Seven Tips to Draft a Balanced Contract that Speeds Up Deals


KEY TAKEAWAYS:

  • Contracts should prioritize business needs over legal battles to speed up deal closures.
  • Educating business teams on non-negotiables aligns expectations and streamlines negotiations.
  • Adapting contracts based on historical data and client feedback can significantly reduce negotiation times.

Seven tips to draft a balanced contract that speeds up deals by Ashkay Verma

If you want to speed up deals as a lawyer, there’s one thing to keep in mind above all else: business contracts are not between you and the other lawyer. They’re between two businesses and need to be treated as such.

Often, lawyers treat contract drafting and negotiation as a fight between themselves and the lawyer on the other side. They draft a “bulletproof” contract that’s not acceptable to any of their counterparts. They negotiate for weeks, wasting valuable time.

And, “time kills all deals” is a phrase we’re all too familiar with because that’s precisely what happens when you go down this path. Legal ends up becoming the deal-killer, all because you couldn’t zoom out and see the bigger picture. In reality, closing deals is a team effort.

Here’s how to avoid this and lead with balanced contracts instead.

1. Align with key stakeholders on your company’s risk profile.

Before you start meddling with your contract, you need internal alignment. As the lawyer representing your company, it’s important to zero in on what your business actually cares about. What are your negotiables and non-negotiables? Talk to your business peers, and your leadership, and arrive at a list.

2. Educate business teams on your non-negotiables.

After you’ve done your research and arrived at non-negotiables, it’s time to educate business teams on the “why” behind these non-negotiable legal risks. This needs to happen periodically so everyone is on the same page about what’s acceptable and what’s not acceptable, and can communicate the same to clients from day 1.

3. Understand that some deals need to be treated differently.

Picture this: You spend three weeks negotiating a clause and you end up losing the deal, only to find out later that the clause didn’t matter at all in that specific context. This is more common than you’d think. Often, the risk profile changes according to context, and you need to ensure that you have the context needed to draft a contract tailored to specific deals.

4. Look at historical data.

The best source of information for how to draft a balanced contract lies in historical contract data: go through executed contracts and make note of the most negotiated clauses, most common amendments, etc. If you’re agreeing to a certain amended version of these clauses in most deals, why not change this on your contract?

We did something similar at SpotDraft – we realized that a few clauses on our MSA were getting a lot of pushback from our clients (and for valid reasons!) We took a close look at what’s fair to both parties in each case, and made the following changes to our MSA:

  • allowing for termination for convenience;
  • solely taking all data security/ protection responsibility and indemnifying our customers for any breach of the same;
  • including service credits if our service experiences a downtime, and the availability reduces below a certain threshold.

The result? We were able to close deals 30% faster.

5. Talk to clients to understand their concerns.

Back when I was working at Axiom, one of our clients came to us with a problem. Their sales team was not very happy with the legal team—their contracts were taking too long. Despite having contract processes that everyone was adhering to, and despite leveraging technology the best they could back then (in 2015), contracts were taking much longer than sales was comfortable with.

To find out what was going wrong, we started:

  • an analysis of historical contracts and,
  • joining customer calls as much as we could.

What we discovered on calls was that the language used in a specific clause was making counterparties uncomfortable. This clause was getting negotiated far too often and ended up being the reason for delays. When we looked at the amended version that both parties usually ended up agreeing to, there was only a minor difference. After this, we made a small change to their risk profile and their contract, and it ended up reducing their cycle times by 40%!

6. Make it as easy as possible for businesses to give you their money.

Once a deal enters the contracting stage, there are three key stakeholders/teams you need to convince on the other side: legal, security, and privacy. Make sure your contracts and documentation are well prepared to convince all three parties. We interviewed Sue So, formerly Head of Legal at Hopin a while ago and she made an excellent point:

 “You must ensure that all three pillars—legal, security, and privacy—are addressed in your contracts and documentation. You have to be able to speak to these people’s concerns ahead of time and try to educate and pre-negotiate so you don’t end up in a long sales cycle – you want to make it as easy as possible for people to give you their money.”

7. Create an online version of your agreement

At SpotDraft we converted our sales agreement to a three-page order form referencing the link to our software services agreement terms, rather than a PDF.

This, in combination with the changes we made to our clauses, reduced redlining and the execution time spent by half! There are still some clients who end up negotiating on terms, but the number of clients who directly accept our order form has increased manifolds.

Remember, a contract that gets to “yes” faster is a win-win, not just for the lawyers but for the businesses thriving on speed and simplicity. Let’s ditch the legal tug-of-war and aim for contracts that pave the way for quicker handshakes and happier partnerships.

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2 Responses

  1. Thank you Ashkay (and Go Bears!) – I am particularly focused on how to utilize AI in Step 4 to help us start similar client/supplier contract drafts further along in the negotiation/redline process based on prior contract negotiations where that client/supplier relationship is not only similar but also resulted in a good/successful business relationship. This helps us jump ahead so that what was originally Draft 1 of 20 off our template with a former, similar negotiation can start at Draft 10 (say) for a new, similar client/vendor and reduce negotiation and cycle times significantly while still managing risk appropriately. Rod (Cal ’83)

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