KEY TAKEAWAYS:
- Develop streamlined templates and playbooks, institute a liability approval matrix, prioritize security/privacy compliance, and offer an internal KPI.
- Utilize templates and other automations and, when feasible, implement a CLM solution.
- Leverage sales tools and provide self-serve documents, training, and empowerment.
While a startup’s first or only in-house counsel typically supports many areas of the business, often their primary objective is partnering with Sales on commercial contract negotiations. Having been the first legal hire at three SaaS startups, and an early legal hire at a fourth, I have learned what it takes to successfully accelerate a startup’s deal cycle. This article provides an overview of 10 critical to-dos for a first or only contracts lawyer at a startup.
Challenges in Selling Without Efficiencies, Automation, or Enablement
First, consider how a startup company’s sales journey can be a lengthy, arduous process involving an enterprise customer’s Legal/Procurement and Security/Compliance teams.
A customer’s Legal/Procurement teams may:
1) require their own lengthy contract template, which does not map to what or how your company sells;
2) make one-sided demands about liability and risk, out of proportion to any risk your products/services may present; and
3) engage in long, unfettered negotiation cycles in accordance with their resources and availability instead of being aligned to your startup’s deal targets and timelines.
Then, the customer’s Security/Compliance teams may require lengthy security questionnaires, overbroad security contract addendums, and invasive compliance audits post-contract.
Where can this lead? Slow deal cycles, frustrated business teams, and the startup taking on outsized risks just to close deals. That is, until you implement a legal strategy for streamlining deals with enterprise customers. Read on for suggestions on how a SaaS startup’s first in-house counsel’s use of efficiencies, automation, and enablement can help solve this common problem.
Efficiencies
Pro Tip: Develop streamlined templates and playbooks, institute a liability approval matrix, prioritize security/privacy compliance, and offer an internal KPI.
1. Templates and Playbooks
- Streamline Templates. Streamline your SaaS deal templates (Master SaaS Agreement, Data Processing Addendum, Data Security Addendum, Non-Disclosure Agreement, Service Level Agreements) to remove unnecessary friction and align the terms with what’s market for your company. For example, if you are a B2B SaaS vendor and you see comparable SaaS vendors providing uncapped liability for third-party claims of IP infringement in respect of their product, confer with leadership to see if it makes sense to offer that in your template or as a fallback. Also, consider Bonterms – a suite of open source templates including a cloud terms agreement, professional services agreement, DPA, and more, all negotiated by cover page instead of via back and forth redlines.
- Contract Cover Pages. For each template, create a cover page or intro paragraph that explains what and how you sell, privacy/security nuances applicable to your company, and the reasoning behind key terms in your forms. Your Sales team can utilize these to position to the customer why your company’s paper is the fastest way to closure.
- Playbooks. For each template, also build a contract playbook with several levels of compromise or fallback language, along with the reasoning you will provide the customer for each issue.
Learn More: To learn how to create a practical contract playbook, watch this on demand webinar by Roma Khan!
2. Security and Privacy Compliance
Ensure your company’s website privacy policy and terms of use are clear, compliant, and customer-focused. Partner with your Security/Engineering stakeholders to create a “Trust & Privacy” page on your website with an FAQ on privacy and security, and references to your SOC, ISO 27001, and other certifications. If your company isn’t yet certified, offer to partner with Security to obtain these. Once you complete your SOC 2 audit, you can leverage that in contract negotiations and offer to provide annual SOC reports in place of invasive audit terms.
3. Liability Approval Matrix
In alignment with leadership, document a structure for approaching your indemnification and liability cap negotiations at different price points–and other criteria–with an approval matrix for exceptions. Then, track the liability caps and terms you agree to with customers. You are likely to be asked for this during financing rounds and other activities involving due diligence.
4. Internal KPI
To set expectations and build trust with your internal stakeholders, provide an internal Legal KPI for contract review and redline turnaround times. Be sure to provide realistic timelines for reviewing and redlining customer forms vs. your company’s templates.
Automation
Pro Tip: Utilize template and other automations and, when feasible, implement a CLM.
5. Streamline NDAs
To free up time, streamline those high-volume NDA reviews by implementing a short, agreeable mutual NDA template for Sales to lead with, e.g., oneNDA. Like Bonterms, oneNDA is negotiated by cover page instead of via redlines. Automate your NDA template (and others, e.g., your DPA) by uploading a pre-signed PDF version into your e-signature tool, and then providing Sales a link to share with customers.
6. Contract Lifecycle Management (CLM)
Plan to implement a contract lifecycle management (CLM) system as soon as budget and bandwidth permit. In the meantime, institute a contract naming convention and develop an organizational structure and digital filing system for all contracts to enable ease of implementation once you have a CLM.
Enablement
Pro Tip: Utilize Sales’ existing tools and provide self-serve documents, training, and empowerment.
7. Utilize Existing Sales Tools
In engaging with your Sales team on contract requests, utilize Salesforce and other tools they already use instead of requiring them to use a new “Legal” tool. For example, I’ve found that for B2B deals, most Sales teams primarily use Salesforce. By enabling sellers to submit Salesforce Cases for contract requests your sellers will stay in the Salesforce platform. Legal can also utilize Salesforce to self-serve information about the deal and customer. Many automations and most CLMs integrate with Salesforce. What won’t be well received? Requiring Sales to use a legal-specific request form in Word, e.g., “fill out and email to us this 3-page Word document with every detail of your request.” When you’re working to speed up deal cycles and build rapport with your sellers, this can frustrate the process.
8. Self-Serve Templates
Enable Sales to simplify their workflow by making relevant contract templates available to them via an internal shared drive or repository. Include FAQ documents to share with customers that explain these templates at a high level, and provide your sellers with talking points on the efficiency of using your forms. Where possible, put these forms on your website as well. Work with Finance to create an internal “Vendor Information for Customers” document that lists your company’s name, address, tax ID, and banking information, and also has links to your COI and W-9 forms. A self-serve approach eliminates Sales having to repeatedly request basic information from Legal or Finance, and helps ensure efficient vendor onboarding with customers.
9. Training
Provide training to Sales on your contract templates and key terms. Not only is this helpful for their customer engagement, but understanding contracts can also be beneficial for their long-term professional development. Ideally, you’ll provide training at least annually to the Sales team, for all new sellers, soon after their start date so they can quickly ramp up on who to work with on deals and how. It’s key to show that you approach the legal function as a business accelerator and partner to Sales, and it helps to make the training short, fun and interactive. In addition to high level guidance on basic contract terms – such as termination, indemnification, limitation of liability – you can also partner with Security to provide mini-trainings on those privacy and security topics your customers have questions and concerns about.
Learn More: Want to upskill your current team? Check out the Contract Nerds Vid
10. Empowerment on Low Risk Terms
Identify those MSA terms you regularly “give on” in customer negotiations, then discuss with Finance and other stakeholders whether Sales and/or RevOps can be empowered to negotiate those on an Order Form basis without Legal’s involvement. For example, you could suggest including fallbacks in the Order Form that allow Sales to offer up to Net 60 instead of Net 30 payment terms, remove auto-renewal language, or provide options for choice of law/forum. Empowering Sales to negotiate low-risk MSA terms on an Order Form basis can give them some early leverage on their deals.
By utilizing these strategies, a SaaS startup’s first or only in-house counsel can demonstrate their value as a business accelerator early on. This will provide a solid foundation for you to build on for continued success with stakeholders throughout your company.
