His report revealed that the number of startups increased very quickly since 2008 from 4.26 million to 4.8 million.
In a recession, it’s often smaller, boutique businesses that come to the fore. But although a staggering number of SMEs and startups flourish in a recession, a study in 2012 by Bis.gov showed that 20 per cent of them fail within the first year.
There are many reasons why SMEs fail or encounter difficulties in their infancy. In our experience, a stumbling block for many a startup is incurring legal expenses they hadn’t accounted for. In our business, we find that small businesses and startups tend to avoid engaging the services of a lawyer altogether because they perceive the law to be stressful, complicated and costly.
A recent government report found that 25,000 SMEs failed to get funding from traditional lenders – venture capitalists and banks. In fact, The Law Society has stated that 40 per cent of SMEs in anyone year face a serious legal problem because they have not sought legal advice, or have poorly drafted and misunderstood contracts.
And business advice for SMEs has often been found wanting. This is because the institutions that should be supporting an entrepreneurial market have become institutionalised. It is also ironic that the future of our economy, jobs our future prosperity, comes through startups and SMEs.
My company was established with the aim to help aspiring entrepreneurs and SMEs the means by which they can move forward and contribute meaningfully to the overall UK economy. We aim to do this by democratising the law and making it more readily available to everyone, not just those with large bank balances.
By creating access to not only the law, but good legal services, good commercial law and good commercial legal advice, in plain English, LawBite is helping create the necessary conditions for the UK economy to begin to become resilient and to thrive. After all, it is through SMEs that new growth, jobs and inward investment are created.
How can the law be democratised and made more simple?
1. By keeping small firms safe and sound at a price they can afford
2. Embracing the ethos the law is for everybody, not just those who can afford high prices.
3. Making legal documents more easy to understand and in plain English.
Instead of leaving business owners to chance it on their own, or making them spend large amounts of money law firms ought to be actively winning over their SME customers.
We’re by no means saying all lawyers are bad, or the legal profession is not professional – the truth is that many great lawyers provide excellent value. And for bigger companies the high-cost, highly detailed advice can be valuable.
But there’s a strong gap in the market for the democratisation of the law. In other words, making readily available the legal advice that small businesses need to survive in a language they can understand.
Alan Moore is head of strategic marketing of the online legal service, LawBite
