Common Legal Terms All Non-Lawyers Should Know

Industry Advice Law & Criminology

Many professionals in highly regulated industries interact closely with legal counsel daily to ensure their organizations operate within the bounds of the law and avoid unnecessary lawsuits. Consequently, there is growing demand for non-lawyers who have the skills and knowledge to think and communicate critically about legal issues that affect their field.

One of the key skills for these professionals is understanding common legal terms. When working alongside a company’s lawyers, counsel may introduce a legal term or concept in a meeting that, based on their legal training, is “common” to them. That same term, however, might be foreign to the average industry professional. Imagine how much easier and efficient it would be, for both the individual and for counsel, if both parties could speak the same language.

Dan Urman, director of Northeastern’s Master of Legal Studies program, says understanding legal terminology is critical for all professionals, including entrepreneurs, healthcare workers, compliance officers, real estate agents, arbitrators, and human resource managers.

“Learning the language of the law not only makes these professionals more effective in their roles, but it gives them a competitive advantage,” he says. “If you’re able to understand and articulate legal concepts using correct language, you’ll stand out as someone who can interact effectively with counsel to protect ideas and organizational assets. Many attorneys bill by the hour, so if you can interact with them quickly and clearly, you can save your organization, and yourself, money.”

By learning common legal terms, you can execute your professional duties with confidence in your own expertise. While earning an advanced degree in legal studies is one way to improve your legal knowledge, here are some common legal terms for non-lawyers in a variety of industries to help you get a head start:

Legal Terms in Business

Action: An action is a lawsuit in which a party or parties sue one another. A cause of action is the basis of a lawsuit, such as fraud, breach of contract, or negligence.

Alternative Dispute Resolution: Alternative dispute resolution (ADR) refers to the use of a neutral third party to assist in reaching a voluntary, consensual settlement and avoiding litigation through typically confidential arbitration or mediation.

Articles of Incorporation: These formal documents establish the existence of a corporation, such as an LLC, S-Corp, or Inc., in the United States or Canada. Filed with the Secretary of State, these documents detail critical business information, including the legal structure of the corporation for tax purposes.

Civil Law: This is a generic term for non-criminal law as it applies to settling disputes between private citizens or organizations. Civil lawsuits might be about negligence, a breach of a contract, or a land dispute between neighbors. Civil liability is the responsibility for damages in a lawsuit, as opposed to criminal liability, which leaves parties open to punishment for a crime that could include jail or prison. Civil penalties are fines imposed by the government to enforce regulations, such as failure to obtain a permit or pay taxes on time.

Contract: A contract is a binding agreement between two or more parties that creates rights and duties for each party that are enforceable by law. They often outline processes for decision making and dispute resolution. Contracts can be written or oral, implied or expressed. In some cases, oral contracts have little standing in court.

Common contracts include:

  • Sales, manufacturing, housing, asset purchase, sales, employment, consulting, franchise, service, or licensing agreements
  • Confidentiality and non-compete agreements
  • Business partnerships, operating agreements, or stock agreements

Damages: Damages are awarded to someone who has suffered an injury or loss as a result of an action by another party. There are many forms of damages, including economic, physical, and emotional. Compensatory damages are recovered for injury or economic loss, whereas punitive damages are awarded to punish a defendant for his or her actions, such as negligence. A well-known example of punitive damages involved a woman who spilled hot coffee on her lap.  The jury, wanting to send a message to McDonald’s, awarded the plaintiff nearly $3 million dollars in punitive damages, although the amount was later lowered by a judge.

Force Majeure: This clause relieves the parties in a contract from fulfilling their obligations, due to an unavoidable event or unforeseen circumstance that could not be reasonably anticipated or controlled.

Fraud: Fraud is the intentional deceit of one party to deprive another party of his/her/its money, property, or rights.

Injunction: An injunction is a court order compelling a party to act or to refrain from a certain act, under the threat of civil or criminal penalties.

Liability: Liability is the legal responsibility for one’s actions. Failure of a person or entity to meet their responsibilities under the law leaves that party vulnerable to lawsuits for any resulting damages. Strict liability means a party can still be found guilty of an offense, even without any intent to harm.

Malfeasance: Malfeasance refers to the act of doing something illegal or morally wrong, including dishonesty and abuse of authority by a person or business.

Natural Person: In a lawsuit, a natural person refers to a human being as a party, as opposed to a corporation.

Negligence: Negligence refers to carelessness, or the failure to act in a way that a “reasonable or prudent person” would do in the same given circumstances. Negligence is different from intentional wrongs, such as assault or trespassing, but can still cause serious physical, emotional, or financial harm.

Nonfeasance: Nonfeasance is the failure to act when action is legally required.

Shareholder Agreement: This is a type of contract that determines the rights of shareholders and defines when and how they can exercise their rights, including the right to transfer shares, right of first refusal, or redemption upon death or disability.

Tort: A tort is an illegal act in which an injury occurs to another, whether intentional or accidental. Tort laws protect individuals from civil wrongs caused by individuals or by businesses, such as in the McDonald’s example above.

