The Cost of Commercial Legal Services in the UK 2024

Running a small business is no easy feat. There are a million things that demand your attention—customers to serve, products to improve, employees to manage. And then, just when you think you have everything under control, a legal issue pops up. Maybe it’s a dispute over a contract, or perhaps a new regulation you’re not quite sure how to navigate. That’s when you realise the true cost of legal services—and it’s a lot.

Legal fees are rising fast

If you’ve noticed that the cost of legal advice seems higher than it used to be, you’re not imagining it. The UK’s top law firms have increased their hourly rates by a staggering 40% in the last five years. The average rate is now £449 per hour for the biggest firms, up from £321 in 2019. That’s far outpacing general inflation, and it’s affecting businesses across the board—especially small and medium-sized enterprises (SMEs).

SMEs form the beating heart of the UK economy, representing 99.8% of all UK businesses. You might be one of them: a small retailer, a startup in tech, or perhaps you run a construction company. Whatever your sector, you’re not alone in feeling the squeeze. Legal costs are rising just as other pressures, like inflation and taxes, are biting.

The growing community of small businesses

There are 5.5 million businesses in the UK today, and most of them are small. In fact, 3.1 million are sole traders, and 1.2 million are micro-businesses with fewer than 10 employees. SMEs employ 16.6 million people, which is 60% of the private sector workforce, and they generate £2.8 trillion a year in turnover. This means that small businesses are not just important—they’re essential to the economy.

Despite their importance, many small businesses have limited in-house legal capabilities. The phrase “prevention is better than cure” has never been more true when you consider the financial impact of overlooking the legalities of operating a business in the UK. A survey conducted by YouGov and the Centre for Economics and Business Research (CEBR) showed that failing to address legal issues can cost SMEs over £13.6 billion a year.

The hidden cost of avoiding legal help

The reluctance of small businesses to use lawyers is understandable—legal fees can feel like an overwhelming burden. However, this reluctance often leads to significant financial losses that could have been avoided. The YouGov survey revealed that companies with fewer than 10 employees encounter an average of three legal issues per year, with costs averaging £2,240 per issue. This means that small businesses could be facing nearly £7,000 in unnecessary costs annually.

The most common legal issues involve customers and suppliers, disputes over terms and conditions, and employment-related problems. These issues, if not managed properly, can quickly escalate and result in substantial financial losses. For example, disputes with suppliers alone have cost small businesses over £968 million annually.

According to Unbiased, as of 2024 these are typical costs for common legal matters for small businesses:

• Drawing up an employment contract: £350 - £520
• Arranging a commercial lease: £600 - £900
• Creating terms & conditions for consumers: £550 - £750
• Arranging a shareholders’ agreement: £750 - £1,250

How do you pay for legal help when costs keep rising?

With so many demands on your finances, the rising cost of legal services can feel like a burden that’s impossible to bear. Yet, ignoring legal needs isn’t an option. Whether it’s making sure you’re compliant with employment law or drafting contracts that protect your interests, legal advice is something every business needs at some point.

So, how can small businesses keep up with these rising costs without risking their own growth?

Legal service subscriptions: bridging the gap

Here’s where legal service subscriptions come in. If you haven’t heard of this model before, think of it like Netflix—but for legal advice. Instead of paying huge, unpredictable fees every time you need to speak to a lawyer, you pay a monthly subscription fee for ongoing support.

These subscriptions are designed with small businesses in mind, offering:

• Predictable Costs

No more worrying about a surprise bill after a 30-minute phone call. You know what you’re paying each month, which makes it much easier to budget.

• Access to Expertise

Whether you need advice on a contract, compliance questions, or even just a sounding board for a new idea, you have access to legal experts who understand small businesses.

• Preventative Support

Legal problems are much easier (and cheaper) to handle before they get big. Subscriptions give you ongoing access to ensure proactive management of your legal matters.

Why it matters now more than ever

The challenges of running a small business in today’s environment are real. With rising legal fees, increasing regulations, and the general costs of keeping a business afloat, finding a way to manage legal needs affordably could be the difference between thriving and just getting by.

Legal service subscriptions offer a way to bridge the gap between the growing need for legal support and the escalating cost of accessing that support. They can provide peace of mind, allowing you to focus on growing your business instead of worrying about legal hurdles.