Perfect vs. Done: How Do You Know When A Contract Is Ready?

One of my favorite movie moments of all time is Al Pacino’s speech in Any Given Sunday.

“On this team, we tear ourselves and everyone else around us to pieces for that inch . . . because we know . . . that’s going to make the [bleeping] difference between winning and losing, between living and dying.”

As law students and newly minted law firm associates, we are challenged to prove our professional worth by ensuring that every inch, every clause, every word in a contract is perfect. Punctuation errors and glitches in the autonumbering generate untold stress.

When you start your first in-house position, the game changes immediately. The relative importance of volume vs. speed skyrockets. You are no longer measured by how many hours you can bill to a project. No one is checking to see if you are missing a comma on page 4. Instead, you are being tasked with closing contracts quickly and efficiently with the business needs at top of mind.

So to succeed in-house, you must expand your toolset. Technical legal excellence still matters–but now you must make judgement calls between a perfect contract vs. a done contract. Often speed will matter more than making every inch of a contract into a textbook dream.

Your contract tasks will exist along a continuum. A few will merit the fight for every inch of perfection. The vast bulk require only that you win on a few points critical to managing the company’s risk. Some just need to be done as quickly as possible so that you can focus your time on other items. So how do you determine when a contract is good enough? Here are four guidelines I use to ensure I strike the right balance between perfect vs. done.

1. Get the simple, low risk agreements done quickly.

Ideally you should have a process for getting simple, low-risk agreements done without attorney review. Automation is the ideal. Templates are necessary. Paralegals and other team members are invaluable. Done is more important than perfect for these. Here is what matters:

• NDAs –Use a market-aligned template. Keep revisions minimal. Only invest time if you receive something that has terms outside the norm, like information security, liquidated damages, or broad indemnities. Push back on those as needed.
• Low-dollar Purchase Agreements – Maybe you can use a standard purchase order form. Or perhaps it is easier to just go with the other party’s form. These types of contracts are necessary to do business, but you aren’t going to add a lot a value by fighting for an inch here.
• Amendments to Business Terms in Client Contracts – When amending contracts to extend the term, change the price, or add a product or service, have a template or process readily available. Prevent unusual terms from slipping in. That’s it.

2. For sales contracts, focus on what matters.

You probably have a lot of sales contracts on your desks. That’s great! It means your company is making money. In this category, done is more important than perfect. Here is what matters:

• Critical Terms – Every business will have a few critical terms. Frequent fliers are limitations of liability, intellectual property, and anything impacting the value of the deal (price, term, services definitions). Focus on these.
• Limit the Redlines – When a client or counterparty opens your redline, their first impression will be visual. If they see a ton of red ink, they might just close the document and send it back. Be strategic. Do not make redlines just to improve style points. It’s annoying. If a provision is non-applicable, think twice before deleting it. A streamlined contract is technically better. But, is deleting the clause it really worth adding the red ink and the angst?
• Turn Times – Your sales team will always want sales contracts done yesterday. While expectations may be unrealistic, speed does matter. Faster to contract is faster to revenue.

3. High risk contracts merit more attention.

Guarding the business against risk is a core responsibility of the legal function. Some business activities are inherently risky. Ask yourself “What is the worst that could happen if everything goes wrong?” If the answer is loss of life or economically substantial loss of property, you need to ensure that the company is as protected as possible against a catastrophe. This will require a deeper review. Perfect (or near perfect) may be more important than done for these. Focus on:

• Limitations of Liability – Having a liability cap is critical. Keep a close eye on the exclusions. These can be make or break.
• Insurance – Know what your insurance will cover. Try to match your coverage to the commitments as closely as possible.
• Performance Standards and Scope – Avoid vague standards like “best in class”. Align your scope of responsibilities to your scope of service.
• Force Majeure – These are sometimes treated as boilerplate. But, if you are working on high-risk agreements learn how to draft a strong force majeure clause.

4. Every inch matters in big, strategic agreements.

There will be a few big, strategic agreements. These should be easily identifiable. Your executive team will be involved. The dollar amounts will be high. Success will be very impactful and visible. You won’t win every point on these agreements, but you need to make trade-offs intentionally.

The classic example is merger and acquisition agreements. These agreements are complex. A stray sentence can have big economic impacts. They have tail liabilities. Even in a successful transaction, both parties are likely to pull the agreement out a few times over the years to make sure each provision is met.

This is why merger and acquisition agreements are almost always drafted by expert counsel from outside law firms. Specialized outside counsel is better equipped to deliver at the level of perfection required for these agreements. Your role as in-house counsel in these agreements is to understand the business impacts of each clause and help the business make the necessary risk tradeoffs.

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You will need to draft many other types of contracts over the course of your career. Taking a moment at the beginning to consider the trade-off between perfect vs. done will serve you well. It will make you more efficient, improve your relationship with the business, protect your work/life balance, and ensure that your company has the protections it needs when it really matters. This is a must-have skill.