A few weeks ago, my team and I finally completed a complex contract negotiation that lasted several months. Multiple departments across our company and the counterparty took turns chopping up the agreement. We’ve all been there: what started as a clean document soon became a frustrating, mind-bending rainbow of redlines. It wasn’t clear where the parties had agreed and where we were still far apart.
One night, I finally said enough. I made an issues list that showed what contract items had not been agreed upon yet. Then, once we had agreed on the item, I shaded the row green. Having this document as a living document that people in either company could review greatly expedited the negotiation process.
No matter if you are a lawyer, a paralegal, or any contracts professional, never underestimate the power of an issues list, particularly with complex negotiations. An issues list is a document that shows open issues in a contract and is often used with complex contracts and negotiations. It has two main objectives: (1) helping your internal stakeholders understand and comment upon the business and legal issues and (2) moving negotiations forward with your counterparty. At the end of this article, I provide a free issues list template that you can download and use.
Help Your Internal Stakeholders
Legal contracts are often intimidating and difficult to understand, even for experienced lawyers and contracts professionals.. And when contracts become longer and longer, with input needed from various departments and with various exhibits, they can be downright overwhelming. Simply sending the contract to the internal stakeholder from whom you need input will inevitably lead to a response along the lines of “Help me understand this before I comment.” Their time is valuable, and they don’t want to spend it parsing through an opaque contract.
Get ahead of this. Instead, send them the agreement with an issues list. Explain that they can review the entire agreement but you have provided an issues list to pinpoint their attention. This way, you can get a response more quickly and more efficiently. You will also build goodwill with these stakeholders since everyone loves coworkers who make their job easier.
For instance, if you need finance’s approval on the invoicing process, you could write the section number and topic into the issues list, copy/paste the language, explain the clause and any concerns you may have, and perhaps provide a recommendation. You are more likely to get a concise response from that stakeholder using this approach. And, what’s even better, you can keep track of everything in one place (paper trail!), instead of over emails, chats, and comments in the agreement itself that you could accidentally send to the counterparty if you aren’t careful.
Move Negotiations Forward
Like your internal stakeholders, your counterparty will appreciate any clarity and efficiency to the negotiation process. First, instead of solely relying on redline turns back and forth where the internal comments build on top of each other over time, an issues list can help you keep track of the open items. Imagine getting on a redline negotiation call with the counterparty and pulling up the shared issues list (I recommend Google Docs), you can quickly move to the open issues rather than scrolling through a long contract. I recommend having a column in the issues list that asks each party to track (with their initials and date) updates they made to that specific issue.
Plus, the longer the contract, the more likely there are more exhibits that require each party to insert their unique information (such as SLAs, SOWs, etc.). Having an issues list will remind the parties that they need to complete this information. And like building goodwill with your internal stakeholders, an issues list can build goodwill with your counterparty since they will likely appreciate the work you put into creating it.
However, be warned, don’t mistakenly share your internal issues list with your counterparty. You risk disclosing confidential information you plan to leverage in the negotiations. To prevent this mistake, keep the internal and external issues lists in completely separate documents.
Interested in using an Issues List? I made a simple template for either your internal teams or the counterparty that you can download here for free that you can use. See you next month on the New to Contracts column, exclusively for Contract Nerds!
Jack Terschluse is serving as Corporate Counsel and Head of Procurement at Balto, a software development company. He strives to make Legal relatable and impactful. He is passionate about contracts and showing new in-house lawyers and contracts professionals the ropes so they never have to go it alone. He is a St. Louis native who loves his family, his dog, reading historical fiction, theology, BBQ, National Parks, The Office, fitness boot camps (or hates!), and bragging about St. Louis' Cathedral Basilica. He attended Washington University in St. Louis for undergrad and law school. Before joining Balto, he worked as a corporate associate at Lewis Rice LLC.