Before, during and after Covid-19:
legal problems of mSMEs in Ukraine

Key findings

A relatively small proportion of the micro, small and medium scale enterprises (mSMEs) from the survey sample — 16% — say that in the past 2 years they had to deal with legal problems. But the reported legal problems are very serious, impactful, and costly.

The most common problems are related to disputes with suppliers and clients, corporate fraud (raiding), or business premises. Many mSMEs try to solve the issue but do not receive closure. They actively pursue negotiations but it is difficult to convince the other party to cooperate. This indicates the need for services that bring the parties together to meet, talk, negotiate, decide, and implement fair solutions.

mSMEs frequently try to resolve problems by involving third parties such as lawyers, courts, public authorities, and accountants in the dispute. With the exception of the public authorities, they perceive other providers of dispute resolution services as helpful. At the same time, third parties provide a limited range of interventions.

Most often they help with advice about parties’ rights and obligations. This indicates that besides advice and information, mSMEs need justice treatments that resolve problems fairly.
Most of the legal problems of mSMEs remain unresolved. This is a challenge but also an opportunity for the justice innovators in Ukraine.

mSMEs are rather dissatisfied with the quality of procedures and outcomes of justice processes. They scored the quality of the procedures and outcomes around or lower the middle of the scale. Justice workers, policy-makers, and innovators need to listen to the voices of mSMEs and focus their efforts on improving processes and outcomes.

The evidence of this report was gathered during the unprecedented times of the Covid-19 healthcare crisis. mSMEs are conscious of the consequences of the crisis on their functioning. They foresee primarily three types of problems to increase due to the pandemic: problems related to insolvency of clients or suppliers, compliance with health and safety requirements, and their own insolvency.

Introduction

In 2016, HiiL asked thousands of individuals in Ukraine to map out the legal problems in daily life. Acknowledging that micro, small and medium enterprises (mSMEs) are the backbone of the economy, in 2020, we partnered with The Centre for Law and Democracy (CEDEM) to explore the legal challenges that mSMEs face.

Our objective is to understand how mSMEs access justice. Hence, the main questions this report aims to answer are:

Which legal problems do the mSMEs face?
What is the impact of legal problems on the mSMEs?
What do they do to resolve the legal problems?
How do the mSMEs assess the fairness of the formal and informal justice processes?
To what extent are the legal problems resolved and which outcomes do the mSMEs obtain from justice processes?
How is the Covid-19 crisis affecting legal challenges experienced by the mSMEs?

This report is an evolving story. The data is displayed interactively. We show, rather than tell. The readers are invited to go beyond the text, to formulate their own questions, and look for answers and solutions. HiiL and CEDEM contribute evidence and views to the discussion about how best to support the Ukrainian mSMEs. We will be happy to continue the dialogue with new data, insights and solutions.

This project was funded by Pravo-Justice, an European Union project.

Addressing the legal needs of mSMEs is crucial

mSMEs play a critical role in the Ukrainian economy. There are more than 1.5 million mSMEs in Ukraine, including micro-enterprises (0-9 employees), small enterprises (10-49 employees) and medium enterprises (50-250 employees). mSMEs employ 61% of the persons employed in business and constitute 99% of the country’s enterprises. Together, they contribute to 20% of the country’s GDP. Apart from mSMEs, Ukraine also has a thriving start-up ecosystem. Kyiv, the country’s capital, ranks 32nd in the world and first in emerging Europe for having the best ecosystem for start-ups.

State owned banks make applying for credit for small businesses and start-ups difficult.

Owner of an agricultural enterprise

Much has been said about the business climate in which mSMEs in Ukraine operate. Ukraine is progressing in the Doing Business index. At the same time, concerns have been raised about the legal and regulatory framework, complicated administration of taxes, limited access to finance, price inflation, political instability and so on. In contrast, very little is known about the legal needs of mSMEs in Ukraine.

