61% of Small Businesses Fear Breaking the Law — Yet Wait for a Crisis to Call a Lawyer

Sixty-one percent of small businesses worry about accidentally violating laws or regulations, according to a 2025 survey by LegalShield, a U.S. provider of legal plans and services. Yet most of them still treat a lawyer as a number to dial only when something has already gone wrong.

That gap — between knowing the risk and acting on it — is the subject of a recent opinion piece by Jereme Baker, a Colorado-licensed attorney and founder of Baker Law Group, a firm that advises businesses. His argument is blunt: one preventable legal mistake can now cost a small business more than it can absorb, and legal preparedness belongs in the business strategy, not in the emergency plan.

"Small businesses can no longer afford to treat legal advice as crisis management," Baker wrote in Newsweek.

What does the timing problem actually look like?

The core issue, in Baker's telling, is not awareness. Owners know the law can hurt them — the LegalShield survey proves it. The problem is when they act. By the time most owners seek legal counsel, the decisions that created the problem, and the risks those decisions carry, are already behind them.

Why the delay? Baker says it's rarely carelessness. Owners are optimistic by nature. They trust their partners, they trust themselves, and they assume things will work out. A limited understanding of how the law works compounds the problem.

There's also a newer force at play. Baker reports seeing more owners every year turning to AI or online templates to draft contracts instead of approaching professionals. The numbers back that up: a consumer survey by Rev, a transcription and AI technology company, found that 65 percent of Americans had already turned to an AI chatbot for legal help, according to its AI Legal Advice Index.

Baker's position on the technology is measured. "AI is a useful starting point, but it shouldn't replace attorneys who understand the business and the jurisdiction," he wrote.

What does this change for owners running lean operations?

For practitioners, the practical question is where legal input belongs in the decision chain. Baker's answer: before commitment, not after conflict. His prescription is straightforward:

• Choose the right business structure from the start.
• Formalize partnerships in writing, no matter how strong the trust.
• Review contracts before signing — including AI-drafted ones.
• Consult an advisor at defined key moments rather than keeping counsel on staff.

Those key moments, as Baker lists them, include hiring, contract signing, taking on partners or investors, leasing premises, and expanding into a new state. An advisor who knows the business and is consulted at those points is often enough, he argues. Most small businesses don't need a lawyer on staff.

The economics favor the approach. That relationship costs far less than the disputes it prevents, according to Baker. For a business already squeezed by rising costs and tighter margins, that's a budget line that pays for itself — provided it's spent early.

The cost of waiting

Baker sketches what proactive legal planning changes in day-to-day operations. Owners make major decisions with confidence and clarity. Partnerships begin with agreed terms, and even when disagreements arise, they're less likely to end in disputes. Hiring processes and expansion attempts move faster because the groundwork is already in place. More capital goes toward growth rather than cleanup.

The flip side carries a price. Businesses that wait keep spending already scarce time and capital to resolve problems that could have been prevented. Partnership disputes over terms never written down can end businesses — and even relationships. Contracts signed without review, including AI-drafted ones, leave owners exposed in ways they don't discover until a dispute. And the damage doesn't stop at the business: employees, customers, and communities feel it too.

In Baker's framing, stronger small businesses mean more stable jobs, better customer service, and thriving local economies. Legal risk, handled well, is an economic variable, not just a compliance one.

Planning ahead

For owners who want to act, Baker offers a short list of habits. Build legal review into every major decision before committing. Put agreements with partners in writing, no matter how strong the trust. Treat AI-generated documents only as a starting draft, never a finished contract.

"Find a legal advisor before you need one, so your first conversation is about planning, not damage control," he advises.

He also pushes responsibility beyond owners themselves. Accountants, lenders, and incubators already push small businesses to plan their finances early, he notes. They should push just as hard on legal planning.

The goal, Baker writes, isn't to eliminate risk — no advisor can promise that. It's to ensure preventable legal risk doesn't hold a business back. His closing line doubles as the operating principle: "In my view, the best time to call a lawyer is before you think you need one."

With nearly two-thirds of Americans already consulting AI chatbots on legal questions and 61 percent of small businesses worried about regulatory violations, the market has clearly moved toward do-it-yourself law. Baker's piece is a bet that the businesses that pair that instinct with professional judgment — early, cheaply, at the right moments — will be the ones that don't pay for the alternative.

All opinions expressed in the original piece are the author's own.