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In fact, the history of a company and a complete overview of its business standards are in the contract database of the Company anchored and are waiting to be deciphered.
How can you make use of the wealth of knowledge that is hidden in these mountains of files? Is there a way to integrate the data into a useful plan so that employees in all departments can complete their tasks better and more efficiently? Yes, there is! This procedure is known as a Contract Playbook.
What is a contract playbook?
Contract playbooks are essentially internal guidelines and specified compliance criteria that are used by internal legal teams to crystallize ideas that have accumulated over many years of negotiations. Playbooks often deal with provisions that are not necessary but would still be desirable (“nice to haves”), with clauses that are acceptable with appropriate changes (“may-haves”), and with clauses whose absence/existence constitutes a breach of contract and is unacceptable (“must-haves”).
A well-crafted playbook helps sales, legal, and other departments stay on the same page during contract negotiations. It also allows for a faster transaction, as everyone involved can rely on the playbook instead of waiting for someone else to respond. In addition, playbooks are also a great resource for onboarding new team members.
Why create a contract playbook?
A contract playbook has numerous advantages, including the following points:
Playbooks encourage the use of a consistent, ideal language
When the playbook team has done their job correctly, the conditions in the playbook represent the best position for the organization. When the rulebook is followed, this position becomes consistent across the organization. The risks of different terminology or different regulations are largely avoided. The organization can rely on its contracts to work in its favor, both economically and legally.
A good playbook saves you time and resources
Since responsibilities for contracts are more evenly distributed between the individual departments thanks to your contract playbook, the legal team can focus more on more critical matters. Less time spent on small activities helps employees focus their efforts and work toward overarching goals, such as continuing to improve the contract management process to increase efficiency. Not to mention reducing the amount of resources spent hiring outside lawyers and training new employees. Your in-house team should be able to take on additional tasks that are normally handled by outside lawyers, and new hires can rely on the contract planning book as they learn to negotiate your company's most important contract cycle.
Playbooks ensure everyone is on the same page
Separate contract reviews by commercial, financial and legal departments can result in these departments being pitted against each other. The creation of a contract playbook brings these groups together to develop a language that achieves their goals while taking into account their perceptions of risk. The conditions in the playbook reflect both the expertise of the legal team and the experience of the managing director. The reasons for the final wording and the overall significance of a particular provision are set out in the playbook and become part of the training. This reduces internal renegotiations and questioning of the language of the contract.
Playbooks make contract review easier
It is time-consuming to review previous contracts for discrepancies or questionable wording. Although a legal review of concluded contracts and licenses cannot be prevented, the fewer changes are made to previous contracts, the better. Use of the guide over time results in uniformly worded contracts for all contract types, which facilitates legal review and reduces concerns about one-off terms.
Creating a contract playbook: Where do you start?
Evaluate your current contract process: In most cases, the very first step is to understand your current contract process. This involves two main tasks: outlining and evaluating the details of your existing processes and identifying current issues that you can address by creating and implementing a contract playbook.
If you're not sure how to analyze your processes, you can start by creating a visually structured presentation, such as a flow chart or process map that describes each step in the contract process. In any case, it is important that all actors involved in the process and the activities they carry out are listed.
It's also a good starting point for identifying key issues that could impact your efficiency, quality, or compliance. The most common issues include excessive manual processes, lack of standardization, or inadequate communication between stakeholders.
Once you've identified stakeholders, you can get feedback from all stakeholders, including legal, finance, procurement, and business teams. This can be done through interviews, surveys, or focus groups.
Once you've collected the data from the process map and stakeholder feedback, you can start analyzing to identify trends and patterns that could give you an idea of the root causes of your problems.
Create standardized templates: First, it should identify the usual types of contracts that it concludes regularly. Companies often conclude contracts for services, sales, partnerships, and employment contracts. Based on the various types of contracts that a company deals with on a regular basis, it can adapt its playbook to take into account the specific requirements and risks for each type of contract.
Once the contract types are identified, each type can be converted into a standardized template. The templates should include all clauses and provisions that are typically included in this type of contract. By creating and using templates, a company can ensure that its contracts are consistent and that its employees are familiar with the terms of each contract. This is efficient because companies don't have to start from scratch every time this type of contract is needed.
In addition to standardized templates, the playbook should include guidance and best practices. When a company negotiates a contract, it is helpful to be able to refer to a list of conditions and to know the areas that are frequently negotiated. When employees are provided with this type of guide, they can focus on actually negotiating the contract.
The playbook should also include a clause library. The clause library may contain pre-approved clauses. This allows employees to easily insert the desired clause without the need for review by the legal department. Companies can save a lot of time and energy if they already have approved clauses in their libraries.
In addition, there are a few basic steps to follow when creating the playbook:
- Bring together the expertise and opinion of legal, business, and contract experts who have the knowledge and skills to standardize contract language.
- Draft contract language and fallback clauses and explain clearly how they will be used in negotiations. Evaluation of contract performanceto identify the most commonly negotiated terms and their long-term effects.
- Try to enable negotiators to close the majority of contracts without additional scrutiny and to strike a balance between business objectives, legal protection and ease of use. It's important to remember that while lawyers can offer the best wording to get the most desired results, executives must also decide how much business risk the company can tolerate in a contract.
- If legislation changes, new business opportunities arise, or the financial situation of the organization has changed, you should review and update the wording.
Tips for an effective contract playbook
Here are a few key tips to ensure that your contract documents improve workplace efficiency and communication.
1. Focus on customers and results
When negotiating contracts, playbooks must aim to improve both company results and customer satisfaction. Good playbooks ensure this by fairly evaluating and balancing the goals of all participants. This includes not only functions such as sales, procurement, risk, compliance and legal, but also the people involved.
2. Pay attention to ease of use and efficient design
Simple design strategies can improve effectiveness and impact with audiences. Consider using visual graphics and imaginative methods to communicate legal results.
3. Focus on standardized contract templates
First and foremost, create templates for frequently used contracts that your employees can use efficiently, not only to save time but also to ensure that the relevant and important clauses are always included. Standardised contracts generally help to minimize risks and ensure that all contracts are of high quality and comply with applicable laws and regulations.
4. Use contract software solutions
Digitized playbooks are easy to create and dynamic. With a comprehensive Contract Management Software Solution companies can develop a reliable strategy for many types of current and future contracts!