Our methodology

A mixed methods approach to assess the legal needs of mSMEs

The research methodology consists of three parts: desk research, qualitative interviews, and quantitative survey. CEDEM and HiiL conducted a thorough desk research to understand the political, social, and economic environment in which mSMEs operate, followed by collection of qualitative and quantitative data. A Ukrainian company, InfoSapiens, gathered the data in May-June 2020. The evidence presented in this report is based on in-depth interviews with 24 mSMEs and a survey with a non-systematic random sample of 800 representatives of mSMEs from all regions of Ukraine except the temporarily occupied territories. We spoke to owners, directors or other individuals who have a role in legal affairs of mSMEs.

The methodology of the survey aims to understand justice from the perspective of the people who embody the mSMEs. We asked about the complete journeys to justice in the past 2 years, from when a problem was experienced to its resolution. Our concept of justice journeys includes formal, informal and hybrid processes.

The methodology quantifies justice journeys by capturing people’s perceptions of the process, the outcomes, and the cost of the journeys. Previous studies explore the legal needs of SMEs in various countries (see UK, Netherlands, Australia, Poland). The novelty of our approach is that we look deeper into the justice journeys. The entrepreneurs reflected in detail over the fairness of the processes, outcomes and costs, of the justice needs. This data and knowledge intends to help justice workers, innovators and policy makers to formulate actionable solutions for the justice needs of SMEs.

As a consequence, most likely the reported problems over-represent the most impactful problems and under-represent less impactful problems.

A word of caution about the data is in order. Upcoming chapters will show that the percentage of mSMEs who report experiencing a legal problem is low. Possible explanations for this are:

The aforementioned high threshold of impact – only very serious legal problems have been identified.
It is a common practice among representatives of mSMEs to avoid discussing legal problems with strangers, especially if they harbour doubts about the confidentiality of the conversation.
If the mSMEs have broken the law, and consequently faced legal problems, they are less likely to reveal that.
mSMEs active in the informal sector have not been included in the sample.
mSMEs may perceive some legal issues being “a part of the deal” or an operational routine when running a business. As a result, they may under-report their legal problems.

The outbreak of Covid-19 also posed a few limitations to the methodology. First, a telephone survey had to be conducted due to restrictions on the movement of people. Second, enterprises that were most affected by the lockdown, such as restaurants and cafes, are underrepresented in the survey.

Limitations of the Methodology

To whom did we talk

A diverse group of mSMEs

Sector

Size

Regions

Legal Service

Finances

Legal problems that mSMEs deal with

Disputes with partners, fraud, disputes about business premises

Back when we had a ten year land lease agreement, we were confident about investing in the business. But now officials have terminated the agreement because they have other plans for the land. Dozens of businesses have been shut down in this manner.

Representative of a company providing photo services

1.6 The average number of problems mSMEs encountered in the past 2 years

16% of mSMEs in Ukraine report having experienced a legal problem in the past two years.

The most common problems are related to disputes with suppliers and clients, corporate fraud (raiding), or business premises. Trade problems mostly concern an insolvent supplier or client, or disputes over contracts. Fraud cases usually involve theft of company property. Problems with business premises often involve troubles with land acquisition, registration, transfer, lease, or tenure.

Here, we had asked the mSMEs to tell us about all their legal problems. In the next stage, we asked the respondents to tell us more about the problem which in their opinion was most impactful.

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One in four of the mSMEs that have experienced legal problems say their most serious problem is a trade problem.

Problems experienced by mSMEs differ according to the size of the company. The most common problem of the micro companies (1 employee) is related to business premises. Micro companies also experience problems with regulatory compliance more often than other mSMEs.

Moreover, problems encountered by businesses vary across industries. mSMEs operating in information technology, manufacturing or construction experience trade partner-related problems more frequently than the others. Businesses in wholesale report experiencing fraud relatively more often than other sectors. Agricultural companies experience problems with business premises, more so than any other problem.

mSMEs tackle ‘raids’

Enterprises in Ukraine encounter a peculiar problem- raiding. It refers to illegal seizure of property or equipment owned by a business. Interviews with respondents revealed that raiding is initiated by corrupt officials, competitors, business partners during disputes or by opportunistic land-owners. In the below paragraphs, two of the interviewed entrepreneurs share incidents of raids experienced by them that had the potential to jeopardise their claim and possession of their property.

