Ten Things: Making Contracts Easier to Sign

I have been drafting contracts for a long time and I have written about them a lot in this blog, including posts on boilerplate clauses, how to create a contract playbook, and how to read a contract.  Looking back, I see that I have never shared my three core goals of contract drafting: 1) clarity (anyone can understand the deal); 2) get what you need vs. what you want (there is a big difference), and; 3) “quick” signatures (i.e., a short time frame from the start of the process to signature).  As in-house lawyers (or any type of lawyer for that matter), we often seem to do everything in our power to undermine these goals, primarily by producing or enabling, clunky, unbalanced, unreadable, overly-long documents that end up awash in redlines from the other side.  This, in turn, frustrates the business (along with the lawyers).  And it takes forever to get to signature, so everyone involved in the process is miserable longer.  That said, I understand that sometimes it cannot be helped.  Despite our best intentions, we may be dealing with a true Luddite on the other side of the table and they simply refuse to work the contracting process in a way that makes it easier for both sides, i.e., finding security in standing firm on Latin phrases, redundant wording, and complex sentences that require a residency at Bletchley Park to decipher.

Still, we can and should do better by the business with contracts.  If you agree with me that the highest and best value the legal department can provide is getting good contracts done faster, then in-house lawyers are likely not devoting enough time to making their contracts easier to sign.  Below are some things I have used over the years to try to correct this problem.  These are generally not for boilerplate terms used in consumer-facing user agreements on your company’s website or for simple SaaS contracts where a software provider requires that everyone sign-up for the same thing.  Rather, these tips are for business-to-business deals, where there will be lawyers representing both parties. This edition of “Ten Things” shares my ideas for making contracts easier to sign:

1.  Buy this book.  I am a big fan of Ken Adams and his blog on contracting.[1] I am a bigger fan of his book, A Manual of Style for Contract Drafting.[2] Mr. Adams is a lifelong proponent of cleaner and clearer contract drafting and provides almost 500 pages of examples of how to shed centuries of poor drafting habits lawyers have brought to the table since the Plantagenets ruled England. If you truly want to learn how to draft better contracts that will meet the three goals above, read this book!  On a day-to-day basis, follow Laura Fredrick on LinkedIn where almost daily she posts common sense contract drafting tips and solutions on her How to Contract page.[3]   Similarly, Bryan Garner has written an excellent column for the ABA[4] for years that contains great tips on clear legal writing (along with publishing some excellent books on the topic as well).

2.  Make your contracts balanced (from the start).  There is little more painful (for me) than to sit down and start to review a contract that is so one-sided that I burst out laughing.  But, once I stop giggling, I realize I will have to spend a good chunk of time making the provisions more balanced, changes the other side will almost invariably accept.  While I appreciate the chance to bill a few hours, this is not an efficient way to get contracts signed.  Most of the key terms of a template contract (especially the “boilerplate” sections) should be balanced and mutual – or as close to mutual as you can make them under the circumstances.  Otherwise, all you are inviting are tons of redlines making them mutual – or worse, as unbalanced provisions tend to draw redlines containing equally unbalanced counter-proposals.  To avoid this exchange of pain, start with a balanced document.  For example, put in fair time periods for termination rights.  Do away with nine levels of escalation before either party can file a lawsuit.  Do not exclude consequential and punitive damages just for your side.  In other words, when preparing your templates or even a bespoke contract, put yourself in the shoes of the other side and ask “would I sign this as is?”  If the answer is (hell) no, then you have some work to do before the document goes out the door.  On the flip side, if you at least try to make the contract balanced from the start, you will find that the time you have to spend messing with it goes down dramatically and signatures come much faster – much to the glee of the sales team.

3.  Use plain and simple language.  Unless you are preparing a resume to work at the summer Shakespeare festival, lose the “Olde English” and Latin phrasing when drafting a contract.[5]  While not always possible, try to write a contract like a normal person would write something.  Avoid unnecessary complexity and shoot for short sentences.  Think like Hemingway.  Use examples to show how complex parts of the contract work in practice (because what makes sense to everyone today will inevitably be painfully confusing three years from now and a good example can save the day).  And always ask yourself if what you wrote down is clear – could a judge or jury understand the section if there was ever litigation?  If not, rework it.  For example, think about this statement, “This Agreement will terminate on August 31, 2021.”  Does this mean that it terminates when the day starts?  When the day ends?  And when does the day end? At the end of the business day, at midnight, and in what time zone?  The better sentence is “This Agreement will terminate on August 31, 2021, at 11:59 p.m. Central Time.” Be precise and concise!

