Contracts Playbook - A Ready Reckoner for Negotiators!
Contract negotiation is one of the most risky, time consuming and complicated task a contracts team, legal team, paralegal, or a business unit is involved in. It is imperative for organizations to precisely know what they are willing to accept and at what point they should walk away. They need to speculate accurately how far their opponents are willing to go to get what they want*. It's essential that negotiators understand their organization's standard policy and procedure and at the same time appreciate the other negotiator's constraints. A negotiation playbook will do all this and more!
What is a Contracts Negotiation Playbook?
A guide template containing an organizations standard and acceptable fall back contractual positions to help negotiate contracts effectively and efficiently.
- Contains firm's standard position for agreed clauses/provisions as well as 2-3 fall back/alternate positions for each clause (Clause library)
- Facilitates as a ready reckoner for fall back positions to be proposed to the other party during negotiations
- Contains guidelines or scenarios for use of fall back positions
A contracts negotiation playbook can be created for any type of contracts; Master Services Agreements, Non-Disclosure Agreements, Software License Agreements, Professional or Consultancy Services Agreements, Commercial Leases and many more.
What does creation of a playbook involve?
- Detailed review and analysis of existing contracts
- Tracking deviations from standard positions which will highlight the extent of deviation an organisation has agreed to or can agree to (Deviation analysis)
- Create fall back positions for each clause considering business, legal and finance perspectives
- Finalize standard positions and fall back clauses in consultation with legal/finance/business units
- Reduced Contract Closure Time
- Risk Mitigation
- Reducing the gap between business, finance and legal team by setting up an effective risk management process.
- Guidelines for negotiation
- Pre-approved fall back positions with scenarios for faster negotiation
- Reduced need for "across the table" negotiation - playbook as a ready reckoner facilitates quick virtual negotiation
An expert in creation of playbooks will add value to this service by providing -
- Multiple acceptable fallback positions in response to counterparty pushback
- Explanation for internal understanding of rationale behind each position
- External arguments to be made to counterparty supporting positions as a guide to negotiator
- Standard clause library for use in editing agreement according to guidelines
- Defined escalation protocol within contracts team, legal team, or other departments (e.g. insurance, finance) and business units
- Methods to enhance contracts database including categorizing the contracts by risk and revenue contribution
- Visibility to legal department and stakeholders into the risks and liabilities of their contracts
"Let us never negotiate out of fear. But let us never fear to negotiate." - John F. Kennedy
* Melanie Lindner and Lisa LaMotta, The Negotiator's Playbook, Nov 21, 2008, available at http://www.forbes.com/2008/11/20/buffett-goldman-harvard-ent-manage-cx_ml_1120negotiatorsplaybook.html