My competitor plotted a raid against my enterprise. He came with a court decision, officials from the prosecutor's office, cars and movers. It was an organised event. They tried to grab hold of our gym equipment. The court order gave rights to the investigator to inspect the equipment and do something with it at his own discretion. So, they wanted to take it to a safe custody until everything was settled. But I didn’t know where this safe custody was or what this would lead to. I mean, if the equipment is taken away, then it’s a wild goose chase. So I physically stopped them from taking the equipment.

Owner of a sports club

In Ukraine, a person can register ownership of an object or part of an object that is currently owned by someone else. Such a problem occurs with plants that were built before Ukraine gained independence and went bankrupt during the crisis of the Soviet Union. I bought such a property in early 2000. But after my business became successful, someone came forward to dispute the ownership right of the property using forged documents. He pulled out some document from the 50's that was not transferred to me and claimed 1 million dollars to settle the problem. That’s absurd!

Owner of a company that produces ceramic products

Impact

Legal problems have a significant impact and a considerable price tag for the mSMEs

To register a plot which is on the cadastral map costs 200 hryvnia usually. But because my plot was not on the cadastral plan, I had to prepare technical documentation, which cost me between 1.5-3 thousand hryvnia. This was expensive and time consuming.

Owner of an agricultural enterprise

1.8 million UAH The average number of Ukrainian hryvnia that companies lose because of one legal problem

In 88% of the cases, legal problems negatively affect the viability of the business. On average, one legal problem causes 1.7 negative consequences. The most common consequence of legal problems for all mSMEs is loss of market share, followed by loss of clients. While rare, 3% report bankruptcy as a consequence, indicating that legal problems cause not only temporary, but also permanent financial strain.

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Thirty eight percent of mSMEs which report a problem, say that the most serious problem caused a considerable negative impact on the company’s finances. On a scale of 1(trivial) to 10 (very severe), on average mSMEs attribute the score 7 when assessing the severity of their legal problems. This is another indication of the high impact that legal problems have on the mSMEs.

Resolving legal problems

Outcomes and processes

Despite the efforts, the legal problems of most mSMEs remain unresolved

mSMEs in Ukraine actively seek solutions but find it hard to effectively resolve their legal issues. Only one in four legal problems has been assessed as resolved. Almost half of the reported problems are in a process of resolution.

This means that problem resolution is slow or ineffective, and continues to concern owners and directors.

Another quarter of the problems are deemed to be unresolved despite the pledged efforts. mSMEs try to negotiate, involve third parties and public institutions but rarely manage to reach a fair solution. Filing complaints with justice or administrative institutions often do not resolve the problem.

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mSMEs need interventions that resolve legal problems

Our actions (to solve a problem) do not have a clear result. What worked in one case may not work in another.

Representative of a company producing metal equipment

As mentioned above, a quarter of the existing problems are resolved. When a legal problem is resolved, the mSMEs are very likely to say that the resolution fixes the underlying problem and allows the company to move ahead. This is a bright spot of justice for the mSMEs in Ukraine.

By contrast, the pending (unresolved and still in process of resolution) problems reveal a different picture in terms of outcomes. Rarely are all parts of the problem resolved when the resolution is ongoing. This indicates the importance of interventions that not only deal with the problems, but resolve them in a definitive way. There is also a good opportunity to further study the success of mSME justice in Ukraine and scale up the best practices.

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mSMEs negotiate first, involve lawyers next

To resolve existing legal problems, mSMEs mostly negotiate directly with the other party in the dispute. Particularly, negotiation is used when the company is in a disagreement with a trade partner or in a dispute over the company premises.

