SMEs lose out as legal system set up for big business, says research

Up to 2.4m small and medium sized businesses (SMEs), start-ups and the self-employed are being let down by the legal system and could be falling into a legal gap, according to research just published.

Nesta Challenges, an independent technology innovation organisation, conducted research this spring with 183 SMEs and the self-employed which revealed 43 per cent of them think the legal system in England and Wales is set up only to suit big businesses and those with the resources to pay for it.

The research also revealed nearly 80 per cent believe it should be easier to check if a problem can be resolved through the legal system.

However, the research also revealed 45 per cent of SMEs and the self-employed said they were very willing to embrace digital services to help with legal problems, which is encouraging news given the survey took place to mark the recent launch of the Legal Access Challenge - a £250,000 technology fund run by Nesta Challenges and the Solicitors Regulation Authority (SRA).

Its aim is to encourage the development of new legal technology solutions to increase access to legal services for businesses and for individuals.

Head of Better Markets at Nesta Challenges Chris Gorst described the findings that so many small business owners feel they cannot make use of the legal system as “deeply worrying”.

He said: “England and Wales have one of the best legal systems in the world and yet we are witnessing a ‘legal gap’ between those businesses that have the wealth and knowledge of the system to access it, and those that feel they don’t.

“With 5.6 million SMEs in the UK, employing 16.3 million people, it’s vital they can get the legal advice they need, when they need it.”

So far, there have already been more than 85 expressions of interests in applying for funding through the Challenge from entrepreneurs and legal professionals to technologists, law schools and charities.

SRA chair Anna Bradley said small businesses are the lifeblood of our economy. She said: “Sound legal advice is crucial if businesses are to succeed. But it’s clear that too many small businesses struggle to access the legal support they need.

“We want the Challenge to move things on and open up legal services for small businesses as well as the public. And it’s about much more than simply offering funding to those with good ideas.

“Innovators need support and networks to get their ideas off the ground. We are creating those networks, enabling people to tap into expert support and to collaborate.”

She encouraged anyone, whether that is a trade association “with a good idea” or a tech firm looking to partner with a legal expert, to get involved.

“Having fair access to legal advice is something that everyone should benefit from”, said Gorst, “yet too many small business owners and self-employed people currently miss out.

“We look forward to playing our part in turning that around.”

The closing date for applying to the Legal Access Challenge is 11 August 2019.