What SMEs can learn about legal risks from big business: Insights from a former in-house solicitor

Legal risks don’t always come from major disputes or lawsuits. I’ve learned firsthand that some of the biggest legal headaches often stem from everyday business decisions—signing contracts, hiring employees, managing customer complaints, or expanding into new markets. During my time as an in-house solicitor at one of the world’s largest hospitality brands, I saw how taking a proactive approach to legal matters could shield a company from countless problems before they escalated into full-blown disputes.

SMEs may not have the same resources, yet they face just as much risk—if not more. Without the right legal structures in place, a single mistake can have grave financial, operational and reputational consequences. While larger companies embed legal protections into their operations, SMEs often navigate risks without dedicated legal support. With smaller teams and tighter budgets, legal considerations can feel secondary to more pressing business demands. But ignoring legal risks doesn’t make them disappear—it just makes them harder to manage when they surface.

Fortunately, SMEs can still take a proactive stance on risk management, even if they lack their own in-house legal team.  

The challenge SMEs face

SMEs, by their very nature, operate with limited resources. They often lack the budget for a dedicated legal department or an in-house legal professional. Yet this constraint does not diminish their exposure to legal risks. On the contrary, smaller organisations are especially vulnerable because a single legal setback—be it a contract dispute, an employment issue, or a regulatory fine—can have an outsized impact on the bottom line. When you do not have the luxury of vast reserves or a large workforce, a poorly managed legal concern can derail growth strategies, damage reputations, and even threaten the survival of a business.

Another pressing issue are the “unknowns.” If you run a small company, you might be acutely aware that you do not have the knowledge of a legal professional, yet you may also be unaware of exactly which risks your operations could attract. Large companies mitigate this by carrying out regular risk assessments, maintaining compliance frameworks, and training staff on legal best practices. SMEs may view such processes as overly bureaucratic or prohibitively expensive, but streamlined versions of these preventative measures are just as essential for smaller enterprises as they are for global juggernauts.

The central takeaway is simple: when it comes to legal risks, size does not matter as much as preparedness and preparedness does not have to cost a fortune. Below are five key lessons I learned in a large corporate setting that SMEs can adapt to their own advantage to remain well-protected and firmly in control.

• Proactive legal planning saves money

During my tenure as an in-house solicitor, I observed that big players rarely wait for problems to arise before seeking legal advice. Instead, they adopt a proactive stance. This might involve negotiating robust contracts at the outset, conducting regular compliance reviews, and implementing clear policies for everything from data protection to supply chain management. This foresight pays dividends; by resolving potential issues early, the company avoids the inflated legal fees and reputational harm that can result from firefighting once a problem has escalated.

SMEs can adopt a similar approach—albeit on a smaller scale—by engaging legal support early on. Instead of waiting until a major issue surfaces, consider using fixed-fee legal services or subscription packages that offer consistent, ongoing advice. Addressing risks in the early stages, rather than reacting to a full-blown crisis, is far more cost-effective and helps protect your reputation.

• Contracts are business tools

In major corporations, contracts are viewed as strategic assets rather than mere “tick-box” exercises. A well-crafted contract defines responsibilities, allocates risk, and clarifies performance expectations. It can be the backbone of a successful commercial relationship, helping avoid confusion and disputes.

For SMEs, the temptation might be to download a generic template to save time and money. However, this carries inherent risks: generic documents may fail to capture the unique aspects of your business or industry and could omit crucial clauses. Investing in professionally drafted, tailored contracts can reduce the likelihood of legal disputes, preserving both your time and budget in the long run. Remember, a robust contract is a shield that protects you; a poorly considered one can be a significant liability.

• Employment issues are a real legal risk

One of the most common challenges I encountered in a large corporate environment involved employment-related disputes, ranging from grievance procedures to claims of unfair dismissal. While big businesses have dedicated HR teams, they still rely on legal guidance to navigate an ever-evolving landscape of employment legislation.

For SMEs, with smaller workforces and less formal structures, the risk of inadvertently breaching employment laws is heightened. Whether it’s incorrect working hours, overlooked discrimination policies, or poorly drafted employment contracts, these issues can be both costly and reputation-damaging—even if they never reach tribunal. By establishing clear employment policies, compliant contracts, and transparent grievance procedures, SMEs create a foundation that minimises misunderstandings and better protects them if a dispute occurs.

• Regulatory compliance does not only impact bigger businesses

Regulatory compliance might conjure images of multinationals grappling with data protection laws or environmental regulations, but SMEs are equally bound by these legal frameworks. Whether it’s GDPR obligations, health and safety standards, or industry-specific rules, smaller organisations cannot afford to overlook them. Even relatively modest penalties or reputational damage can cripple an SME.

Large corporations invest heavily in compliance because they know non-compliance can be astronomically costly. SMEs, on the other hand, might assume compliance efforts are too expensive or time-consuming. However, securing ongoing guidance from legal professionals ensures you stay on top of regulations and avoid fines or enforcement actions. Moreover, demonstrating a commitment to compliance can bolster credibility with clients, suppliers, and investors, all of whom expect responsible business practices.

• Legal costs should be predictable, not a surprise

Large corporations often have the benefit of in-house legal teams, allowing them to budget for legal costs more accurately. In contrast, SMEs tend to seek legal advice only when problems become too complex to handle internally. At that stage, escalating hourly fees can come as an unwelcome surprise.

Thankfully, the legal sector is evolving. Fixed-fee models, subscription-based services, and other cost-effective arrangements are now available to SMEs. These options provide consistent legal oversight without unpredictable costs, enabling smaller businesses to proactively manage risk. Rather than viewing legal services as a last resort, consider them a routine part of your operational plan, akin to accounting or marketing. This approach shifts the narrative from crisis management to long-term legal resilience.

Making legal support work for SMEs

The key message is that legal risk management is neither optional nor out of reach for SMEs. You don’t need to build an entire in-house department to protect your interests; you simply need to be proactive and strategic. Treat contracts as growth-enablers rather than administrative chores, make sure employment obligations are clearly laid out, stay on top of regulatory requirements, and consider predictable-fee legal services to keep surprises at bay.

This is where Lawyerlink comes in. We’re designed specifically for growing businesses that want tailored legal support without unpredictable fees. Our subscription packages let you pick and choose the level of service you need—from drafting contracts and reviewing employment policies to providing guidance on compliance matters and handling unforeseen legal issues as they arise.