Small Business, Big Opportunity: Understanding the Small Business Legal Market
By Katherine Hollar Barnard, Firesign
While much of the legal marketing chatter surrounds large corporate clients, there’s considerable opportunity for law firms who shift their focus to startups, family businesses and other closely-held companies.
Indeed, according to a study by Kingston University, the average small business incurs 13 potential legal problems every year. Given that the U.S. is home to 33 million small businesses, this yields a whopping 429 million potential legal matters.
For legal marketers to successfully attract, win and retain this business, they must first understand this client segment – from what they need to how they view lawyers.
The Kingston University research, The Legal Needs of Small Business, provides a solid foundation:
Type of Legal Problems.
More than half of small business matters stem from commercial/contract issues or taxes. Among the most frequent concerns:
● Commercial/Contract: 37.5 percent
● Tax: 22 percent
● Employment: 14.5 percent
● Intellectual Property: 8.8 percent
● Real Estate: 7.1 percent
Interestingly, for several practice areas the researchers identified “turning points” – the size at which an organization became likely to face a certain kind of issue. Among them:
● Real Estate: 24 employees
● Finance/Debt: 25 employees
● Tax: 26 employees
● Commercial/Contract: 27 employees
● Employment: 29 employees
● Regulation: 31 employees
● Corporate Structure: 34 employees
● Intellectual Property: 46 employees
What this means for you: When designing a strategy for small business clients, focus on the practice areas that matter most to them – and refer to the tipping points when researching and segmenting potential clients.
Business Impact.
Small business clients may feel the sting of a legal issue more acutely. In the Kingston University study, one in four small businesses said they lost income due to a legal issue.
Among the other (potentially painful) problems:
● Loss of customer or contract: 9.2 percent
● Additional costs: 8.8 percent
● Inability to complete scheduled work: 8.7 percent
● Damage to reputation: 8 percent
● Inability to take on new work: 5.2 percent
What this means for you: Legal problems can cut to the quick for a small business. These clients want clear solutions, and they want them fast; in a Firesign survey of 100 small business legal clients, 60 percent select a lawyer in less than a week. Match their sense of urgency with responsiveness and a straightforward Intake process.
Emotional Impact.
Serving small businesses can carry more emotional weight; clients may have personal fortunes or family legacies wrapped up in their enterprise.
In the Kingston University study, 16 percent of respondents said that after a legal problem, they felt stress-related illness; 5 percent felt ill physically; 4 percent had a mental health issue; and 20 percent felt any combination of these.
What this means for you: Firesign recommends that lawyers advising small businesses educate with empathy. It’s unlikely your entrepreneur client will get into the weeds with you on legal strategy, but given the heightened stakes, both for the business and themselves personally, they will want to see a clear path forward and a semblance of a timeline. The most effective small business advisers will strike a balance between providing legal context and communicating with straightforward efficiency.
This is Part 1 of a series, Startups and Small Business: Actionable Intel for Legal Marketers. In our next article, we will explore the most effective content strategies for this demographic.
To learn more about how small businesses scout and select lawyers, check out Firesign’s report, From Referrals to Recon: How Small Businesses Hire Lawyers.
Katherine (Katie) Hollar Barnard is the managing partner of Firesign | Enlightened Legal Marketing, an agency that helps law firms and legal service providers build their brands and bottom lines. She can be reached at khb@firesignmarketing.com.