Use of Lawyers
• Despite frequent policy disputes with parts of the legal profession, 69 percent of small business owners have trust and confidence in lawyers and the legal profession compared to 31 percent who do not.
• Most small-business owners use lawyers in a given year. Sixty-five (65) percent of small employers (defined as employing 5 to 250 people) sought advice or other assistance from a lawyer in the last year. The figure for those seeking legal help rises to 78 percent when the reference period is the last three years.
• Median legal expenses, of those who incurred them in the last year, were between $4,000 and $5,000. However, 10 percent (6-7% of the population) incurred expenses of $25,000 or more. Legal costs in the last year appear to be atypically high.
• Seventy-eight (78) percent have an on-going relationship with a lawyer or law firm. Those relationships appear reasonably stable over time. Just 13 percent changed their primary lawyer/law firm in the last three years. The most frequently cited reason for changing is the need for expertise followed by a lack of legal competence.
• Fifty-five (55) percent of those who consulted a lawyer in the last year asked him/her to prepare one or more legal documents. The most frequent documents prepared include a letter(s), contract(s), and papers surrounding the filing of, or response to, an actual or potential law suit.
• Forty-one (41) percent of those seeking a lawyer’s help, or over one in four in the population, were involved in at least one legal dispute during the last three years. The median number of disputes involved in was between one and two.
• Most disputes are resolved informally out-of-court. A common method of out-of-court settlement is formal arbitration/mediation. Only 12 percent of legal disputes between small-business owners and other parties are resolved in court, the least frequent method of dispute resolution.
• A substantial portion of legal disputes appear to have modest stakes. The most frequent topics are debtor/creditor relations and/or debt collection (21%), and contracts (19%). The most frequent party to these disputes are customers (47%) followed by suppliers (25%). The median total legal cost to settle a dispute is about $5,000. Two-thirds of resolved disputes result in no money or anything of monetary value exchanging hands.
• Legal disputes often require considerable time to resolve. The median time between engagement of a lawyer to handle a dispute and its resolution is four to five months. However, 30 percent took more than one year to settle while 16 percent took more than two years.
• Twice as many small-business owners are satisfied with the resolution of a legal dispute as are dissatisfied suggesting that small-business owners are on balance pleased with the performances of their lawyers.