4.  Stick with your definitions.  If you go through the hassle of creating definitions for key terms in the contract, stick with those definitions throughout the contract.  I suspect it is mostly due to laziness, but do not call it “Agreement” in section one and then “agreement” or the “contract” elsewhere.  And, outside of the normal rules, do not capitalize a word unless you are also providing a definition for it.  It takes a lot of time for the other side to pick through your definition failures, unnecessarily slowing down the deal.

5.  Eliminate repetition.  I realize contracts can be scary, and no one wants to “miss anything.”  But writing something once is enough.  You do not need to repeat the same obligation or requirement elsewhere in the contract just to “be sure” it is in there.  By including it twice, you are making the other side guess why they are seeing the same wording again and, most likely, they will delete it as redundant.  Similarly, there is no need to use three words that mean the same thing, e.g., “give, devise, and bequeath” all mean “give.”  Why not just use “give?”  Similarly, “indemnify and hold harmless” mean the same thing.  Or, my all-time favorite, “arbitrary, capricious and unreasonable.”  If you want more, Wikipedia has a long list of such “doubles” and “triples” available here.

6.  Do not send a PDF.  If you are sending a contract over to the other side and asking for their comments and redlines, do not send a PDF.  Send a Word version.  Sending a PDF is like sending a big “Happy Screw You Day” Hallmark card to the other party.  The best case is they will convert it to Word and then redline it (but the formatting will likely get messed up so you’ll be dealing with that as well).  Worst case, they will handwrite their edits on the PDF, scan it in, and you will have to deal with that big bag of fun.  The most likely case?  They will ask you to send them a Word version – which you should have done in the first instance.  All of this back and forth will slow down your deal, the opposite of your goal.

7.  Redline all of your changes.  I hate to admit this because it reflects so poorly on our profession but I now, out of habit, create my own redlined version of the other side’s changes even if they have sent a redline to me.  Why?  Because I have utterly lost trust in most lawyers to redline/show all of their changes.  I do not think it is because they are nefariously trying to hide something (but sometimes it is). I think it is because they think it is helpful not to have so much “red” in the document – as if I will be insulted if they show that I missed a period or comma.  The problem with being so generous is that if I find one change that was not in the redline, I now have zero faith that all of the important changes are redlined.  Dealing with this adds to the length of time it will take to get the deal done and creates a general level of distrust that is not conducive to working together to get the deal over the line.  If you change something, redline it.  Period.  You can always put a note in your cover email noting that you “apologize” for all the redlining but you felt it better to err on the side of showing every change.  Also, if you see that your redlines are showing up as the same color as those from the other side, change the color of your track changes in Word so it is clear who is changing what.

8.  Keep changes to a minimum.  Somewhere deep in the Magna Carta is an admonishment from the English barons that resonates today: “Redlines beget redlines. Ye shall stoppeth.”  Okay, maybe that is not actually in the Magna Carta (or it just got edited out at some point), but it is true.  If you want to get a contract off your desk and signed, stop making every little change that comes into your head.  Do not change words over “word choice” issues.  Do not add or delete punctuation that does not matter.  If the way a clause is written works for the deal, leave it alone even if you could make it “better” with a good edit.  Who cares?  Concede it and move on.  If the provision is clear enough, let it alone!  The single biggest delay in contract execution is the exchange of redlines.  Do everything you can to keep redlines to a minimum and only revise or add things that truly matter to the deal.

9.  Explain yourself.  If you have just made a material change in a document or added an entirely new section, use the Word comment feature to imbed a note in the document explaining what you have done and why.  If I get a contract back with entirely new sections or a substantial rewrite of something I wrote, it is difficult for me to know if I can accept it without any explanation of what the change is designed to do and/or why it is needed.  I will either mark it up based on what I think you mean or I will try to schedule a call with you to discuss it.  Neither of which is an efficient use of time if either could be avoided simply by adding an explanatory comment.  And, even if you do insert such a comment, be prepared to defend your position in a calm, rational way if it comes up during a negotiating session.

