New Study: Legal Pitfalls Dent Small Business Owners' Bottom Line, Yet Most Forgo Counsel

• 47% lost at least $500; nearly 1-in-5 lost $5,000+ due to legal issues
• 40% missed out on new business revenue due to legal fears, lack of advice
• 60% avoided retaining a lawyer due to perceived cost and complexity

Nearly one in five small businesses lost over $5,000 to preventable legal issues last year, while 40% missed revenue opportunities due to legal uncertainties, according to a new LegalShield study revealing how outdated perceptions about legal services are undermining America’s small business sector.

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A new study by LegalShield reveals a troubling gap between entrepreneurs' legal needs and their willingness to address them.

Released during National Small Business Month, LegalShield's study reveals a troubling gap between entrepreneurs' legal needs and their willingness to address them—even as regulatory demands and economic pressures intensify. The study reports:

• 61% of small businesses worry about accidentally violating laws or regulations
• 83% say access to affordable legal services is somewhat, very or extremely important
• A quarter of small businesses have considered closing their business due to legal challenges
• More than 1 in 4 spend 3-5 hours a week dealing with legal matters

"Most small business owners only turn to attorneys when they're already facing litigation—that's the wrong approach. Using a health analogy, it's like not taking care of yourself and ignoring aches and pains until you need an expensive operation," said Michael Fiffik, a LegalShield provider attorney. "By proactively working with an attorney, businesses can prevent costly contractual claims, avoid regulatory fines and penalties, make informed decisions, and give themselves important legal advantages when inevitable challenges arise."

“Every hour a small business owner spends dealing with legal issues is an hour they’re not serving customers, selling products, or growing their business,” said Warren Schlichting, LegalShield CEO. “They often believe legal help is too complicated and expensive, but that perspective can end up costing them far more in the long run as they try and handle matters on their own. Legal support should be simple, accessible and above all affordable.”

Study Methodology: LegalShield surveyed 299 small business owners and managers across the United States, completed on April 5, 2025. Respondents ranged in age from 25-80 years, balanced according to basic U.S. Census demographic data. The sample included representation from all U.S. regions. All respondents self-identified as owners or managers of small-to-medium businesses.

About LegalShield:

For more than 50 years, LegalShield has provided everyday Americans with easy and affordable access to legal advice, counsel, protection, and representation. Serving millions, LegalShield is one of the world's largest platforms for legal, identity, and reputation management services protecting individuals and businesses across North America. Founded in 1972, LegalShield, and its privacy management product, IDShield, has provided individuals, families, businesses, and employers with tools and services needed to affordably live a just and secure life. Through technology and innovation, LegalShield is disrupting the traditional legal system and transforming how and where people receive legal guidance and services, with access to hundreds of qualified, trusted attorneys and law firms. LegalShield and IDShield are products of Pre-Paid Legal Services, Inc. To learn more about LegalShield and IDShield, visit LegalShield.com and IDShield.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250519395084/en/

“Every hour a small business owner spends dealing with legal issues is an hour they’re not serving customers, selling products, or growing their business,” said Warren Schlichting, LegalShield CEO.