One of the challenges facing small and medium-sized enterprises (SMEs) is accessing quality legal advice at the right time and at the right price. Traditionally, the ‘hourly rates’ model has effectively placed lawyers and SMEs in conflict; lawyers have wanted clients that can afford to pay hourly rates for bespoke work, whereas sometimes SMEs have limited access to the funds required to pay for legal services.
The result has been that SMEs typically fail to gain access to legal advice until a dispute arises that costs more to cure than it would have cost to prevent. While engagement occurs, clients too often feel their interests are not aligned with those of their lawyers.
The challenge for law firms looking to make their services cost-effective for SMEs is to drive down the cost of legal services to attract SME clients at an early stage of their development.
How do modern law firms look to address this challenge? One of the answers is to use smart technologies and IT to drive down cost. Firms that achieve this can open up the legal marketplace to a vast group of smaller businesses.
Document generation and workflows
As discussed in last month’s column, there is a legal obligation to provide an employee with a statement of employment particulars within two months of their employment starting. Small employers will often not deal with this until a dispute emerges. When you’re running a young and growing business, spending money on contracts drafted up by lawyers is understandably quite a way down the list of priorities.
Employment contracts do eventually become relevant. When a dispute arises over an element of pay or an employee seeks to take the SME’s confidential business ideas and staff in order to set up in competition, they are often critical to the outcome. By which time, of course, it may be too late.
Here are easy ways of getting around the expense of bespoke contracts. New technologies can provide access to legal documents in a simple and low-cost form. Progressive law firms provide access to document generation systems that allow the creation of employment contracts and a wide range of employee policies that are tailored to the specific needs of SMEs.
For SMEs, this low-cost approach allows them both to develop a working relationship with a lawyer and protect themselves without having to incur hefty legal bills for essential but simple tasks.
Similarly, when a claim against a small employer arises (which is fairly inevitable for any business), it does not have to cost a fortune to defend it. The development of sophisticated workflows and electronic case management systems allow lawyers to service clients’ needs efficiently, which will ultimately reduce legal bills.
There’s no reason why lawyers and SMEs shouldn’t be able to align their interests. Law firms that adopt a progressive low-cost approach can provide SMEs with a high-quality service that doesn’t break the bank.
One of the emerging trends is for lawyers and other HR practitioners to share legal knowledge on social media platforms such as Twitter. If you search Twitter using #ukemplaw you will find a growing community providing legal updates, commentaries and opinions on UK employment law. Lawyers are, more and more, constantly connected to clients, potential clients and peers.
Sharing legal knowledge does not replace the need for lawyers, but it does allow clients to develop a greater understanding of the relevant issues. In the past, lawyers’ legal knowledge was almost completely inaccessible, and therefore of little value to clients. These days, clients demand more for less, and want enough knowledge to feel empowered.
There may in the future be a trend to provide clients with decision trees allowing them to assess potential issues before deciding whether or not to take formal legal advice – effectively a legal version of ‘NHS Direct’. This will help reduce costs in simple matters for small businesses, but these systems will not result in lawyers being cast aside, rather it will ensure that they always provide advice that adds real value to the client.
Legal risk management
For both lawyers and clients, it is far more rewarding to be involved in managing risks rather than resolving disputes. Preventing an employment tribunal claim from arising is more pleasant for all parties than having to resolve the dispute once it has become aggravated and acrimonious.
Lawyers want to anticipate the problems that may arise. The issue is that lawyers often only become involved at a late (possibly too late) stage, as clients fear racking up legal fees too early.
That’s why it’s so important to encourage SMEs to dip into the legal marketplace at an early stage and at low cost. The ideas above are designed to allow small businesses to afford to engage lawyers, identify and manage risks and look to avoid issues from arising. This legal risk management need not be the preserve of in-house legal teams in large businesses. The use of technology and new working methods make this a real possibility for SMEs too.