Contracts are the lifeblood of any business, but managing them can be a time-consuming labyrinth. Negotiations stall, approvals get bogged down, and key terms leave even experienced teams unsure. The answer lies in a powerful tool: the contract playbook, also referred to as contract review playbook.  

This article dives into the world of contract playbooks, explaining what they are, how they benefit your business, and why they’re the secret weapon for smoother, faster deals.

What is a contract playbook?

A contract playbook is a central resource designed to streamline and standardize how your company negotiates, reviews and approves contracts. Think of it as a rulebook for your contracting process. It compiles a wealth of information on various stages, from collaboration between teams to legal review and final approval.

This information empowers those involved in contracts to handle key parts of the process without constantly needing legal involvement. 

The playbook outlines your company’s standard terms and preferred positions on various clauses, making it easier for everyone to be on the same page.  

While contract playbooks can be as basic as spreadsheets or cloud-based notes, integrating them with contract review software unlocks their full potential. This allows for automation of specific rules, leading to increased compliance and a more unified contracting process.

What are the benefits of a contract playbook?

Contract playbooks offer a range of advantages for businesses, including:

  • Empowering teams. Playbooks provide business teams with the information they need to handle contracts independently, reducing reliance on the legal department.
  • Clearer negotiation process. The playbook outlines the steps and protocols involved in contract negotiation, review and approval, streamlining the process.
  • Faster negotiations. By providing a clear roadmap, playbooks can expedite contract negotiations, minimizing delays and back-and-forth communication.
  • Structured workflow. The playbook clarifies who is responsible for each stage of the contract workflow, ensuring a smooth and efficient process.
  • Negotiation guidance. Playbooks offer negotiators clear explanations and rationales behind specific clauses, allowing them to confidently defend provisions and advocate for the company’s interests.
  • Identification of risks. Playbooks warn negotiators about potential counterparty language and provisions, enabling them to identify and address potential risks.
  • Efficient escalation. The playbook clarifies when to involve legal or senior management for approval, avoiding unnecessary delays while ensuring complex matters receive proper attention.
  • Efficient training. Playbooks serve as a valuable training tool for new hires in both legal and other departments, offering a central resource for understanding the contract lifecycle.
  • Standardized language. Playbooks provide pre-approved and reviewed terms and conditions, guaranteeing consistent and legally sound contracts.

What does a contract playbook include?

A contract playbook goes beyond the basics, offering a rich resource for your team that includes the following. 

Core clauses and wording

  • Pre-approved contract language. This includes standard terms and conditions for different contract types (e.g., sales agreements, NDAs).
  • Explanations of legal terms. Plain language explanations ensure everyone understands the meaning and implications of each clause.
  • Examples and alternatives. Playbooks may provide alternative clauses or examples for different scenarios.

Negotiation strategies and guidance

  • Common negotiation points. Identifies clauses most likely to be contested and offers negotiation strategies for each.
  • Tactics for negotiation. This could include guidance on phrasing requests, responding to counteroffers, and identifying walk-away points.
  • Playbook examples of successful negotiations. Showcases past successful negotiations to provide real-world examples and inspiration.

Fallback options and escalation

  • Alternative clauses. Offers ready backup clauses in case the primary options aren’t accepted.
  • Escalation triggers. Clearlies define situations where legal or senior management involvement is necessary (e.g., high-risk contracts, significant deviations from standard terms).
  • Escalation procedures. Outlines the process for escalating issues, including who to contact and what information to provide.

Rationale and approval workflows

  • Rationale statements. Provides clear justifications for each clause, including legal and business considerations.
  • Approval matrix. Defines who needs to review and approve contracts at different stages based on complexity or risk level.

Additional playbook elements

  • Contract data analysis. Insights from past contracts, e.g., negotiation frequency for specific clauses.
  • Red flags and risk management. Highlights potential risks in certain clauses and provides mitigation strategies.
  • Counterparty language guidance. Offers advice on identifying and addressing potentially problematic clauses proposed by the other party.
  • Glossary of legal terms. Provides a quick reference for key legal terms used throughout the playbook.
  • Training resources. Links to relevant training materials or resources for further learning.

Who typically uses the contract playbooks?

While legal teams usually take the lead in crafting the playbook, its benefits extend far beyond them. Contract playbooks are designed to be a collaborative tool, empowering various departments to participate in the contracting process.

  • Legal teams. As the architects of the playbook, the legal team ensures it incorporates best practices, standard clauses, and clear explanations. This empowers them to focus on more complex contracts while providing a strong foundation for others.
  • Business teams (Sales, HR, etc.). Contract playbooks equip business teams to handle routine contracts with confidence. The playbook provides guidance on negotiation strategies, common sticking points, and pre-approved clauses. This more independent approach frees up the legal team’s time and streamlines the overall contracting process.

Creating your contract playbook

So, you’ve seen the benefits of a contract playbook, now let’s talk about the key steps involved in creating one.

  1. Choosing the right format

Paper playbooks are a thing of the past. Today, digital formats like a cloud-based platform or a dedicated contract management tool are more commonly used. This ensures easy access, updates, and centralized information.
Selecting a contract review platform that includes a digital playbook can automatically enforce and implement its guidelines on new contracts requiring review.

  1. Gathering the information

Compiling information from various sources like interviews with experienced legal personnel, existing contract templates, training materials, and past contracts from different scenarios.

  1. Considering the audience

Recognizing that business teams might have limited legal knowledge. Explaining concepts clearly and simply for better understanding.
Designing the playbook for accessibility and easy comprehension to encourage independence among various teams.

  1. Providing details and examples

Minimizing risk by making the playbook as detailed as possible. Including clear explanations, examples, and templates to guide users effectively.

  1. Designing for readability

Ensuring visual appeal. Avoiding dense information dumps by using clear formatting, visuals like flowcharts, and structural cues to make the playbook user-friendly.

  1. Training and rollout

Providing effective training once the playbook is built. Equipping your legal team and relevant personnel with proper training to understand and apply the information effectively. Updating training as the playbook evolves.

  1. Measuring success

Conducting regular contract audits to assess the effectiveness of the playbook. Identifying areas for improvement and ensuring consistent application of knowledge.

Tech-powered playbooks: supercharging your contracting process

Contract playbooks are powerful tools, but technology can take them to the next level. Here’s how.

  • Streamlined workflow. Technology platforms can automate playbook elements directly into the contracting software. Imagine having pre-approved clauses and negotiation strategies readily available within the workflow, eliminating the need to switch between documents. The AI consistently implements the playbook across every new contract, ensuring that nothing is overlooked. This creates a seamless user experience and significantly reduces the risk of errors.
  • Real-time collaboration. Gone are the days of outdated desktop versions of playbooks. Advanced solutions ensure everyone can access the latest playbook information. Negotiators can reference terms and respond to redlines in real-time, accelerating the contracting process.
  • Reduced errors. Manually inserting fallback clauses can lead to typos and inconsistencies. Technology automates this process, ensuring accuracy and reducing the risk of errors that could derail negotiations.
  • Enhanced consistency. A central repository for your playbook eliminates the risk of outdated versions floating around the organization. Everyone is on the same page, leading to consistent contract language and negotiation strategies.
  • Improved efficiency. Technology empowers business teams to handle routine contracts with minimal legal involvement. This frees up business resources to focus on other matters, ultimately saving time and money for the organization.