Many Small Businesses Don’t Seek Legal Help Despite Risks

Owners can't make critical decisions without advice from an attorney

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A new nationwide study released today by LegalShield shows a majority of America’s smallest businesses – those with 250 employees or less – go at it alone when it comes to dealing with legal issues that impact their business.

From debt collection, to contract disputes, to regulatory interpretations and employee issues, small business owners increasingly make critical decisions that could affect the success of their business without the benefit of advice or counsel from an attorney.

The Legal Needs of Small Business Survey shows that more than 13 million small businesses – nearly 60 percent of all small businesses – experienced significant legal events in the past two years. However, a majority of those businesses (54 percent) did not seek the services of an attorney to help them deal with those issues. When asked why they did not hire an attorney, 57 percent reported they believed they could handle legal issues better on their own, while 40 percent said they did not use an attorney because of cost concerns.

The reluctance to use an attorney comes despite the fact that nearly all respondents listed at least one legal issue – debt collection, insurance disputes, government regulations, tax issues, contract concerns, intellectual property protection, product liability and threats of lawsuits by customers and employees – as one of the “greatest threats to their business.”

Legal expenses for small businesses can be significant. Owners reported spending an average of $7,600 in legal expenses per year with 20 percent saying they spend $10,000 or more per year for legal help.

“Our study clearly points to a dangerous cost-benefit issue in the marketplace,” said LegalShield CEO Rip Mason. “A frightening number of small business owners deal with legal issues on their own because they don’t believe hiring an attorney is worth the significant cost they have to pay.”

Services such as the ones provided by LegalShield can be an affordable solution for a small business. For a fraction of what a small business would pay an attorney to handle a single issue, owners can have access to their own dedicated law firm for advice and counsel. With LegalShield Small Business plans, owners pay between $75 and $125 per month, depending on their number of employees, to have year-round access to a range of legal services they need to protect their businesses. LegalShield attorneys also provide consultation on such issues as incorporation, intellectual property protection, employment issues and vendor problems.

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