Legal departments and contract teams are now often under pressure to move faster, provide value, and streamline processes all while contracts increase in length and complexity to address changes in technology (e.g., artificial intelligence) and laws (e.g., various privacy and regulatory requirements). The good news is that meaningful contract streamlining does not require a full rewrite or oversimplification of existing templates. Small, targeted changes can improve speed to contract, clarity of the agreement, and usability for both the legal/contract team and business team stakeholders.
Below we highlight practical suggestions to cut friction from your contracts and templates while limiting any shift or change in risk:
- Start with a purpose statement. Including a brief opening statement or paragraph to explain for what purpose the contract is actually intended can help provide clarity for the reader and reduce any misinterpretation later. This may also help operationalize the contract.
- Remove duplicative provisions. Over time, templates and contracts can accumulate duplicative clauses and provisions that overlap (e.g., multiple sections addressing confidentiality, survival or indemnities). Consolidating or eliminating these duplicative provisions may reduce redlines and inconsistencies and provide a template that is easier to read and use.
- Use defined terms meaningfully. Defined terms are useful and often create efficient contracting provisions. However, the overuse of definitions can slow readers down and create bulky provisions. If a defined term is only sparingly, consider whether the plain text is easier to read versus another defined term.
- Identify highly negotiated or technical provisions and determine their best location. Certain provisions, such as service-level agreements, comprehensive data security provisions, or complicated pricing mechanics, can often be moved to schedules or attachments to the main body of the contract. This helps simplify the main body of the agreement and enables streamlined review by subject matter experts.
- Reformat dense paragraphs. Conditions, obligations, and multiple subclauses may be easier to read in a list rather than a block of text. Reformatting these dense sections may create clearer provisions with reduced misinterpretation and questions.
- Using a template? Standardize fallback positions and suggestions in a playbook. Where your organization leverages templates, if any, including standard or optional fallback positions and suggested responses to regularly negotiated terms (e.g., a playbook) may create a more functional and efficient contracting process, including by reducing delays in the contract cycle and the internal contract approval process.
- Right-size reps and warranties. Reviewing and right-sizing the reps and warranties in a contract based on the size, scale, risk profile, and nature of the contract can be another useful practice. Tailoring the reps and warranties may lead to a streamlined contracting process and reduced redlines.
- Design with intention. Contracts, including templates, are living documents. They must be operationalized after signing. Designing contracts with the end user and administrator in mind will help ensure that the agreed terms are put into practice after execution.
Streamlining contracts and templates is not always about doing less or including fewer legal terms. Rather, the intended result can often be achieved by drafting focused, intentional, and risk-aligned terms to address the deal at hand.
Where legal and contract teams are being asked for protection, speed to contract, and simplified agreements, delivering a contract that is clear, modular, and fit for purpose can help all stakeholders move forward.
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Our technology transactions, outsourcing, and commercial contracts lawyers regularly advise clients on complex commercial arrangements, contracting for and the provision of goods and services, and global sourcing strategies, including assisting clients with creation, review, and updating of contract templates.
If you have questions about any of the other topics discussed above or would like to learn more about our capabilities, please reach out to any member of our team.