Small businesses are becoming increasingly sceptical about whether lawyers offer value for money when trying to help resolve issues, research by the Legal Services Board (LSB) suggests.

According to figures published today, the proportion of small businesses who agreed that lawyers provided a ‘cost-effective’ means of solving disputes has decreased from 14% to 11% over the past four years.

Today’s report follows similar research undertaken by the oversight regulator in 2013 and 2015.

The report, ’legal needs of small businesses 2013-2017’, is the largest survey of small firms’ interactions with the legal sector and is based on responses from 10,579 owners and managers of small businesses. The survey was undertaken by YouGov.

For the purposes of the report, small businesses are defined as organisations that employ 50 or fewer people.

According to the responses, around half of small businesses who reported a legal issue said it resulted in a negative impact. Total annual losses to small businesses due to legal problems were estimated £40 billion.

Further, fewer than one in 10 businesses employed in-house lawyers or had a firm on retainer, the research found. When advice was sought, accountants were consulted more often than lawyers. For those that did turn to a lawyer, 22% shopped around for the best deal. Of that 22%, half said they found it easy to compare different providers.

Helen Phillips, interim chair of the LSB, said: ‘There still remains a perception of legal services as expensive – whether or not that perception is accurate – resulting in many businesses either ignoring legal issues or trying to handle them alone.’ She added that it is hoped that work to implement the Competition and Markets Authority’s recommendations on transparency should help address these issues.

Phillips added: ‘There are so many opportunities for legal service providers to expand their business if they can tailor their services to what this group of consumers need, raise awareness of their services and overcome perceptions of high cost.’

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