On the Money
Managing Legal Fees for Small Businesses
According to analysis of an extensive YouGov poll carried out by the Centre for Economics and Business Research (CEBR), the UK’s SME’s are losing up to £13.6 BILLION every year due to failures in taking care of their legal matters. That’s a lot of money. So what’s going on?
Tiger Law has some answers.
Managing Legal Fees for Small Businesses
The CEBR reports that UK business owners display reluctance to engage legal advice and services. You don’t need to be a topflight business guru to work that one out. Qualified law professionals are expensive and almost anyone has a tale to tell of a situation where they or someone they know has had to roll over when faced with a legal dispute simply because the legal bill was going to be far too high.
And Double-Ugh when you realise how many of these disputes and their ensuing nightmare invoices could have been avoided by spending far more affordable amounts on getting the business relationships that turned sour on a clear and secure legal basis from the get-go.
Surprise, surprise! It’s the time and money!
I’m sure you will not be astonished to hear that a major part of the problem is that putting in place proper safeguards for a young or growing business, or even a new product or service in an established firm, involves expenditure of time, as well as money.
And this tends to come at a point when there isn’t any significant revenue flowing yet and you’re working ridiculous hours in any case to get the thing off the ground – it’s kind of in the nature of the entrepreneurial beast. However much investment you’ve got, it always feels as if there is something better to do with it.
At this point in your entrepreneurial journey you are probably getting on fine with everyone you work with – the relationships are relatively new and everyone is in a kind of honeymoon period – and just plain glad of the help or custom. “It won’t happen to us” you tell yourself.
So you cut corners, download a template or three and adapt them to suit your firm. What’s the worst that can happen?
Quite a lot.
There’s a hole in your fence
As commercial lawyers we are trained to identify and cover the invisible potential for problems in even the most simple of transactions or agreements. We know that it’s a rare case where there is not some pretty large hole in a stock template through which an expensive problem, quite specific to the individual business set up, will be able to make itself felt.
Perfectly sound and sensible business people do not see these threats, they have not spent years giving themselves eyesight problems poring over legal precedents long after the kids are asleep. We have. They have better things to do than follow every little bit of new legislation much less work out what is appropriate for them to do about it. That’s what we do.
The number of potential threats and commercial legal menaces increases even more when it comes to agreements that some third party is asking you to sign. Sure, they are telling you it’s all fine, just a routine agreement. It may well be, but it’s drawn up to protect them, not you.
Understandably, any non-legal person tends to be a bit bewildered by the legal-speak in contracts and statements of terms. The CEBR analysis of the YouGov survey highlighted that many business people complain that they do not understand legal jargon – yet it’s what they sign. A great deal of it is there to cover what-if scenarios – potential situations that can and do arise as is evidenced by just the kind of precedent cases we spend our time perusing. That’s why you need a lawyer’s eye.
The CEBR’s report reveals that the average SME is likely to encounter more than 8 legal issues every year and that 43% of these are likely to result in charges in excess of £5000. Each.
More than half the issues that SME’s encountered occurred in 5 key areas:
- Disputes (13.2%)
- Employees and Key Contractors (12.5%)
- Customers and Suppliers (11.4%)
- Terms and Conditions (9.2%)
- Software (9.1%)
- Others (44.6%)
The highest amounts are estimated to have been lost in the following three areas:
- Disputes (£1.7 billion)
- Employees and Contractors (£1.6 billion)
- Customers and Suppliers (£1.6 billion)
That “Out-of-Control” Feeling
One of the curious things that the report revealed was that the SME owners surveyed did in fact understand and believe that paying for properly set up legal documentation to underpin their business activities and relationships was not just a good idea, but likely to save them money. So why didn’t they do it?
Apart from economic constraints that caused them to prioritise their budget to directly grow the business, it seems they just don’t find commercial lawyers to be good value.
The perception we have often experienced is that you go to a lawyer when you are absolutely forced to, get the advice or service and then just grin and bear it when the astonishing invoice shows up. People feel that they have little control over how much they are going to end up spending.
Asking a question, such as why something is actually necessary or useful for them, is only going to add to the bill and, as they find the output of most firms rather dense with jargon, they are really not very keen to enter into the process.
A lack of control of how the process and its cost is going to roll is fertile ground for procrastination and de-prioritising.
Only 8% (yes, 8%!) thought they got good value from their legal advisor.
So where does Tiger Law stand on legal fees?
I set up my businesses InHouse Legals, Tiger Law and Tiger HR precisely in order to offer business owners something better than what they have been getting from their legal firms. Take a look at our home page – it’s right up there as soon as you arrive. Accessible, Affordable, Attentive. We mean it.
Unplanned bills in excess of £5000, not to mention the reputational and good will losses that these sort of issues involve pose significant risks to the development or even survival of most small firms.
Tiger provides you with an alternative that gives you the protection from such risks that you need to go to market without the enormous bills.
Here’s how we do it:
Tiger Law First-Timers
The first step of the process is to book a free consultation. This gives us the chance to gain a primary understanding of where you are and what you need. Together we can work out what you’ve got that’s fine and what needs putting in place.
We’ll listen to your concerns and your plans and make it our business to understand how you personally and your business tick. You can rely on us to:
Respect your budget and not try to sell you more than you need.
Explain CLEARLY why you need what we are proposing and how the cost balances against the risk or potential gains.
Provide you with a flat fee quote wherever possible. If a matter is going to involve work that will need to be charged on an hour rate, we’ll make sure you understand that clearly, quote for it and report regularly. There won’t be any horrifying surprises. You’ll always be in control.
Pull together a cost-saving package of services for you when appropriate.
For more on our views on how to plan sensibly and put in place what you actually need but at the same time keep the focus on getting on with it see my post on InHouse Legals: The Planning Pit
InHouse Legals is our sister company providing legal services to business that do not need the intervention of a qualified solicitor. InHouse is soon to be succeeded by a new company, Tiger to Go, currently in development. T2G will offer easy to understand, off the shelf packages of legal services and advice designed to achieve specific goals and get businesses to where they are going quickly and efficiently.
Tiger for growing businesses
As businesses grow they find that their routine legal requirements grow as well. A host of client, partner, supplier and staff relationships and transactions, along with licences, property leases, and intellectual property issues need setting up, monitoring and reviewing to run securely and compliantly. Treating each of these an individually billable job becomes burdensome both in terms of time and money.
However, these things usually start accumulating long before a business approaches the league where employing full-time in-house counsel is an option.
Tiger Law offers a specific, tailored solution to bridge that gap, so that you can save money on legal fees and enjoy the benefits of continuous, reliable and tailor-made legal support.
We can start with quite small packages of hours per month or you can buy a block of hours to use up as and when you need to, just keeping an eye on things and giving oversight to any documents that you are putting out, like sales contracts, or employment agreements.
Our focus is on prevention and protection. We aim to get to know you and your business as our client so that we can be proactive about watching your back. If new legislation arises that’s going to open you to risk or require you to change the way you do things, we’ll make sure you are ahead of any potential problems.
The Tiger retained service provides as much as you need or as little. It moves and grows with you and stays affordable because it really does deliver value – just like any other service to your business should.