Lawyers are usually involved when dealing with regulatory compliance or diverse issues that emerge around company registration, legal status, and ownership.

Complaints to administrative authorities or to judicial bodies are more often filed in situations of fraud (raidership) and difficulties with enforcement of contracts and previous decisions.

Although mentioned in the qualitative interviews, mSMEs rarely resolvе their legal problems by simply transferring money. On face value, corruption is not a sizable problem. However, we acknowledge that a survey methodology, particularly the administration of the questionnaire via telephone interviews, is not a suitable method for exploring corruption. In the qualitative interviews, the respondents are more outspoken about the instances of corruption.

Negotiations are well-intended but hardly effective

The supplier has not refunded my money. I am negotiating with him via common acquaintances. But I am not satisfied with the outcome. The supplier makes promises but does not fulfil them.

Director of a company engaged in sale of building materials

When dealing with their most serious legal problems, most companies approach the other party in the dispute. Roughly half manage to make contact, the other half of the mSMEs with problems struggle to engage the other party in a negotiation (See chart 9).

A personal meeting is the preferred mode of communication. Sending letters, calling, and messages are also popular means of communication. Very few mSMEs report that there was a third party whom they could rely on to make contact with the other party.

The mSMEs who manage to make contact with the opponent in the dispute do not experience cooperative behavior. Almost 80% say that in the negotiation the other party did not consider their arguments (did not listen to their side of the story). Seventy-three percent say that the other party was not willing to compromise in its position. In almost 90% of the cases of negotiation, the other party did not contribute efforts towards reaching a solution.

Dispute resolution treatments - A mix of approaches

Providing information and advice is the treatment that third parties most often practice. They seldom mediate between the disputing parties. This, to a certain extent, explains why many legal problems remain unresolved. This finding is an important cue for justice innovators who want to provide services that address unmet needs of mSMEs.

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Glass half-full or half-empty? Half of the problems find fair resolution; half are resolved unfairly

How fair are the outcomes of the legal problems? The respondents are almost equally split in their assessments.

About one third believe that the problem has been resolved in a fair manner, one third perceive the resolution as unfair and the remaining third point to a resolution which is neither fair nor unfair (See Chart 10).

Legal problems with employees and trade partners are more often seen as fairly resolved. On the other hand, a large proportion of frauds as well as disputes over the company’s premises is perceived as unfairly resolved.

The process of problem resolution needs to be more user-friendly

We asked the mSMEs to reflect on 3 dimensions of the quality of the procedures used. Namely, we measured voice, the neutrality of the third party, and whether the process was explained. On all three dimensions, the respondents gave scores around or below the middle of the point (point 3 on a scale from 1 to 5). The low score strongly indicates that a lot can be done to improve access to justice for mSMEs in Ukraine. Opportunities to participate in the process need to be enhanced.

The processes organised by a third party should convince the disputants that the decision-makers are objective and unbiased. Lastly, the procedures should be better explained.

Compared to other formal or informal dispute resolution processes, court procedures receive slightly better results from the mSMEs. The take-away is that cheaper and faster processes can borrow from the strong sides of adjudication procedures and deliver justice which is fair but also affordable and fast.

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mSMEs are dissatisfied with the justice outcomes

Similar to the quality of the process, we asked mSMEs about the quality of the outcomes of dispute resolution. The results are similar to the assessment of quality of the processes.

mSMEs who went through the process of dispute resolution are dissatisfied with the final result of dispute resolution. Outcomes do not compensate for financial loss and are not well enforced. Enforceability deserves further research and explanation.

Negotiations and involvement of experts are voluntary processes that take place in the shadow of the law.

Such mechanisms are based on the expectation of voluntary compliance and are therefore less often implemented (enforced) in real life. What is concerning is that acts of adjudication as well as administrative decisions are also not enforced properly. The shadow of the law itself is not very compelling.

