The legal department of a business handles legal issues that may come up in the course of business, ranging from drafting waiver forms for employees to handling lawsuits from angry customers. Many large companies have this type of department; smaller companies may choose to keep a lawyer or a staff of lawyers on retainer, ensuring that they have quick access to legal knowledge when they need it. Customers can often find themselves interacting with the department, especially when they file complaints or indicate that they believe a business is not operating within the law.
Members of the legal department are typically trained and qualified lawyers, along with a support staff of legal assistants and other law professionals. Ideally, the department focuses only on tasks that require a trained lawyer; in other words, employees may look over a letter from an executive to ensure that it will not cause problems in the future, but they will not draft letters for members of the company, unless the letters pertain to legal matters.
One of the most important roles for employees in this department is as legal advisers. Before marketing a new product, staff members will often discuss it with the lawyers. Executives may talk with the staff about potential legal issues ranging from being accused of discrimination in hiring practices to sexual harassment. The department may also offer training and assistance with employee manuals to ensure that the company and its employees are kept up to date on workplace law, reducing the risk of potential suits.
The legal department will also become involved in customer complaints, ensuring that the responses to these complaints are drafted in a professional style that also covers the company's bases legally. In the event that a company is sued, either from within or from the outside, the department will represent the company in the suit. It also handles the filing of patents and other legal documents with official agencies.
In a large, multi-national company, the legal department can be massive, approaching the size of a large law firm. The lawyers may come from different nations and have different training backgrounds, ensuring that every aspect of the company's business is covered, from a manufacturing plant in England to a bank in India. The staff members may also work together on deals, using their years of experience to vet proposals and documents, ensuring that the company is getting the best legal representation and advice possible.
Legal Team Structure
There are three main ways businesses incorporate a legal team as part of their business structure.
In-House Legal Departments
The largest and most apparent method is to have an actual legal department as a part of the business. This means having an entire group of people solely devoted to handling legal matters for a company. Sometimes this group might be two or three people and sometimes it can consist of hundreds of employees. The size of the legal department usually directly correlates to the size of the company itself.
Divisions or Sub-Departments
A second way that organizations obtain a legal team is by having a few people under another department specifically devoted to legal matters. For instance, as a part of the Sales or the Human Relations Department. Usually, this type of legal team might be considered a division or sub-department rather than a separate department of its own. This occurs more frequently in medium or small-sized companies rather than larger companies. Under these circumstances, the legal team might be around 3-10 people, though it is possible to have less or more depending on the needs of the company. Occasionally, this "team" might even simply consist of a single lawyer on staff.
Third-Party Legal Firms
The third way that a company might have a legal team is by hiring a legal team outside of the company itself. These third-party legal teams usually consist of a business contracting a law firm from outside of the business rather than including the legal team as a part of the business's direct employees. Very small businesses or businesses that rarely require legal intervention might gravitate towards this sort of legal team to help cut down on costs or retain valuable physical space.
Legal Team Members
Just as there are several different ways a business can have a legal team there are also many different members that a business might want or require to be on that legal team. At the bare minimum, a single licensed lawyer is a necessary component of every legal team no matter its size or structure. Often, legal teams will consist of more than just one lawyer though. Some other team members that legal teams might employ are:
- Secretaries or Administrative Assistants
- Paralegals
- File Clerks
- Contract Administrators
- Corporate Counsel
- Chief Legal Officer
- Transcriptionist
Many legal teams require more than one certified lawyer as well. Different lawyers specialize in different subject matters. There may be generalized business lawyers as well as very specifically trained lawyers for precise subject matters. Here is a list of some of the common areas that business lawyers might specialize in:
- Corporate Law
- Finance Law
- Employment and Labor Law
- Environmental Law
- Intellectual Property Law
- Contract Law
- Consumer Goods and Services Law
- Tax Law
The type of lawyer necessary for each business depends on what that specific business is involved in as well. For instance, a music recording studio might additionally hire an entertainment lawyer to deal with entertainment-specific legal matters that arise. On the other hand, a hospital would likely want to have a medical malpractice lawyer and a health insurance lawyer on staff to handle many of its legal matters.
How many different areas of focus a company requires often determines how many lawyers that company needs as well. Very large companies and companies that span great distances or have multiple locations may also hire multiple lawyers of the same type to cover the expansive needs of the organization. Sometimes legal departments will even have entire sub-departments or divisions for each specific area of law that the company is regularly involved in.
Why Is the Legal Department Important in an Organization?
There are multiple reasons that a legal department is an important component of an organization. For one, companies need legal teams in case they get sued. Lawsuits can be detrimental to an organization. They can destroy a business's reputation if not handled correctly, they can quickly become a substantial financial burden, and, in extreme circumstances, they can force a company out of business completely. Having a legal department that is knowledgeable and prepared to swiftly handle any lawsuits that attack the company, can make the difference between victory and defeat.
Legal teams are also important for the day-to-day workings of a business. Many businesses require transactions and contracts between different entities and a good legal team can help the company produce well-developed contracts that keep the company's best interests in mind and safeguard it from most lawsuit possibilities. Efficient legal teams also help protect their organization's financial, intellectual, and physical properties to keep the business in good standing and ensure it continues to be profitable.
Frequently Asked Questions
What role does the legal department play inside an organization?
The legal department of a business is in charge of giving legal advice and direction. This involves providing legal compliance advice, drafting and reviewing contracts, defending the firm in legal disputes, and managing any legal risks the company may face. People management (roles and responsibilities, structure, motivation, and culture), workflow management (processes, techniques, and systems), information, knowledge, legal service providers, and other essential resources are included in corporate legal department management.
What exactly are the legal department's roles and responsibilities?
The roles and responsibilities of a legal department might vary depending on the size and nature of the business. Typical roles include contract administration, legal assistance to firm executives, litigation and dispute management, ensuring compliance with laws and regulations, and resolving arising legal issues.
Why is it essential for a business to have a legal department?
Typical roles include contract management, legal assistance to corporate executives, litigation and dispute management, ensuring compliance with laws and regulations, and resolving any legal challenges that develop.
Why is it important for an organization to have a legal department?
A legal department assists companies in navigating difficult legal challenges, reducing risk, and ensuring legal compliance. Businesses that have in-house legal staff can also save money on legal bills and respond to legal matters in a more effective and timely manner.
What education and experience are required to work in a legal department?
Working as a lawyer in a legal department normally requires a law degree and relevant legal expertise. Additional essential credentials may include a thorough understanding of company law, taxation, labor law, contract drafting, negotiating experience, and good communication and interpersonal skills.
What is the relationship between a legal department and outside counsel?
To provide extra legal experience or handle more difficult legal concerns, a legal department may collaborate extensively with outside counsel, such as law firms or specialist attorneys. The legal department may also be in charge of managing the relationship with outside counsel, such as negotiating costs and supervising the work of outside counsel.