The Logic Behind Implementing Legal Department Indicators

Incorporating legal department indicators on a balanced scorecard is indeed an effective technique that should be used by companies to determine progress and performance of their own legal departments. These indicators function much like the way KPIs or key performance indicators would, in the fact that they are quantifiable in nature already. This makes it much easier for your company’s legal department to check its performance because the measures are already translated into significant figures. All that has to be done would be interpretation and analysis of these figures and you would then have a clean-cut description of just how your legal department is presently doing.

In just about any corporate setting and industry, the legal department is actually that particular division that is responsible for the creation of policies, rules, and regulations that each member of the company or organization has to carry out and observe. Apart from that, the legal department is also in charge of handling any legal matter that the company faces. This includes the event of entering contracts or agreements, creating such contracts, creating proposals, dealing with internal legal disputes, incorporating discipline amongst members of the organization, and so many more. Such roles and responsibilities are very important and should be carried out with utmost care by any company. This is precisely why it is important for a company to monitor the performance and the effectiveness of its legal department – for there is just so much entailed in its tasks and responsibilities.

At present, there is much demand for performance measures and metrics to be more than satisfactory so that these would be effectively used in gauging the performance and value of any company’s legal services. It goes without saying that the success of any company also comes with the effectiveness of its legal department.

There are actually several perspectives to keep in mind here – financial, customer, internal business processes, and learning and growth. All of the perspectives here should have corporate goals and objectives incorporated here, as well as the company’s vision and strategy. This is something that should be practiced by retailers and manufacturers – how much more by legal departments. More importantly, the performance measures and indicators to be used here should be just a few relevant, to give way better interpretation and analysis. It might be tempting – even too tempting – to go with a lot of indicators. But really, it would be better to go with a relevant few.

Contrary to popular belief, the balanced scorecard is not a complicated tool to use at all. In fact, using the tool entails a simple process and it economical as well. You do not really need to be a master at measurement or an expert at evaluation and analysis to use the tool efficiently. Your company does not even have to shell out that much money for the development of the tool itself! The internet is laden with sources and materials that you can use in developing your scorecard. And if you are not too sure which particular legal department indicators to use, you can resort to using the ones used by other legal departments – only as mere guides, of course. The bottom line is, for your scorecard to be effective; you need to use indicators or measures that are relevant to your company.

Advantage of Using BSC For Legal Departments

Using the BSC for legal department measurement and evaluation is a technique that may be employed by a lot of companies in order to determine the performance level of their legal departments. This way, the method of evaluation is made simpler and more efficient with the use of a time-tested and proven evaluation tool.

The legal department of a company is in charge of making sure that the rules, regulations, and policies of the company are being carried out and observed by its members. Also, the department is given the task of handling all the legal matters that may be faced by the company, such as entering into contracts, making proposals, handling internal disputes, discipline of members, and the institution of suits and answering them, in case the company is made subject of one. This shows that the legal department has one of the most critical functions in the company structure. Hence, there is a need to constantly monitor its performance and effectiveness.

The present day has a large demand for satisfactory metrics and performance indicators in order to properly gauge the value of the legal services that are delivered by the concerned department in a company. Being a part of the latter, the success of the company has a large bearing in the success of the legal department because it handles one of the most crucial aspects of the functions of the company.

In taking consideration of the basic perspectives that affect a company, such as the financial, customer, internal business processes, and learning and growth, in relation to the vision and strategy of the company, the performance of each department can be better evaluated because of the specific concentration on each perspective. More so in legal departments, where in certain cases, the very existence of the company is placed on the table. The relationship of the legal department to the company in terms of the four perspectives involved in the balanced scorecard is also highlighted in the determination of its performance level.

As a feature, the balanced scorecard is a very simple measurement and evaluation tool to use in gauging the performance level of a department, or the company as a whole. Also, this instrument is a very economical tool to use. This reality is contrary to the general idea that using performance evaluation tool is a very complicated process, needing the expertise of measurement and evaluation experts and causing the company to incur a lot of expenses. With the fact of its ease of use and economical nature, the company will undoubtedly experience a more efficient evaluation process without the allotment of a lot of expense.

The value of the legal department to a company cannot be discounted. Using the BSC for legal department evaluation will certainly prove to be a good move for the company, considering that efficiency and economy are always in the forefront of the list of objectives of every company. All that has to be done is to know how to implement the tool and everything can be expected to flow downhill from there.

2009 Resolution – Give Your Site a 10-Point Legal Check-Up

It’s early in the year, and it’s time to fulfill your resolution to give your site a quick legal check-up.

Online businesses are now highly regulated, and there’s substantial liability if you site’s not legally compliant. In addition, your customers are becoming more Internet savvy, and a site that’s not legally compliant is not going to be trusted. So, let’s get started.