A good outcome of a justice process is a resolution which is explained in a comprehensible fashion to the disputing parties. The dissatisfaction of mSMEs with the explanation of the results evokes the need to re-think and re-design the available dispute resolution processes so that the parties clearly understand the factual and legal basis of the decision.

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Legal information and advice

Practical and linked to internet

The company’s technical director monitors legislation via the internet and press.

CEO of a machinery manufacturing
company

What sort of legal information do mSMEs receive when dealing with a legal problem? Advice is preferred to information. Generally, practical advice about concrete steps to resolve the issue or how to deal with the other party is used. More abstract information about rights and obligations is used less often.

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We asked all the mSMEs, regardless of whether they had experienced a legal problem or not, what sources of legal information they used. Most common of all is the internet. mSMEs of various sizes use the internet to understand how to respond to legal problems. This is a promising springboard for tech-focused justice innovators.

Covid-19 pandemic

mSMEs expect certain set of problems to increase

OECD in its recent report highlights the impact of Covid-19 on mSMEs worldwide. It estimates that more than half of mSMEs world-wide suffer a fall in revenue and one third of the mSMEs anticipate being out of business without external assistance. In a study conducted by HiiL, thought leaders based in 20 countries across the world also predict that mSMEs are more likely to go bankrupt, and likely to face disputes with employees and suppliers as a result of the pandemic. They predicted an increase in disputes related to repayment of debt and regulatory compliance as well

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Majority of the mSMEs in the survey expect the number of disputes they experience to remain the same, despite the onset of the Covid-19 pandemic. This finding can be explained by the fact that at the time of conducting the survey, mSMEs most severely affected by the pandemic were shut, and were therefore under-represented in the survey. Another possible explanation might be that the survey was conducted after the peak of the Covid-19 pandemic in the Ukraine. It could be that with hindsight the mSMEs were more buoyant about their capabilities for dealing with legal problems.

mSMEs foresee primarily three types of problems to increase due to the pandemic: problems related to insolvency of clients or suppliers,compliance with health and safety requirements followed by their own insolvency.

mSMEs in certain sectors are more affected by the pandemic than the rest. mSMEs in the hotel and restaurant industry emerge as most affected, followed by mSMEs in finance and those providing social and personal services.

A new way to solve legal problems is gaining momentum

Justice innovations

What are the implications of this explorative research? The survey data shows that a small percentage(16%) of mSMEs in Ukraine encounter very significant legal problems and need more and better resolutions urgently. More research is needed to investigate whether other mSMEs also have justice problems that impact their businesses significantly. The research also suggests more courts, lawyers and administrative offices will not bridge the gap. The mSMEs struggled to resolve issues, even when they used such interventions.

The results of this survey suggest that justice services for mSMEs in Ukraine need to be further developed. Within the scope of this research project, we did not investigate in depth how the justice system can respond to their needs. We note, however, a number of promising developments that can contribute to relieving the needs of mSMEs that suffer most from injustices.

Innovative approaches in this direction are being developed both by private sector start-ups and by the government. The Ministry of Digital Transformation is playing a key role in this.

Where do mSMEs need innovation? The evidence shows that the greatest needs are in disputes between trade partners, protecting against fraud and raiding, as well as disputes around renting of premises.

It should be mentioned that the government created a task force and improved some procedures to reduce raiding. For example, there is now an option to submit a claim to the Anti-raiding committee electronically through a simple form, as opposed to hiring a lawyer to draft and send a paper complaint. But this movement slowed down as the minister who pushed the anti-raiding reforms quit and it remains to be seen whether victims of raiding will benefit from these reforms.