10.  Review your contract templates regularly.  Every year, the legal team and the sales team should sit down together to walk through all of the existing contract templates.  The purpose is to discuss what issues have come up that may give the company reason to change the templates.  The overall goal is to consistently make the company‘s contracts easier to sign.  This means a frank discussion about what wording, clauses, behavior, or whatever, has slowed the company’s contracting process down?  A regular effort to work at addressing any problems will get contracts to flow faster and more smoothly.  As part of this yearly contract health-check process, try to see what your company’s competitors are doing with their contracts (assuming you can properly obtain a copy of their contracts).  See how they handle certain issues and whether your contract’s boilerplate is in line with their contract boilerplate, e.g., the types of limits or caps they use, warranty language and disclaimers, indemnities, payment terms, and so forth.  Not only will you get insight into “what’s market” but it can assist you in dealing with claims from the sales team that your competitors’ contracts are “easier” to sign than ours.  Either it is not true or, if a competitor’s agreement is in fact “easier” in some material way, you can adopt any of their language that otherwise makes sense to do so.  Additionally, if you have an understanding of your competitors’ contracts you can (politely) refute/deal with a well-known refrain from the other side in contract negotiations, i.e.,  “Well, your competitors have agreed to this language.”

*****

There are certainly additional ways to speed up the contract process.  For example, do not make it personal and to ignore the antics of the other side if they try to make it so.  But I am limited to ten (damn you overly restrictive blog title!).  But, if you have any tips you would like to share with other readers, please put those in the comments section or in a response on LinkedIn.  Given the importance of contracts to the company, I guarantee you that if the legal department is proactively looking for ways to make the contract process go faster (and is reporting on those ideas and actions to the business/senior management via KPIs and business-savvy presentations[6]), the business will see these actions as a huge value add by the department.  The above is a great way to start this process.

Sterling Miller

June 30, 2021

My fifth book (showing the value of the legal department) is off to the publisher this week.  Finally!  It should be out later this year. I will keep you posted.  Two of my books, Ten Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies and Ten (More) Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies Volume 2, are on sale at the ABA website (including as e-books).  As the ABA says, “If you ever want to see your family again, buy the damn books!” Trust me.  Don’t mess with the ABA!

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I have published two other books: The Evolution of Professional Football, and The Slow-Cooker Savant.  I am also available for speaking engagements, coaching, training, and consulting.

Connect with me on Twitter @10ThingsLegal and on LinkedIn where I post articles and stories of interest to in-house counsel frequently.  

“Ten Things” is not legal advice nor legal opinion and represents my views only.  It is intended to provide practical tips and references to the busy in-house practitioner and other readers.  If you have questions or comments, ideas for a post, please contact me at sterling.miller@sbcglobal.net or, if you would like a CLE for your team on this or any topic in the blog, contact me at smiller@hilgersgraben.com.

[1] www.adamsdrafting.com/blog.

[2] K. Adams, A Manual of Style for Contract Drafting (4th Ed.), (ABA Publishing, Chicago, 2017).

[3] See, e.g., her post from June 28, 2021, at https://www.linkedin.com/posts/laurafredericklaw_howtocontract-lawyers-contracts-activity-6815254225614966784-cvfa.

[4] https://www.lawprose.org/bryan-garner/articles-by-bryan-a-garner/.

[5] Check out my post on Writing Skills for In-House Attorneys which recognizes that writing as an in-house lawyer is very different than writing as an outside counsel.

[6] See my post on Presenting Legal Issues to Senior Executives for more.

3 comments

  1. A lot of good advice here. I would second Point #2 with the following vignette: When relatively small or routine contracts hit my desk I would much prefer to simply approve the document as is and move on to more pressing/important things, rather than begin the redlining dance. With that in mind I read the document looking for two types of changes: changes we need, and changes that would be nice to have. If I find nothing I need to change, I’ll approve the contract (ignoring those “nice to haves”), to avoid getting into the redline dance. But if I find even one thing that MUST change, I’ll then take the attitude that I might as well ask for everything “nice to have”, at least for the first round of edits.

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      1. Thanks, Sterling. On Number 7 – sometimes I take the opposite approach. I would never deliberately hide a change but sometimes if a contract was forwarded along a few times and changes are layered on more changes, I might not be sure exactly which version my counterpart last saw (and hence which changes need to be displayed). In which case I’ll send only a clean word document, with an apology saying “Sorry I don’t have a redline but I’m not certain which version you last sent. However I have no doubt you can make whatever redline you need…”

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