Contract redlines are a central — and sometimes painful — aspect of any contracting process. Redlines are essential to strategic alignment with external stakeholders as part of the negotiation process.
Since contract negotiation is a key step in the contract lifecycle, it's crucial to keep things moving by effectively managing redlines and communicating with signatories. Setting the right tone early on sets the stage for success in the subsequent stages of the process.
What Are Contract Redlines?
Contract redlines are the edits that each party makes to contracts during negotiations. Each party takes turns editing the terms of a contract so that the final agreement benefits all involved. Historically, contracts were marked in red ink — hence the name ‘redlines’ — to distinguish between the original text and the edits clearer.
Redlines can be minor changes in contract language or replace entire clauses. This is often one of the more tedious parts of the contract process because of the constant back and forth (or ‘turns’) between signers to come to an agreement.
Tips for Effective Redlining
Redlining can be one of the most time-consuming parts of the contract process, especially if the contracting parties don’t show up with an open mind or with a spirit of partnership.
To make the redlining process more seamless, here are some tips for effective redlining:
The Other Party Is Not Your Enemy
During the contract redlining process, each party wants to make sure that their needs are accurately represented in the contract, but pushing for your way or the highway can mean alienating your partner and drawing out the process longer than is strictly necessary.
You catch more flies with honey than vinegar. While ruthlessness is sometimes necessary in a competitive market, you can prevent emotional distress (and months-long negotiations) on both sides by finding common ground. Compromising on non-essential terms makes for smoother collaboration during contract redlines.
Watch Your Tone
As we’ve learned from Twitter, tones don’t always translate well over text. As Laura Frederick points out in an episode of Cockpit Counsel, it can be easy to take a condescending tone when writing comments.
Frederick suggests that lawyers tackle contract redlines in two stages: first, write the comment as it comes, snark and all. Then, once you’ve redlined the entire contract, go back and soften your language. This will go a long way in cultivating a strong relationship between parties.
Don’t Redline for Redlining Sake
It’s tempting to mark up a contract that doesn’t use the exact language you would have chosen, even if you agree with the basic terms.
But instead of redlining the contract for the sake of it, be strategic in what you call attention to and change. Save some of your negotiation currency for more substantive changes or terms that don’t reflect your business needs.
Takeaways
Contract redlining is an essential task for every lawyer. Think of the process as a collaboration rather than a competition. See how LinkSquares CLM can help streamline your contract negotiations. Request a demo today.
