Redlining gets its name from the original method of editing a contract. The parties involved would pass a physical document back and forth, each armed with a different colored pen, to suggest, accept and reject edits before agreeing on a final document.
Of course, the process looks a little different in the digital era but the brass tacks remain the same. In short, it’s a negotiation over the content and wording of a contractual agreement and it’s the last phase in the contract lifecycle before signing and executing. It takes place when drafting a new contract and sometimes when renewing or amending an existing contract.
There are 2 areas where redlining can get messy: the practical aspects of communicating edits and the strategic challenges involved in coming to an agreement that satisfies both parties. Here are our top tips for redlining like a pro.
The nuts and bolts
It’s unlikely you’ll be using the old colored pen method but, if you don’t have a good system in place, it’s still easy to lose track of who suggested what when. In long, complex documents, you can miss changes made by other parties or muddle up older and newer versions. If you’re sending a document back and forth, you might also run into trouble with incompatible file formats. Plus, if you’ve ever fought a battle with your tab key and a set of bullet points, then you’ll know that Microsoft Word can be a nightmare for formatting.
The easiest way to avoid this is to use digital contracting software. Cloud-based software platforms allow all parties to read and edit the contract in real-time in a streamlined format. These platforms feature change tracking which means you can easily follow the timeline of edits. Many of them even timestamp edits, leaving a detailed audit trail. They also tend to have security features that help you control and monitor who has access to the contract. There are loads of products out there, and they all claim to save drafter tons of time and money.
Here are some of the options and what makes them stand out.
- PandaDoc - All in one solution
In addition to cloud-based contracting, PandaDoc offers tools for marketing, HR, and sales. To gain access to their redlining tools, you need their ‘Essential’ plan which is $19/month.
- Ironclad - Risk mitigation
In addition to their redlining tools and workflow manager, Ironclad has ‘guardrails’ in place that ensure every document gets the right approval from the right person at the right stage.
- Juro - Good free version
Juro’s free version doesn’t include all their tools but if you’re starting out or on a budget it’s a pretty good option. One of their handy features is the ability to split internal and external versions of a document.
- Litera - Popular in the UK
Litera’s 2 main redlining solutions are Litera Compare, which detects differences in two similar documents, and Litera Collaborate, which allows multiple parties to work on a single document securely. They have a suite of other offerings including project management and proofreading solutions.
- DocJuris - AI redlining
The robots really are stealing our jobs! Software like DocJuris uses artificial intelligence to analyze, pre-screen, and negotiate redlines to your template from anywhere, in any language.
The real deal
Dr. Chester L. Karrass - whose LinkedIn profile describes him as ‘The World Leader in Negotiating’ - says “In business, as in life, you don’t get what you deserve, you get what you negotiate.” But it’s not just about getting the best deal. It’s also about getting it done as quickly and as cheaply as possible.
Here’s some advice that will get you one step closer to taking Chester’s title.
Doing your research before you start negotiating will save you time later on. Make sure you research the company you’re negotiating with. This will give you a strategic advantage and help you make informed decisions. Get familiar with regulations and industry standards for the type of contract you’re negotiating. And spend some time with your team or client to clarify your objectives, priorities, and the concessions you may be willing to make. Understanding the must-haves and motivations will allow you to protect your interests, pre-empt pushback and get the best results.
Communicate and be thoughtful
Be transparent with the other party about what you need. You want to foster positive relationships not just for the duration of the negotiation but for future interactions too. Think about how your edits come across. Deleting or rewriting large sections without explanation could come across as hostile. Pairing a major edit with a concession can help keep the tone amicable.
Call in backup
Another set of eyes can help reduce the risk of errors. Depending on the nature of the contract, you might want to lean on the expertise of other teams in your business - whether that’s sales, compliance, or HR - to ensure you’re getting things right. The more you collaborate early on, the fewer edits you’ll have to make later on. Cloud-based software is particularly useful for sharing contracts and gathering comments from a range of people.
Don’t send in the grammilitia
As a lawyer, you’ve certainly developed a great eye for detail. You might be tempted to fix every split infinitive and misplaced comma but oftentimes errors like these make no material difference to the meaning of a sentence. Redlining details like this can be a waste of your time and risks irritating the other party.
Get back to basics
If you’re new to drafting, it’s important to nail down the must-have clauses that appear in almost all commercial contracts. Even a seasoned pro can get bogged down in the details so it’s worth stepping back and checking you’ve got all your bases covered.
Clauses that cover confidentiality, force majeure, termination triggers, jurisdiction (for contracts with parties from more than one country/state), dispute resolution, and damages (in the case of one party failing to deliver) are essential for an airtight contract that covers your client/company for all eventualities.
Rely on Templates
Wherever possible use sample clauses from the archives of legal research providers. It’s much quicker than drafting from scratch and makes it easier to ensure you are using the correct language and protecting your company or client. Even when you need to draft a customized contract, it’s worth making use of tried and tested samples as a guide.
Even so, it’s important to note that it won’t be as easy as copying and pasting. You need to ensure that the template you use will comply with both your industry and company and most importantly, that it’s appropriate for the situation. Be sure to carefully examine each contract, and modify it where need be.
And, if you’re pushing out contracts left and right (hello hyper-growth!) you may want to consider contract playbooks. A contract playbook breaks down a company’s standard contract terms sets out an explanation of each clause (along with fallback clauses), and notes at what stage a company will “walk away” from a contract. These playbooks make it easy to train new legal hires and align with any department (like sales, finance, HR). Not to mention, it makes hiring outside counsel a breeze. In short, with a good playbook, anyone you bring on the team can offer near-immediate help.
A playbook may take several forms depending on the needs of a company. It can be as simple as a chart setting out general contract negotiating principles, or a fully-integrated library of form agreements, contract clauses, negotiation/approval policies, deal-review processes, etc. With the number of teams still operating remotely, having a playbook in the cloud is a must. Platforms like Lexcheck & Lawgeex can help set up and maintain your playbook. There are even some that have a library of templates, like DocJuris.
Be careful of ambiguities
This may sound like drafting 101 but being clear and concise is essential to prevent legal challenges later on. Define all-important terms upfront. Use short sentences where possible. Avoid dangling modifiers. Where a word or phrase has 2 meanings, try not to use it for both purposes in the same document. Take care with ambiguous use of pronouns or plurals.
Top-notch drafting requires an understanding of the big picture and attention to the tiny details. Champion redliners need a mixture of soft and hard skills - from charming the counter-party and knowing just how hard to push to applying the right pronouns and mastering the software. Learn to do it well, and you’ll gain an invaluable skill that will help your business or client get exactly what they need from the counter-party
We’ll be the first to admit redlining can be a doozy. If you’re looking for part-time help or would like to fill a full-time position, we have a diverse talent network ready to suit your needs.