Legal Terms in Healthcare

Advanced Directive: Also known as a living will, these legal documents outline the specific actions that should be taken on a patient’s behalf should they become incapable of making their own medical decisions.

Anti-Trust: In healthcare, anti-trust laws are in place to protect competition and provide consumers with quality, cost-effective options. These laws prohibit monopolization and price-fixing among healthcare organizations.

False Claims Act: This act makes it illegal for an individual or organization to deliberately make a false record or file a false claim regarding federal healthcare benefits.

HIPPA: The Health Insurance Portability and Accountability Act (HIPPA) is a law that ensures patient privacy and protection of all physical and electronic medical records and other Personal Health Information (PHI).

Informed Consent: In medical treatment, informed consent must be given voluntarily by a patient before undergoing any medical treatment. To be “informed,” patients must have full knowledge of the procedure, possible outcomes, viable alternatives, and their rights to refuse treatment.

Malpractice: In healthcare, malpractice occurs when an individual is harmed by a doctor or healthcare provider, due to negligence.

Standard of Care: The degree of care required to prevent injury to another. If an organization’s actions do not meet this standard of care, they can be considered negligent.

Legal Terms in Intellectual Property (IP)

IP: IP refers to tangible or intangible personal property that is created through the intellectual efforts of its creators.

Trade Secret: Trade secret law protects any company information not “commonly known” which the company has taken “reasonable steps” to keep in confidence. They are protected under the law from “misappropriation,” or wrongful taking.

Trademarks: Trademarks protect logos and brands, helping to distinguish businesses from one another. The right to a trademark is automatically assumed once a business starts using a unique name or logo.

Patents: Patents are used to protect new or significantly improved products, and are effective only in the United States and its territories. Once a patent application is approved by the United States Patent and Trademark Office, a patent owner has the exclusive right to make, sell, or otherwise use and profit from the invention for a designated period of time. Before a patent is issued, inventions are considered trade secrets—unless they will be sold to the public.

Copyrights: Copyrights apply to tangible works of authorship. Unlike patents, they apply automatically. Copyrights prohibit the reproduction, distribution, modification, public performance, or public display of a work that is “substantially similar” to the original. CDs, books, and most software are automatically protected by copyright.

Non-Disclosure Agreement (NDA): An NDA is a contract in which a party or parties promise to protect the confidentiality of information obtained during the course of employment or business transaction. These agreements can be one-way or mutually binding, and generally include:

  • A definition of what constitutes confidential information (including what is out of scope)
  • How confidential information should be handled
  • Who owns the information
  • The time period for which the NDA will remain enforceable

Legal Terms in Human Resources

At-Will Employment: An employee-employer relationship for which there is no contractual agreement. Either party may end the employment relationship at any time and for any reason without incurring penalties.

Back Pay: These damages are awarded in employment lawsuits in the amount of money an employee would have earned had they not been unlawfully fired, denied a promotion, or withheld pay.

Discrimination: This term refers to the unequal treatment of a person for reasons that have nothing to do with legal rights or their abilities. There are federal and state laws prohibiting discrimination in terms of employment, housing, rates of pay, educational opportunity, civil rights, and use of facilities. A person who believes he or she has been discriminated against can file a lawsuit with the federal Equal Opportunity Employment Commission or their state agency.

Hostile Work Environment: A hostile work environment is one so fraught with harassment that it violates anti-discrimination laws and may interfere with the ability to do one’s job. Harassment claims can arise when the negative atmosphere is so pervasive that it creates an intimidating and offensive work environment.

Non-Compete Agreement: These agreements dictate that an employee will not work for a competing employer, or establish a competing business during, or for a certain length of time after, their employment with the employer.

Sexual Harassment: This term refers to any unwelcome sexual advances by an employer or supervisor. “Quid pro quo” harassment occurs when these unwelcome advances become a condition of employment or represent a threat to an employee’s continued employment.

Title VII: Part of the federal Civil Rights Act of 1964, Title VII law prohibits employment discrimination based on an individual’s race, color, religion, sex, or national origin. This act protects the unlawful hiring, firing, exclusion, or segregation of employees or applicants based on these conditions.

Whistleblower: State and federal whistleblower laws protect individuals who report illegal employer practices to authorities.

Wrongful Termination: An employee has the right to sue his or her employer for damages for unlawful discharge, or being fired without cause, although in recent years, court decisions have become increasingly strict in limiting the grounds required for employees to file a suit.

(For additional legal terms, check out glossaries provided by the American Bar Association or United States Courts.)

The Importance of Words

If you work in a highly-regulated industry like one of the ones discussed above, then there is a good chance that you will be required to regularly interact with the law, regulations, and lawyers. By having a firm understanding of the common legal terms that can affect your organization and industry, you can become a more impactful member of the team, acting as a liaison between legal and non-legal audiences.

Are you interested in furthering your understanding of the law? Earning an advanced legal degree can teach you the language of the law to help your organization stay compliant and move ahead in your career. Check out Northeastern’s Master of Legal Studies program today.