Seven guidelines for when the legal department ought to be involved in contracts

In-house lawyers who handle contracts and agreements should always be thinking about the right balance between what the legal department does and what clients do. A handful of criteria (plus two) suggest whether the balance of work falls on lawyers or stays with clients. These distinctions may or may not be useful.

  1. Drafting contracts is closer to what a law department should do; tracking and entering information about them into a database is closer to what clients should do.
  2. Business-to-business agreements, such as OEM arrangements, are more likely to be the responsibility of the law department; consumer contracts fall closer to clients.
  3. Long, novel, and complex agreements belong to lawyers; short, repetitious, and simple ones more to clients.
  4. Transfers of intellectual property means law; no IP to protect means client.
  5. The more people are involved within the company, the more a lawyer may need to be involved; the fewer who need to review and approve, the more a client can proceed.
  6. Little leverage tilts toward lawyers; if the company has plenty of leverage, clients can proceed.
  7. Licensing deals – transfers of rights to intellectual property — fall to the legal group; purchasing and selling can often be handled by the client.

The poles on these spectra are somewhat fanciful but they may highlight some of the decision criteria for when stretched law departments should just say no. No matter what the guidelines, the legal department should readily review contracts that clients want them to review, on an exception basis.

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