Clive Rich is Founder and CEO of Lawbite, the online legal platform, providing expert, accessible services to SMEs. Here, Clive puts in his predictions for the new year to Business Leader readers.
The Subscription Economy will continue to radically reshape how consumers and businesses pay for professional services.
With Brexit and the pandemic destabilising supply chains and threatening business continuity, SMEs need legal support more than ever. On average, they encounter 8 legal issues every year, 43% of which cost on average £5000. This is an eyewatering sum for SMEs that often dissuades them addressing legal issues properly, which ultimately costs the economy £13.6bn every year.
That’s why it’s time for a radical new approach. Subscriptions improve pathways to legal support by providing SMEs more flexibility and better value for money, while also reducing the strain on lawyers by eliminating the stress of billable hours.
A new wave of SMEs will help to reshape the economy. As unemployment rises, so does the rate of newly incorporated businesses. From June through to October, 376,044 companies were formed, compared to 287,397 in the equivalent period last year.
Newly furloughed and unemployed workers are taking matters into their own hands as they face up to a punishing jobs market. And while many will struggle to make it through 2021, the government is recognising that more must be done to support the new wave.
That’s why SMEs should watch out for the government’s White Paper on the UK’s Industrial Strategy, where they will present a raft of new proposals and initiatives designed to support SMEs.
Of course, many of these businesses will also need to adapt quickly to the incoming changes to customs rules and visas when the Brexit transition period ends on January 1. Businesses should be preparing legally as best they can, or at the very least they should be preparing a list of questions that they will need answering, even if the answers aren’t currently available.
A wave of legal disputes is set to hit UK businesses at the start of 2021 as the period of ‘pandemic tolerance’ fizzles out. Government protective interventions on issues such as evictions and the pay back of loans will cease to exist in the new year and the patience displayed by many business owners will inevitably run thin if their livelihoods come under threat.
The solution, we believe, will be mediation. The Government would be best advised to take action and introduce regulation to ensure mediation is the compulsory first step taken in legal disputes, especially for instances of late payments. This will benefit SMEs by preventing big companies from overwhelming them in court with well-paid lawyers by instead encouraging compromise.
Mediation is a far quicker and cheaper option than entering into litigation, and more importantly, it boasts a 75% success rate.
Furlough fraud. The economic impact of the pandemic will be felt throughout 2021, which is why the government took the decision to extend the furlough scheme through to the Spring. While this should be welcomed, it will likely mean more furlough fraud litigation.
The speed in which the Government’s Job Retention Scheme was enacted and the initial absence of information resulted in some employers inadvertently misusing it. We have already seen instances where small business owners have received fines up to 100% more than the original loan they received. But HMRC do not want to pursue employers who have made legitimate mistakes and are giving businesses opportunities to rectify their mistakes.
With a difficult tiered system to negotiate and business adapting in order to operate in some form, SMEs could make mistakes without receiving sound legal advice.
Women in Business. In many ways the pandemic has exasperated the gap between male and female led businesses. Given the nature of how they work and what they produce, science and tech start-ups have thrived during lockdown, while businesses in the retail and hospitality sectors have been hit hardest.
This has been a massive set-back for women in business, who are underrepresented in science and tech and disproportionately more likely to operate a business in retail and hospitality.
Prior to the pandemic, it was estimated that if women started up businesses at the same rate as men, then up to £250bn could be added to the UK economy by 2025.