Redlining Tips

Redlining Tips

Redlining Tips

Contract Redlining Tips

 

Thanks to advances in technology, legal teams usually conduct their contract negotiations from afar, rather than having to meet in person as they did in the past. Instead of negotiating in a boardroom between two or more legal parties, negotiating is mostly done within what’s known as the “redlines” of legal documents. 

To clarify, redlining is the age-old process of editing and negotiating the terms of a contract. During the redlining phase, both parties can mark certain pieces of text and pitch negotiation requests or changes they believe will be beneficial to one or both parties.

Because redlines are so widely used in negotiations now, it’s important to have all in-house legal counsel become familiar with the ins and outs of redlining. 

Take a look at the following three points to better understand the importance of redlining when it comes to contract management.

 

Redlining Reveals Clues About Involved Parties

 

Redlining allows parties to gain insight about one another. In a way, redlines reveal valuable clues about what parties want, think, and feel about the contract they’re signing. 

Because of this, in-house counsel should ensure that redlines are accompanied by comments. Comments are the key to contract negotiations.

Comments perform two different functions. For one, they help parties justify why they approve/reject a certain change. For another, they shed light on where a party stands on proposed changes (including their views about the change). While comments allow parties to gain insights about the people/companies they’re negotiating with, they also allow parties to keep certain information under their hats until it is needed.

 

Redlines Shorten the Negotiation Process

 

Contract negotiations can take quite a while, not because both parties want to drag the process out, but because a lot of information has to be covered. 

Despite this, there is often significant pressure placed on in-house legal teams to complete negotiations as fast as possible. In response, legal teams take every step they can to shorten the negotiation timeline.  

This is where redlining comes into play. Redlines allow for more efficient practices when it comes to negotiating, allowing both parties to perform tasks faster, make speedy updates, and finalize contract changes in shorter timespans. 

On top of this, redlining electronically helps contract management keep track of each and every change that has been made along the way. Of course, redlining on paper kept a history as well, but it was nowhere near as neat and organized as digital redlining is today. 

 

Redlining Allows for Better Collaboration

 
Unlike on-paper redlining processes that were utilized decades ago, today’s contract redlining has become somewhat of a discussion board that includes everyone involved in the contract. 

 Instead of having a massive pile of documents with red scribbles and notes posted throughout, contract management teams now have a well-organized space where involved parties can collaborate and consult with one another. 

Throughout the negotiation process, it’s important to consider involved parties (experts, stakeholders, clients, etc.) and their input before adding, changing, or deleting a piece of information from the contract. 

 Before electronic redlining became available, this meant that contract management needed to meet with each individual involved to discuss and record changes before any action could take place. 

Thanks to the collaboration capabilities of modern redlining, all team members can observe and converse about changes in shorter spans of time. Teams can come to agreements about which changes to approve or reject, and the negotiation process can proceed as planned.

 

Redlining Makes Comparisons Easy

 

Finally, when at last parties have come to agreements, and it seems like the contract is ready to sign, it’s easy to go back and look at the initial contract. While the redlining process and changes weren’t simple, the contract history recorded along the way will help make future contracts easier.

By looking at first drafts and comparing them with the contract that’s about to be signed, legal teams can better perfect their contracting processes. 

Of course, most parties that a business approaches contracts with will want different things, so it is incredibly difficult to develop a one-size-fits-all approach.

Comparing and contrasting first and final drafts of a contract can help contract management and in-house legal teams to strengthen their approach, focus on avoiding mistakes that were made, and keep in mind what has worked in the past versus what has failed. 

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