SME Small Business Owners Face Tough Legal Issues

Transcription

1 LEGAL RISKS FACED BY QUEBEC BUSINESS OWNERS

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3 Small and Mid-sized Enterprises (SME) are the lifeblood of the economy in Quebec. They employ almost 75% of the working population, and contribute to almost half of the private sector s gross domestic product 1. To better understand this pillar of the Quebec economy, DAS Canada and Assistenza International hired SOM, one of the largest survey firms in Quebec. They carried out a survey in the summer of 2015, to gauge the opinions of SME owners and document their interactions with the legal system. Are legal issues an inevitable part of doing business? What types of issues do SME owners face, and how do they deal with them? Do they appreciate the potential risks that come with legal issues, and do they protect themselves against them? What is their attitude toward Legal Expense Insurance (LEI)? Take a look at the key findings and get insights into the world of Quebec SME owners. Our analysis is based on the responses given by 504 Quebec SME Owners 2 The Quebec Small Business landscape is made of 3 : Self-employed individuals with no paid employees: >571,000 Businesses with paid employees: >256,000

4 FACT 1 Though SME owners experience the legal system, little is known about it In Quebec, there are >256,000 SME with paid employees almost 1out of 2 HAS FACED A LEGAL ISSUE That's over 115,000 SME owners AND AS MANY AS 35% declare themselves poorly informed about the Quebec legal system not sure? That's almost 100,000 SME owners 46% of them have less than 10 employees The size, structure and organization of a business all play an important role in SME owners understanding of the legal system and the resolution mechanisms it offers. Legal Risks Faced by Quebec Business Owners Page 2

5 FACT 2 Labour laws and commercial transactions are at the heart of the legal disputes faced by SME owners We asked SME owners about the nature of the disputes. Here is what they said: Employment standards/relations... 30% Contractual / transaction disputes... 19% Health & Safety Commission... 13% Collecting money from customers... 13% Disputes related to commercial transactions make the TOP 3 in our national survey 4 : Collecting money from customers (26%) Contract disputes with customers (20%) Contract disputes with suppliers (17%) FACT 3 When faced with a legal issue, SME owners turn to a lawyer for help 87% hired a lawyer to help them resolve their legal issue $327 is an experienced lawyer s average hourly rate 5 Page 3 Legal Risks Faced by Quebec Business Owners

6 FACT 4 SME owners are concerned How many SME owners are kept up at night by potential legal disputes? 51% or over 130,000 That s almost the entire population of What are the main causes of concern? SME owners are mostly concerned about labour standards (25%) and the Occupational Health and Safety Commission (12%) They also worry about debt recovery concerning client accounts (11%), contractual disputes and commercial transactions (9%), and disputes with customers (8%) Legal Risks Faced by Quebec Business Owners Page 4

7 FACT 5 SME owners believe a legal dispute would have a tangible impact on their business Top 3 impacts identified: Tangible impact on the business s finances... 35% BUSINESS Bankruptcy and loss of the business... 24% Negative impact on reputation... 21% Respondents also cited other consequences, such as having to let go of the workforce, losing customers, and health issues (stress, depression) The potential cost of a 2-day civil action 5 explains why the business s finances and bankruptcy lead the list: $58,222 The research also revealed that... Almost 1 in 10 Know an owner who has lost a business due to legal expenses Page 5 Legal Risks Faced by Quebec Business Owners

8 FACT 6 SME owners show interest in mediation A majority of respondents believe that mediation would lead to better results compared to appearing in Small Claims Court: 65% of SME owners choose mediation over Small Claims Court to resolve a legal issue 58% of respondents believe that new technologies and on-line mediation services are the way of the future FACT 7 Legal Expense Insurance is largely unknown SME owners are exposed to a wide range of potential legal issues. Legal Expense Insurance offers them a solution to help control these risks. Yet: 78% of them have never heard of Legal Expense Insurance Legal Risks Faced by Quebec Business Owners Page 6

9 FACT 8 Legal Expense Insurance meets SME owners expectations and needs What are SME owners looking for? An insurance product that meets their needs (30%) Practicality and expediency (27%) Affordability (22%) The respondents TOP 4 protection needs are: Workplace relationships, health and security at work Collecting money owed by customers Commercial transactions and contracts Fraud, theft, vandalism Are SME owners ready to purchase a Legal Expense Insurance policy? 88% would consider doing so, if among other reasons, the insurance product met their expectations is the average monthly $225 premium SME owners would pay for a Legal Expense Insurance policy Page 7 Legal Risks Faced by Quebec Business Owners

10 IN CONCLUSION Today, a Legal Expense Insurance policy is essential Findings at a glance Legal issues are part of SME owners daily activities The legal system is unknown by more than a third of business owners Most legal issues arise from labour standards and commercial transactions A vast majority of SME owners hire a lawyer when faced with a legal issue Mediation is the number one choice More than 1 in two are worried about the impact a legal issue would have on their business s finances and reputation Legal Expense Insurance (LEI) is largely unknown among SME owners The solution? LEI provides unlimited access to general legal advice. Often times, this is all that is needed to help resolve a legal issue. So when SME owners need guidance navigating the legal system or mitigating an issue, help is just a phone call away. LEI covers legal expenses. With average hourly rates for lawyers running just over $300, small/medium businesses with few or no inhouse resources can now pursue or defend their rights and protect their finances. A DASbusiness policy covers the issues that keep SME owners up at night, such as employment disputes, contract dispute and debt recovery, tax and property protection. The obstacle? LEI is widely unknown amongst SME owners in Quebec. LEI empowers Small Business Owners to pursue or defend their legal rights. Let s work together to raise awareness and help protect the lifeblood of Quebec. Legal Risks Faced by Quebec Business Owners Page 8

11 About Assistenza International Assistenza International is the most prominent provider of white-label value added services in Canada. For over 25 years, we have been there to meet the needs of your customers, 24 hours a day, 365 days a year. Our white-label services are rendered with compassion, in your name using your specific protocol. A team of highly qualified professionals committed to assist your customers; All our professionals have a mandatory and exhaustive training for each service; A Multilingual team in a position to answer to all your clients questions and problems; A network of reputable suppliers chosen under strict admissibility conditions; A detail oriented partner who supports your strategies, activities and initiatives to outperform the competition. Our Assistance programs are designed to provide real, tangible support in stressful situations. In today s increasingly difficult times, we can all feel overwhelmed by seemingly routine occurrences. In our ongoing effort to meet your customers needs, we pride ourselves on being available on a moment s notice. assistenza.ca Endnotes: 1. Statistics Canada, Labour force survey, The survey is based on the findings of a SOM poll conducted by phone, from June 17, 2015 to July 17, 2015, of 504 owners of SME with 5 to 250 employees. The results are considered accurate to within +/- 4.4%. 3. Statistics Canada, and tables, June DAS White paper, Small Business Owners and the Canadian Legal System, May Canadian Lawyer Magazine, Survey, June 2015

12 About DAS Canada DAS Canada is part of the DAS Group, the market leader in Legal Expense Insurance and a subsidiary of ERGO - the primary insurer of the Munich Re Group. We are the market leader in Legal Expense Insurance in Canada, and the only insurance company that specializes in this class of insurance across the country. We empower individuals and businesses when they are faced with unexpected legal issues. A DAS policy: Protects clients from costly legal expense Defends or pursues a client s legal rights Gives clients access to legal advice at any time DAS Canada s range of legal protection and coverages has a solution for everybody s unique needs. Whether you wish to protect your family or your business, legal expense insurance offers protection from the very first moment a legal issue arises until it is resolved. das.ca