long as an employee is completing their work satisfactorily for you (and not preventing anyone else from doing the same), does it really matter to you whether they send three personal emails per week or 33 per day?
- Go to the Law Donut: An email policy for your employees.
New Code of Practice on privacy notices
July 20, 2009
Businesses will welcome new guidance from the Information Commissioner’s Office (ICO) on producing user-friendly privacy notices that comply with the law. Privacy notices set out how the information your organisation collects about someone – for example, because they complete a paper or online form - will be used.
Following a public consultation earlier this year, in the light of consumer research showing that half of consumers do not understand what they are signing up to when they fill in online and paper forms, the ICO has published a new Code of Practice that will help organisations provide more user-friendly privacy and marketing notices.
The guidance reminds businesses that personal information is required by law to be processed fairly, and a privacy notice should state:
- the identity of the organisation in control of the processing;
- the purpose or purposes for which the information will be processed; and
- any further information necessary, in the specific circumstances, to enable the processing in respect of the individual to be fair.
In addition, the ICO has produced a checklist to help small businesses decide if they need to provide a privacy notice to their customers (eg where customers do not already know who they are or what they will do with personal information, including disclosing it to a third party).
- Download the Code of Practice and small business checklist from the ICO website
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