I've made a flow chart to help my team process contract comments / redlines.
What do you think? I'd appreciate your comments and suggestions!
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Contract Redline Review Flow Chart: In deciding whether to accept or reject a comment by the other side, run through the below steps:
➊ Do you understand the comment?
I am surprised by how often I see lawyers reject comments that they do not take a moment to understand. Step 1 is therefore to UNDERSTAND what the comment is trying to do.
If you don't understand the comment, ask for clarification. If you understand the comment, go to step 2.
➋ Who benefits from it?
Here the words of one of my early and impactful mentors, Richard Hall, always ring in my head: "Ali, but who does this comment benefit?"
Sometimes I see lawyers make comments that they have seen elsewhere, or think are "clever" "drafting" "techniques", but that ultimately benefit the other side, not their client.
So, run the comment in your head to its conclusion -- who does it benefit? If it actually benefits your client, accept it. If it benefits the other side, go to step 3.
➌ Does it matter for your client?
Even if a comment benefits the other side, does it matter for your client? For example, the other side wants to limit the definition of "subsidiaries" to exclude joint ventures -- but your client doesn't have any joint ventures and doesn't plan to enter into one either.
If the comment doesn't matter to your client, accept it. If it does matter to your client, go to step 4.
➍ Is it worth negotiating?
Even if a comment benefits the other side, and matters to your client, you still have to ask, is it worth negotiating in the totality of circumstances?
For example, you need to finalize an NDA for a meeting with a target company tomorrow. They've accepted all your substantive changes, except that they would like the term to be 2 years, not 18 months. Is it worth negotiating the 6-month difference in the totality of circumstances you're facing?
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Only after you've run through steps ➊ ➋ ➌ ➍ is it ok to accept or reject a substantive comment.
I teach all my students and team members that they should NEVER rely on "it's our form," or "this is how we do it" to negotiate a point.
The BEST way to negotiate a point is to win on the merits -- and that requires a good understanding of what you're trying to do, and knowledge of drafting techniques and tools to get there.
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