Avvo Study Reveals Small Business Owners See Basic Legal Help as a “Big Business” Luxury

A study from the legal advice website Avvo reveals that many small and medium-sized business (SMB) owners consider lawyers a luxury for larger, more established businesses. The study, conducted in April 2015, indicated that SMBs perceive lawyers as costly, time-consuming, and relevant only when things go wrong, which often keeps them from getting the preventative legal guidance needed to protect their businesses.

Avvo Study Findings

While SMBs go to great lengths to ensure their businesses’ success by employing accountants, insurance agents, and specialists, it seems legal help is only contemplated when something bad happens.

“I used to think of hiring a lawyer only if I was in trouble, like people do on TV when they get arrested,” said Alex Nguyen, a marketing and consumer experience consultant in Washington state. “Since I always follow the law, I didn’t think of hiring a lawyer.”

Alex is not alone. Even business owners who do proactively think about their legal needs delay hiring an attorney due to cost concerns or the perceived time required to find the right lawyer:

• Less than 50% of business owners utilize an attorney to help prevent mishaps.
• 51% say it is because attorneys are too expensive.
• 39% say it is because finding the right attorney takes too much time.

Concerns about costs and time, combined with the perception that lawyers are just for catastrophes, keep SMBs from getting the “preventative lawyering” that large businesses regularly utilize. But there may be another factor involved.

“Small business owners seem to have what psychologists and neuroscientists call ‘optimism bias,’ which leads people to expect positive outcomes even when the facts don’t always support them,” said Nika Kabiri, Ph.D., Director of Consumer Insights at Avvo. “Optimism bias helps manage stress and build confidence, which are very important for running a business. The downside is that it keeps business owners from truly assessing risks. In many ways, it’s this positive thinking that drives their success. But it also could set them up for disaster.”

What Business Owners Can Do?

Most SMB owners readily address their accounting and employee benefits needs with help from professionals, but when it comes to legal matters, their optimism bias is particularly acute and exacerbated by fears that professional legal guidance is too expensive and a hassle.

“Many small business owners take the risk because the traditional model for legal services is too unpredictable in terms of costs and time,” said Chattanooga, Tennessee business attorney Alan Hall. As a result, many small business owners try to tackle their legal needs with Do-It-Yourself online forms and research. That approach can leave business owners legally unprotected, with a false sense of security.

“There isn’t a month that goes by that we don’t encounter at least three horror stories about someone who took care of a legal need using a legal form service or an Internet search and a free template,” said Portland, Oregon business attorney, JP Voilleque. “But in the end, these clients will tell us that they went from thinking they were legally covered with an online legal form, to finding out that they’re worse off than if they had consulted a lawyer from the start.”

Conclusion

As attorney Alan Hall put it when asked what message he’d like to send to small business owners everywhere: “How much is your peace of mind worth?”

A version of this article was originally published on the AvvoStories blog.

About the Author

Avvo is the leading online legal marketplace connecting consumers and lawyers. Avvo offers on-demand, affordable legal advice through Avvo Advisor®, which delivers a highly reviewed lawyer for 15 minutes over the phone—anytime, anywhere—available online or via a free app for iOS devices. Avvo has also recently started offering fixed-price legal services covering routine legal scenarios for businesses, which enable you to identify the attorney you want to work with and purchase the service up front.

In Avvo’s Q&A forum, consumers can get their legal questions answered for free by more than 200,000 participating lawyers or search more than 7 million previously asked questions and attorney provided answers. Avvo’s lawyer directory provides Avvo-rated profiles, client reviews, and peer endorsements for 97 percent of all lawyers in the U.S., so consumers can find the lawyer who’s right for them. Avvo was founded in 2007 and is based in Seattle, WA.