Legal Ops Tools: Contracting Playbooks

A “contract Playbook” is a legal function tool that helps a company (well its commercial, procurement and legal departments) optimize their approach to efficient and safe contract negotiations. 

The Playbook, as the name suggests, provides the "play by play" on how to negotiate select provisions and/or every provision in a particular contract. Playbooks can be calibrated to common legal provisions, or to particular templates.

The Playbook, if prepared properly, is one of the most potent drivers of contracting function productivity and is an essential tool to your contract management lifecycle processes. 

In short, Playbooks are an essential inclusion in any legal department’s transformation initiatives.

When we first speak to in-house leaders (General Counsels, Chief Legal Officers, Heads of Legal) about how well their contracting function performs - one of the first things we ask is whether they are using a Playbook - a simple, powerful, low tech legal operations tools. 

In this article, we'll explore what:

1. is a contract Playbook;

2. elements should a Playbook include; and 

3. benefits can companies achieve by using a Playbook.

WHAT IS A CONTRACTING PLAYBOOK?

In essence, a Playbook is a "how-to" guide for contract negotiations. Helpfully, this guide can be deployed to support both in-house legal and non-legal teams. Playbooks support your company’s contracting infrastructure and life-cycle management. 

Playbooks provide a comprehensive set of guidelines that your team can follow in order to safely negotiate a contract in accordance with your company's group legal policy. 

The main purposes of a Playbook is to:

1. drive contract negotiation efficiency;

2. ensure that both legal and non-legal personnel know how to progress contract negotiations in the most effective way possible; and 

3. ensure that contract negotiations are progressed in a way that is consistent with the company's legal and compliance requirements. 

Playbooks are considered to be a legal operations essential. 

By providing employees with a standardized set of guidelines, a Playbook can help minimize errors and discrepancies in contracts, and ensure that all contracts are aligned with the company's objectives and legal requirements.

WHAT SHOULD A CONTRACT PLAYBOOK INCLUDE?

A Playbook should include several key elements to be effective. Here are some of the most important things to include:

1. Issue Explanations: The Playbook should explain to the user the relevant provision/clause, its importance, and the risk profile of that issue to the organization. 

2. Guidelines for negotiation: The Playbook should also include guidelines and tips for negotiating contracts with counterparties. The Playbook should clearly label what can and cannot be accepted. 

3. Legal requirements: The Playbook should, if used on cross-border deals, flag up where local law positions may be relevant. 

4. Counterparty objections: The Playbook should pre-empt counterparty objections and provide model arguments on how to deal with those objections efficiently. 

5. Escalations & Experts: The Playbook should outline who within your organization is an expert on particular issues or to whom those issues should be escalated. 

5. Standard terms & clauses: A Playbook should include a set of standard terms and clauses that employees can use as a starting point when drafting agreements. 

7. Golden Rules: The Playbook should set out the "golden rules" that your organization should be following in relation to specific negotiation scenarios.

8. Negotiation Strategy: The Playbook should clearly set out what your organization’s negotiation strategy is in relation to specific provisions. 

WHAT ARE THE BENEFITS OF USING A CONTRACT PLAYBOOK?

There are numerous benefits that companies can achieve by using a Playbook. Here are some of the most significant advantages:

1. Increased efficiency: By providing employees with a standardized set of guidelines, a Playbook can help streamline the contract negotiation process. 

2. Improved consistency: A Playbook can help ensure that all contracts are aligned with the company's objectives and legal requirements, which helps reduce the risk of disputes.

3. Better risk management: The Playbook is a strong ally of your compliance function as it helps you to negotiate positions that are consistent with your organization's compliance requirements. 

4. Increased accountability: The Playbook helps ensure that contracts are properly reviewed and approved by the appropriate individuals or teams - which drives accountability whilst reducing errors.

5. Better negotiation outcomes: By providing employees with guidelines for negotiations, the Playbook can help ensure that negotiations are conducted in a strategic and effective manner. This increases the likelihood of favourable outcomes for the company making Playbooks a key vendor management tool.

6. Knowledge Management: The Playbook can become an effective repository of knowledge and experience within your company.

CONCLUSION: A KEY LEGAL DEPARTMENT ASSET

A Playbook is a powerful legal services tool that can help companies manage their contract processes more efficiently and effectively and is a key feature of legal transformation programs. 

The Playbook can be embraced by users beyond the legal department - commercial teams, legal operations teams, procurement teams and beyond. It is considered a critical resource for in-house legal operations as it can easily, and cheaply, make huge contributions to a legal team’s productivity. 

By providing employees with standardized guidelines and best practices for creating, negotiating, and managing legal documents, a Playbook can help minimize errors, reduce the risk of disputes, and increase efficiency and accountability.

In addition to the benefits outlined above, a Playbook can help your organization achieve a consistent legal risk profile across the contracts that it executes. 

It does so by driving a consistent, compliance led approach to contracting across the organization, regardless of who is drafting or negotiating the contract. This can be especially important in large organizations where contracts may be created and managed by different teams or individuals. 

Overall, a Playbook is a valuable resource that can help companies of all sizes improve their contracting processes and outcomes - whether used by your in-house legal teams or other commercial/procurement teams.

By taking the time to develop a comprehensive Playbook that includes the elements outlined above, companies can streamline their contract negotiation processes, reduce risk, and improve accountability and drive consistency across the organization.

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