Small Business + Legal Access: Levelling The Playing Field

Small Business + Legal Access: Levelling The Playing Field

Guest Post by Chris Gorst, Head of Better Markets, Nesta Challenges

We love an underdog in the UK. I often wonder if it’s down to our love of fair play, the belief that everyone deserves a chance and a level playing field.

Too often though things seemed to be stacked against small businesses, particularly when it comes to legal access. Larger businesses have the resources to engage legal firms, but how does a sole trader or small-business owner do this when they have neither the knowledge of their legal rights nor the money to do so?

A real-world example is of a small communications company. Having started her business from scratch, Jane[1]found success with a growing client base. As any business knows, cash flow is vital to the success of an enterprise, so what to do when a client refuses to honour payment for work delivered, threatening to leave the company out of pocket? A larger company would have had the money to seek legal recourse, but a small business whose finances had been crippled by a dishonourable client doesn’t have that luxury.

Chris Gorst, Head of Better Markets, Nesta Challenges

Fortunately, Jane had a family member who is a practising lawyer with the knowledge to help her resolve the problem and claim her payment. She subsequently took a significant amount of time to re-write her contracts and change her business structure to mitigate against a similar situation.

Businesses shouldn’t have to rely on the luck of a knowledgeable family member to solve their legal issues. Unfortunately, all too often it’s the reality that small businesses turn to friends, family or other professionals – such as their accountants – for legal advice. So what about those businesses that don’t have a practicing lawyer among those connections? It’s unsurprising then that the CMA previously found that the legal playing field for small businesses in England and Wales is not equal to that of big businesses[2].

We recently conducted research among small businesses and the self-employed in England and Wales. The results were eye-opening with two-fifths of those asked believing the legal system is only set up for big business or those who can afford it. That disparity creates a ‘legal gap’, a sense that there is an uneven playing field, an unfairness in the legal system. If fair play matters (and I would argue that it does), we should work to solve the problem.

‘It can’t be right that a large proportion of small businesses and self-employed people feel the legal system isn’t set up for them.’

One interesting point that came out of the research is where that solution might lie. Nearly half of those questioned (45%) said they would be happy to embrace digital services to help with a legal problem.

Legal tech is big business; a lot of money is being invested in tools to make the lives of lawyers more efficient. Though legal tech is making the lives of lawyers easier, the same can’t be said for individuals and SMEs who are rarely the focus of new tools.

The hard truth is that it’s the big corporate law firms – which predominantly serve large businesses – that have the pockets deep enough to afford to integrate this new legal technology into their practices.

If legal tech is having such an impact at the corporate end of the market, it follows that it has the potential to make a difference at the other end. We already see examples like Rocket Lawyer[3]and Legal Zoom[4]offering small businesses legal advice and easy document creation on a digital platform, and low-cost subscription apps like LegalDefence from Slater & Gordon where, in trials, 90% of users resolved their legal issue.

Legal tech gives us the chance to create a more level playing field.

Rocket Lawyer’s senior vice president, EMEA, Mark Edwards, explains: ‘We help small businesses and families, who would otherwise find quality legal help to be too costly, to solve legal issues by driving down the price of legal services, and they can do this conveniently, anytime and on any device.’

Since there’s a desire to embrace technology among small businesses, and examples of innovators beginning to create some effective tools, it presents us with a golden opportunity to change the legal market for the better.

Last month, in partnership with the Solicitors Regulation Authority, we launched the Legal Access Challenge. The Challenge is calling on innovators and entrepreneurs to submit ideas to use technology to solve the problem of accessibility and make the legal system more accommodating for individuals and small business owners. It’s an open competition to win a share of £250,000 to develop that idea and bring it to life so that it can make a difference for under-served people.

We don’t prescribe where the ideas are going to come from or what the idea needs to be – as long as it is using technology to improve access to the legal system for individuals and small businesses. Four winners will be given £50,000 to develop their innovation before progressing to a second stage where one will win an additional £50,000 to further invest in the product.

Doing something positive now can make a real difference to those businesses and self-employed people who feel the legal system is set up for their larger rivals. Legal technology offers up a host of opportunities to improve access, whether helping someone identify if they have a legal problem or maybe delivering routine legal services in a more affordable way.

Fairness matters particularly when it comes to legal access. Jane resolved her legal issue thanks to a stroke of luck not because of fair legal access; it can’t be right that a large proportion of small businesses and self-employed people feel the legal system isn’t set up for them.

Legal tech gives us the chance to create a more level playing field, but only if we develop it for those under-served people in the first place.


[1] Name changed to protect the business owner’s identity