A MAJOR threat to many York and North Yorkshire businesses is being tackled by a new initiative.

York-based law firm Denison Till has created a legal health check to help prevent new enterprises failing unnecessarily. The check, started by the firm's dispute resolution department, aims to establish whether businesses have effective legal safeguards.

Johanne Spittle, partner and head of commercial litigation, says hundreds of businesses flounder without adequate contractual safeguards to protect their interests and allow them to resolve both internal and external disputes without going to court.

The firm's initiative follows new Bank of England figures, which revealed that 5,500 businesses failed in the Yorkshire, Humber and North East Region last year. And a survey by NatWest showed that regulation, debt cash flow and paperwork were major problems for small businesses.

According to Denison Till, good practice procedures backed up by proper contractual safeguards can help businesses prevent a slide into administration.

Ms Spittle said: "Failure through inadequate contractual safeguards is a growing problem, especially where a high proportion of new businesses are in the new service technologies, which are replacing the more product-based industries.

"Entrepreneurs often start off in good faith with great ideas, but the sheer pressure of work leads to taking on staff, suppliers or partners for good commercial reasons, but with poorly-drawn-up contracts, or in many cases no contracts at all, which can lead in a very short time to disputes and often to business failure.

"This is unfortunate because it has nothing to do with the quality of what they do and, as a result, many futures are ruined, jobs lost and investment in research and development is wasted.

"The collective impact on the local economy is significant."

The company is now inviting businesses that are uncertain about their contractual protection to have them reviewed by a lawyer free of charge.

The service also reviews employee contracts and credit control arrangements.

Ms Spittle added: "This service addresses an important gap in business support."

Updated: 11:06 Monday, December 08, 2003