According to the data, mSMEs mostly need assistance with negotiating and problem solving, with recourse to a neutral authority to enforce a solution if the other party does not cooperate. The data suggests these are promising areas for innovation:

Solutions that conclusively resolve legal problems
Guided procedures that assist the parties in business disputes to meet, talk, negotiate, decide and implement fair solutions
Accessible, fair and quick online or offline procedures involving third parties who decide on the issue and help to implement the decision
One-stop shops for tailored advice, information and forms
Solutions which help public authorities to provide better services to mSMEs

One stop procedures (combining information, negotiation support, facilitation and adjudication, supported online) are now being developed in countries such as Canada, Singapore and the UAE. The OECD, the Task Force on Justice and a remote courts coalition led by Richard Susskind are supporting these initiatives with expert knowledge. Academics outline how to do dispute system design and Oxford’s Christopher Hodges explores how existing procedures can be merged into one stop shop processes. Case management software is increasingly supporting online dispute resolution options that integrate seamlessly (Modria/Tyler, Matterhorn, Resolver, VisionHall).

We would love to hear your ideas!

Please use the form below to reach out to us and tell us where do you see the potential for innovative solutions. Or even better – tell us about solutions that already deliver justice to the mSMEs.

Examples of justice innovations

Justice innovations already deliver fair outcomes in Ukraine

The startup ecosystem in general, as well as legal innovations which is a part of it, is quite vibrant in Ukraine, and it may be well placed to play a role in providing solutions for mSMES. This is a glimpse into working solutions suggested by local start-ups to help their mSMEs colleagues, and the government.

These are examples of the most prominent justice innovations in Ukraine:

Avodocs (Axdraft product) is software that drafts essential legal documents for startups for free. It is used by over 4,000 startups from all over the world and trusted by Amazon Web Services, Y Combinator, and Techstars.
PatentBot is a chatbot that allows the user to register trademarks and copyrights in a few clicks via Facebook Messenger or via the web version. The process of submitting applications takes 5-7 minutes. The chatbot is operational in Ukraine, the EU and the US.
Vkursi and Court on the Palm use open data provided by the government to make deep analytics on counterparts and court cases. They make data visually appealing and easy to comprehend. Opendatabot serves a similar purpose, but it works through a messenger app of the user.
DomJurista provides a wide range of preset consultations and documents for a variety of businesses and personal situations at an affordable price.
Legal Alarm provides an SOS button that connects a business owner with an attorney and tracks users’ location in extreme cases like police raids in the office or kidnapping.
Cryptonomica offers online identification and arbitration.
Diia is a big governmental project which aims to bring all state services online. mSMEs can solve a few legal problems with it. For example, they can register a limited liability company or as individual entrepreneurs, sign documents online, and apply for a license. Moreover, Diia.Business works as a one-stop shop for all sorts of support for entrepreneurs and innovators. It provides advice, gives guidelines and document templates and refers to relevant startup hubs or solutions from the private sector.
Electronic Court is a free online portal administered by the State Court Administration that allows individuals and mSMEs to submit claims with e-signature, manage cases and perform written communication with the court and counterparts. Videoconferencing is also available in some courts.
Community paralegals program, a network of advisers who have trust of the community and basic legal knowledge, connect the informal and formal justice systems. It is one of the potential game changers for local communities and can be helpful for micro and small enterprises in towns and villages.

How to encourage and scale-up justice innovations?

The examples above suggest that the ecosystem of justice innovation in Ukraine is vibrant, but also that there is still a gap between the pipeline of (government and private sector) innovations and the justice needs particular to mSMEs. So more needs to be done. The justice needs and the justice innovation environment in the Ukraine and elsewhere has been investigated before. Highlights of this analysis have been:

First, serious investment is needed to ensure that legal innovations grow into high quality, scalable service providers that can positively impact justice. So far, the private sector has taken moderate interest in justice innovation. This study, together with studies about the justice needs of individuals in Ukraine, show that there is a sizable amount of unmet justice needs. Investments in good ideas and solid business models can meet this gap.

Second, a more flexible and outcome-oriented legal framework for justice and legal services is needed. Such a framework should encourage public and private innovations that deliver justice to the mSMEs.

