The civil courts system should be overhauled and alternative dispute resolution strengthened to spare small businesses the ‘huge burden’ of legal disputes, a representative organisation suggests today.
According to research published by the Federation of Small Businesses (FSB), legal disputes cost small enterprises in England and Wales at least £11.6bn each year.
A federation report published today ‘Tied Up: Unravelling the dispute resolution process for small firms’ states that 70% of small businesses have faced at least one dispute in recent years.
On average, the amount at issue is around £18,000 but the cost of resolving it is a further £17,000 if they have to spend ‘time and money dealing with the problem’.
The federation calls for a ‘new approach’ to prevent disputes from occurring in the first place and facilitate faster, fairer and cheaper resolution if they do.
It suggests that the new small businesses commissioner, proposed by the government earlier this year, should develop an online hub, providing guidance and support for businesses.
It also recommends overhauling civil courts fees and introducing a specialist commercial track in the county court, which it says would make it ‘cheaper, quicker and fairer for small firms’.
Alternative dispute resolution should also be strengthened, the FSB said, particularly by reviewing its effectiveness for small businesses.
Mike Cherry, national chair of the FSB said, ‘We want to see a beefed up system to bring about fewer disputes and faster resolutions for small firms’. He added: ‘A huge burden would be lifted from small businesses by rebooting the system around prevention and resolution of disputes.’