Four Responses You Can Use on a Redline Call

When on a contract redline call recently, I felt overwhelmed by the infinite ways I could respond to the counterparty’s request for more favorable indemnification language. This is what scholars call the tyranny of choice: more choice doesn’t always lead to the best outcomes. I thought to myself, “I really should distill down the many ways you can respond here into a few categories. That way I will have more confidence.” Thus, this idea for this blog post was born.

There are so many blog posts about redlining when you are sitting at your desk on your own time. In these situations, you can carefully consider a redline request, type out your comments in Word, etc. But when you are on a redline call, you are in the heat of the moment and are expected to respond in real-time.

So what do you do? Remember that a redline call is a negotiation of a contract. So the more prepared and the more confident you are, the more likely you are to achieve your desired outcomes. Whether you are new to contracts or more seasoned, here are four responses you can use to help navigate a redline call.

1. “Yes, we can accept that.”

When to use this response

Use this approach when you are confident that you can accept a redline request (and be sure to say it enthusiastically if the request is for a redline that has gone through many iterations of negotiation– celebrate the wins with your counterparty when you get them). You may be confident because your business has accepted this type of risk in a prior deal similar in size and scope to this deal, or you may have been advised to accept this request by your business teams or supervising attorneys. Or, perhaps, you can use this approach as a conditional acceptance, such as, “We can accept this so long as you can agree to our proposed changes in the section below.”

When NOT to use this response

Don’t use this approach when the redline request carries too much risk for your business or when you want to try to get better language out of your counterparty (but that is risky – take your win when you have it and use that momentum to get other wins).

2. “No, we can’t accept that because…

When to use this response

This approach is the inverse of the previous approach – for instance, use this approach when your business has never accepted a redline request like this one. The emphatic approach of your denial – not even suggesting other edits – should signal to the counterparty that that redline request needs to leave the deal or needs to be altered significantly. It is equally important to explain the reason for the rejection so your counterparty has some context and can use that justification to determine their next response.

When NOT to use this response

Unless you are trying to get even better language out of the counterparty, don’t use this approach when you are confident you can accept a redline request. It is risky to lie to your counterparties and to hold onto obvious wins.

3. “We can’t accept that, but how about this…”

When to use this response

Use this approach when you can’t accept the redline request as-is but you have an idea to improve the language. This approach is particularly useful if you have an internal document at your fingertips that will allow you to suggest other language (or perhaps you already know in your head what to suggest, or you have an easily readable contract playbook at your fingertips).

When NOT to use this response

Don’t use this approach if the other approaches are more applicable, i.e. you can or cannot clearly accept something, or, more importantly, you need time to think about the request.

But your most potent and safe response is the following…

4. “Understood. Let me think about it offline and get back to you.”

When to use this response

This approach is your best friend. This approach accomplishes a few things: (1) you haven’t committed your business to anything, (2) you’ve bought yourself time, and (3) you’ve shown your counterparty that you are a thoughtful person who isn’t just shutting them down immediately, even if you eventually tell them no. Use this approach when you are not certain whether or not you can accept a redline request and you don’t have  alternative language ready. Perhaps you need to get approvals or perhaps you need time to research. The good thing is, you don’t need to explain yourself.

When NOT to use this response

Unless you are trying to get better language and need time to consider your ask, don’t use this approach if you are certain that you can accept a redline request. Don’t waste the counterparty’s time and patience, two valuable resources in a negotiation.

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Tune in to more articles in the New to Contracts series by Jack Terschluse—Head of Legal and Head of Procurement at Balto­—exclusively here on the Contracts Blog. If you’re not already a subscriber, we welcome you to subscribe here to our weekly newsletter providing new articles, free events, and other resources on contracts. #contractnerds #newtocontracts