Use This Checklist If You Already Have The Basic Site Documents In Place

1. Copyright Notice. Check Your Copyright Notice. Your copyright notice consists of the following elements: the word “copyright” or copyright symbol (c in a circle) followed by the year of first publication followed by the name of the copyright owner. It’s also a good idea to add “All rights reserved worldwide”. Example: Copyright 1996-09 Digital Contracts, Inc. All rights reserved worldwide. Note that if you update your site from time to time, you should add a date range reflecting the fact that the site has been updated each year within the date range. If you haven’t updated yet for 2009, do it now.

2. Blogs, etc. Have you recently added a blog or any other functionality that permits visitors to post text or digital files to your site? Or, do you plan to do so as part of your marketing plans for 2009? If so, you need to have a DMCA notice in your Terms of Use and you also need to file a DMCA Registration form with the U.S. Copyright Office. These steps will create a “safe harbor” from strict liability for copyright infringement if a site visitor posts infringing material to your site.

3. Personal Information. Do you collect personal information from site visitors? If so, review your Privacy Policy to make sure that you identify all of the categories of personal information you collect and the way in which you share this personal information. If you’ve changed these policies since you posted your Privacy Policy, amend it now… without delay.

4. Data Security. Check your data security measures. If you collect personal information, you are required to implement “reasonable and appropriate” data security measures. These measures are essentially moving targets since data security technology evolves at a relatively rapid pace. What may have been “reasonable and appropriate” a couple of years ago may not pass muster today. Update your security procedures, if necessary.

5. Future Sale of Your Business? If your online business is starting to be successful and generate positive revenue, have you ever considered that you might want to sell it for a profit in the future? If so, be sure that your Privacy Policy specifies that personal information collected may be transferred and shared in the event of a sale. If you don’t do this prior to collecting personal information, you won’t be able to pass it on to your purchaser. The Federal Trade Commission (FTC) stipulated in recent settlements that personal information collected prior to posting this notice in your Privacy Policy will not be transferable in the event of a sale. And this personal information (your opt-in lists and customer lists) are the real value of your online business.

6. Service Providers. Do you use service providers to provide hosting, site maintenance, SEO services, or other site functions where they have access to your server? If you don’t collect personal information, your answer to this question is immaterial, but if you do (and only an email address will suffice), you need to enter into privacy and security agreements with your service providers. The FTC stipulated in a couple of recent settlements that you would be liable if you don’t.

7. Registration Agreement. Does your site require site visitors to register for certain benefits such as a membership or subscription rights? If so, you need an electronic agreement (a so-called “click-wrapped” agreement where the user clicks on “I ACCPET”). Your agreement should be presented conspicuously in the registration process and it should require an affirmative act (clicking on “I ACCEPT”) to complete the registration. You also need to be sure that all of your warranty disclaimers and limitations of liability pass muster.

8. Collect Birth Dates? Do you collect the date of birth as part of your registration process? If so, and if this date indicates that children under 13 are registering, you will be liable for substantial damages under the Children’s Online Privacy Protection Act (COPPA) if you do not comply with COPPA’s stringent requirements. You should either modify your information collection practices or comply with COPPA, or both.

9. Creditor Under FACTA? Do your registered users make periodic payments payable as monthly or quarterly installments, or do you extend credit so that payment is made after receipt of the product or service? If so, you fall within the statutory requirements of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FACTA requires that you adopt a “Red Flag” Identity Theft Policy before May 1, 2009, or face substantial liability.

10. Sales Intermediaries? Do you use affiliates or resellers? If so, a recent New York case illustrates that you may be liable for their actions if they violate certain laws acting on your behalf. For example, are your affiliates engaged in illegal spamming activities? If they are offering their own end user license agreements, do they properly disclose certain activities such as the use of pop up ads? You should check your affiliate and reseller agreements and modify them, if required.

Use This Checklist If You Don’t Have Your Site Documents In Place

You may be just starting your online business, or you may have procrastinated a little with your website legal compliance. If you fall into this group, you should get started without delay.

I’ve developed a procedure that will help you determine the correct mix of legal compliance documents for your site. Part of it is set out below.

First, if your site does not collect personal information, you should consider these documents:

* a Legal page for your intellectual property notices; and

* Terms of Use.

* And if you allow site visitors to post text or digital files to your site (for example via a blog, forum, or chat room), you’ll need a DMCA Registration Form (see No. 2 above).

Second, if your site collects personal information, but does not require registration to open an account or to use or purchase a product or service, you should consider these additional documents:

* Privacy Policy.

* And if you have service providers that have possession of your server or have access rights to it, you’ll need a privacy-security agreement for these service providers (see No. 6 above).

Third, if your site requires registration to open an account or to use or purchase a product or service, you should consider in addition to the foregoing documents, a customer agreement such as:

* a software as a service (SaaS) agreement; and/or

* a Software License Agreement (for software downloads).

* And if you are regulated by FACTA (see No. 9 above), you’ll need a Red Flag Identity Theft Policy — before the May 1, 2009 deadline.


The checklists provided above are not exhaustive. However, they should point you in the right direction as you give your site a new year’s legal compliance check-up. A simple check-up — and remedial action if necessary — is one of the best investments you can make in your online business.