Third, public-private partnerships need to be undertaken to ensure that the justice journeys are user friendly. There are good examples of those already. For instance, Diia.Business portal mentioned above provides services and guidance for entrepreneurs and also references more specific requests to private sector providers who already developed required solutions. The Ministry of Digital Transformation is playing a key role in establishing the portal. It also supports HiiL’s Innovating Justice Challenge 2020. Next step? Look carefully at the needs of the mSMEs and challenge the justice innovators in courts, government agencies and the private sector to provide smart solutions.

About the authors

Authors

Dr. Martin Gramatikov, Director Measuring Justice
Armi Korhonen, Justice Sector Advisor
Dmitry Foremnyi – Justice Accelerator Head, Ukraine
Manasi Nikam, Knowledge Management Officer
Prof. Dr. Maurits Barendrecht, Director Research & Development

About HiiL

HiiL (The Hague Institute for Innovation of Law) is a social enterprise devoted to user-friendly justice. That means justice that is easy to access, easy to understand, and effective. We will ensure that by 2030, 150 million people will be able to prevent or resolve their most pressing justice problems. We do this by stimulating innovation and scaling what works best. We are friendly rebels focused on concrete improvements in the lives of people. Data and evidence is central in all that we do. We are based in The Hague, City of Peace and Justice.

The Hague Institute for Innovation of Law
Fluwelen Burgwal 58, 2511 CJ The Hague
P.O. Box 93033, 2509 AA The Hague
The Netherlands

Tel: +31 70 762 0700
E-mail: info@hiil.org
www.hiil.org

About CEDEM

Centre for Democracy and Rule of Law (CEDEM) is a think-and-act tank, which has been working in the civil society sector of Ukraine since 2005 channelling its efforts for development of independent media, support of civic platforms and movements, and building a legal state in Ukraine

Centre for Democracy and Rule of Law
Zankovetskoyi st., 3/1, of. 12, Kyiv, 01001
Ukraine

Tel.: +380 (44) 496 05 80
E-mail: info@cedem.org.ua

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AllWeb Agency, Sofia, Bulgaria

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Before, during and after Covid-19: legal problems of mSMEs in Ukraine

Key findings

Introduction

Addressing the legal needs of mSMEs is crucial

Our methodology

A mixed methods approach to assess the legal needs of mSMEs

Disputes with trade partners

Disputes over business premises

Fraud

Tax

Regulatory compliance

Disputes with employees

Enforcement problems

Intellectual property

Other

To whom did we talk

A diverse group of mSMEs

Sector

Legal problems that mSMEs deal with

Disputes with partners, fraud, disputes about business premises

1.6 The average number of problems mSMEs encountered in the past 2 years

16% of mSMEs in Ukraine report having experienced a legal problem in the past two years.

One in four of the mSMEs that have experienced legal problems say their most serious problem is a trade problem.

mSMEs tackle ‘raids’

Impact

Legal problems have a significant impact and a considerable price tag for the mSMEs

1.8 million UAH The average number of Ukrainian hryvnia that companies lose because of one legal problem

Resolving legal problems

Outcomes and processes

Despite the efforts, the legal problems of most mSMEs remain unresolved

mSMEs need interventions that resolve legal problems

mSMEs negotiate first, involve lawyers next

Negotiations are well-intended but hardly effective

Dispute resolution treatments - A mix of approaches

Glass half-full or half-empty? Half of the problems find fair resolution; half are resolved unfairly

The process of problem resolution needs to be more user-friendly

mSMEs are dissatisfied with the justice outcomes

Legal information and advice

Practical and linked to internet

Covid-19 pandemic

mSMEs expect certain set of problems to increase

A new way to solve legal problems is gaining momentum

Justice innovations

We would love to hear your ideas!

Examples of justice innovations

Justice innovations already deliver fair outcomes in Ukraine

How to encourage and scale-up justice innovations?

About the authors

Authors

About HiiL

About CEDEM

Website realisation and design

Your ideas and opinions

We want to hear from you

Print Legal problems of SMEs report

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Before, during and after Covid-19:
legal problems of mSMEs in Ukraine