By Sarah-Jane Butler, founder & director of Farringford Legal

Lawyers are often regarded as a necessary evil and often avoided by SMEs. As a profession, lawyers are frequently viewed as a last-minute resort when a problem arises, costly and uncommercial. Whilst appointing an accountant is second nature when starting a company (after all, it is a legal obligation to submit accounts), SMEs rarely appoint a lawyer within the startup phase. Entrepreneurs will often use templates downloaded from the Internet, or copy fellow business owners’ terms and conditions to avoid the cost of appointing a lawyer.

However, whilst clearly as a lawyer I would say this, there are strong arguments as to why an SME needs a good lawyer from an early stage to ensure growth and security.


  1. Save Money

Waiting until there is a problem to solve it will inevitably prove costly. Chasing a client to pay your invoices when your terms are not clear as to payment or liability is like shutting the door after the horse is bolted. If your terms of supply or service are not clear, and in your favour, then you will inevitably at some point be taken advantage of. Appointing lawyers to fight a battle that could have been avoided is stressful and expensive. The key is to be prepared.

Getting clear terms and conditions drafted to your specification and tailored to your business will prevent a lot of issues occurring in the future as your suppliers and clients will have a harder time avoiding their obligations if it is obvious what they have agreed to do to. Presenting a clear set of terms looks professional as well and makes your counterparties think twice about trying to mess you about.


  1. Commercial Advice.

There are a lot of lawyers out there. Some may say too many, and not all lawyers are good. Unfortunately, there are many lawyers who claim to understand their clients, but to be of any use to an SME, or any business for that matter, a good lawyer needs to be commercial, understand your business and take his or her time to know your business sector. Getting to know your business does not happen in that last minute scenario when you call in a panic if there is a problem. This takes time which is why relationships are so important.

Your accountant will build up an understanding of your business as he or she prepares your annual accounts or helps with your management accounts. Having a lawyer to consult, bounce ideas off and support your business can really help support your growth commercially. There’s no need to have an in-house lawyer within the startup or scale phases but being able to have a lawyer on call to review any agreements as they come in, or check a corporate governance question can give you peace of mind and certainty. When raising finance or bringing on new business partners, for example, having reasonable shareholders’ agreements that undoubtedly set out the commercial position now between all parties will help any business move forward with confidence.


  1. Certainty.

So, in reality, nothing is certain in this world and no legal document is perfect (controversial to most lawyers I know!) but if you have a good lawyer who has worked with you to prepare your fundamental documents, you may find you have more certainty and less need to pay out huge legal fees in the future.

Getting documents off the internet can save you money initially, but you should be cautious as i) they may not be legally up to date and ii) they may not actually work for your business or your employees. Brexit and its consequences are having a profound impact on many laws we have taken for granted for many years. The law is an ever-changing beast and employment contracts, for example, that might have sufficed prior to the Good Work Plan changes brought in in April 2020 may mean your contracts are not valid or up to date. Many companies also get caught up distinguishing between someone who is a contractor as opposed to an employee. Seeking to avoid all the countless employer obligations, including the responsibility to pay tax, is a common approach. But in reality, it’s a time bomb for businesses. Having the certainty that your team are set up on the right contracts now might avoid a settlement agreement or a trip to the employment tribunal later.

Good lawyers should be a confidant and an advisor with attention to the detail as well as the future for your business. SMEs should not be weary or reticent about engaging a lawyer to be there on an ad hoc basis to support them. A good lawyer can provide a solid foundation of legal documents and commercial support to allow you to progress with certainty whilst providing value for money.


Farringford Legal works closely with small business owners to ensure they have a strong foundation upon which to grow their business.

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