Let’s set the scene. Your sales team has been hard at work trying to secure this logo and it's finally paid off. Closing this deal will boost revenue and cement your company as a true competitor in your industry. As legal counsel, you don’t want to delay the deal, so you’re eager to finalize the contract. There’s just one problem: you want to change literally everything on the page.
This is a common issue during contract negotiation, which can take anywhere from a few hours to a few weeks, depending on the complexity of the contract and how nitpicky counsel is. You want to make sure that your interests are being fairly and accurately represented in the contract, so you start redlining everything in sight.
But excessive redlining can slow down the deal you’re working hard to finalize. Do you want to be responsible for holding up the deal and delaying revenue recognition?
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 this eBook for more insights on the dos and don’ts of redlining.
