Trading contract redlines back-and-forth can feel like a tennis match, and it’s not just about making edits. Knowing how to redline effectively will save time and create a better experience for all stakeholders involved.
Ineffective redlining can also push internal customers (like sales, customer success, or marketing) towards viewing legal as a roadblock instead of a partner. Knowing how to redline well saves time and creates a better experience for all stakeholders involved.
That’s why we wrote How to Redline Contracts: Best Practices for Better Back-and-Forth. Here’s a sneak preview.
Contract Redlining Best Practices
Redlining is a creative task. This means that lawyers must be artful in their approach. When staff focuses too much on specific language instead of concepts, they lose this.
“Lawyers should always read language and think, how can I be creative and accept this?” suggests LinkSquares’ VP of Legal, Jonathan Greenblatt. “This forces staff to slow down, consider intent, and work to accommodate.”
Legal teams that don’t operate from this principle cannot redline productively.
Instead, their default is to strike entire sections and add vetted language – even if they are comfortable with the concept. Perhaps the edits are minor, but the massive rip-and-replace red area is alarming to the other party.
In the spirit of minimal marks, also think about how much you need to define. As UpCounsel reminds, being too thorough may hurt you –
“Exhaustive lists of every alternative synonym not only make your agreement cumbersome to read but if you leave a term off your exhaustive list, a term that would usually be interpreted correctly had you not gone overboard might be misconstrued.”
Alternatively, lawyers can weave in light language edits in a show of partnership. This shift shows others that you’ve read and understand contract intent and aren’t out to ‘win’ the language negotiation.
Here are some tips for how to redline and mistakes to avoid when negotiating a business contract.
Mistake #1: Dominating Negotiations
The goal of contract negotiations is to get on the same page with your contracting party, not to impose all your preferences on them. Rather than insisting on all your terms, be more flexible and collaborative.
The important thing is that all parties agree on the fundamental concepts in the contract. So even if your writing is “better,” the redlining process will go more smoothly if you are more accommodating than you are demanding. Focus on agreeing on principles rather than being a stickler for language.
Also, you catch more flies with honey. By making this a collaborative experience rather than one where you impose your will on the other party, you’re more likely to set a good precedent and foster a good relationship between you and your future client.
Mistake #2: Too Much Red
Remember when you were in middle school and you turned in work that you were proud of, but your teacher marked all over your work in red ink? Remember how much you hated that? Consider that lots of people still get middle school flashbacks from seeing too much red on a page. In an effort to be a good partner, try using another, less intimidating color when redlining.
Also, too much red is an indication that there needs to be a phone call because you and your signer might not be on the same page.
Mistake #3: Redlining Everything in Sight
Sometimes, especially for high-dollar deals, lots of redlining is necessary. Understandably, you want to make sure that the terms align with your business goals.
But for low-value contracts, excessive redlining is, well, excessive. It’s counterproductive to spend all that attention and energy on a deal that doesn’t have high returns.
There’s no need for a hundred synonyms for a simple concept. As long as the idea is clear, then you can leave well enough alone. It’s called being a team player.
Mistake #4: Redlining Your Redlines
After you’ve made a redline, don’t redline your redline. Just make a fresh suggestion. And if your partner redlines something you’re okay with, accept the changes and move on.
When the document looks clunky and it’s hard to tell what belongs to whom and who agreed to what, which can add days to the contract negotiation process. And it’ll be money you can’t recoup because the contract has a low dollar value.
Takeaways
Redlining is a team sport. It can help you establish great rapport with your partners and take a lot less time if you release your ego and put down the red pen. Avoiding these mistakes can help the deal go more quickly and smoothly.
Download the eBook for more insights on the dos and don’ts of redlining.
