That is according to new research from Direct Line business insurance.
And this stress is having a major psychological impact, as 25% of decision makers said they were unable to concentrate due to anxiety over legal documentation and 24% said they had suffered sleepless nights.
A further 23% reported developing mental health issues, while 19% said the stress became so overwhelming they considered closing their firm or taking a step back from their business.
The study also revealed that decision makers have regularly made mistakes when reviewing or drafting legal documentation.
Nearly 20% reported they have made frequent errors, which may have put their organisation at serious risk.
Direct Line says stress and inaccuracies appear to result from a widespread lack of confidence - 28% of decision makers say they don't feel confident when it comes to drafting or reviewing legal documentation related to their firm.
This is partly because many types of legal documentation can be confusing.
Some decision makers may be struggling to understand certain types of legal documents because they are not researching the broader regulatory landscape.
Just 19% regard themselves as very aware of evolving regulations and how this affects their business.
Alison Traboulsi, product manager at Direct Line business insurance, said:
"56% of small business decision makers often struggle with reviewing and drafting legal documentation.
"They find the process stressful and confusing, which is leading to errors that could be exposing their organisation to legal risk.
"Prevention is better than cure. Many SMEs do not realise it is possible to get advice on legal issues, big or small, from other business providers, including their insurance company. This can help them improve their knowledge of the most common legal issues, reducing their exposure to risk."
Most confusing types of legal documentation, and the percentage of respondents who find it confusing:
- Contracts for selling and buying services to and from other firms 14%
- Documentation for contractors 13%
- Flexible working policies 12%
- Copyright and trademark licences 11%
- Data protection policies 10%
- Employee contracts 9%
- Covid risk assessment templates 8%
