Competency testing often refers to a system devised to assure successful performance on a specific test, in addition to other mandated criteria as a requisite to obtaining a high school diploma. Minimum competency testing is usually defined in one of two ways: as the acquisition of basic skills or as the demonstrated ability to apply basic skills to everyday life situations. The latter definition seems to be the most popular one. This paper examines major litigation that has occurred in the area of testing. Legal standards are explained and analyzed with reference to measurement principles. A discussion of future directions in which law and evaluation may move and strategies that educators might employ to better educate the legal profession about evaluation follows. A 22-item bibliography concludes the document. (JMK)