(3 minute read)
As the pandemic accelerated the adoption of legal technology, the focus shifted from when law firms should adopt such tools to how they should be used. An intriguing and brilliant method that we have seen our clients deploy is the use of contract playbooks.
In this blog post we review :
- Definition of a contract playbook
- Is it worth creating one?
- How to create a contract playbook
With remote working likely to be a permanent fixture of employment moving forward, helping employees efficiently manage contracts has become a business priority. Contract playbooks use the existing technology infrastructure of an organisation to improve the execution of contracts, whilst saving time and developing employees. Previous blog posts have reviewed some of the success stories of our clients, how they have made the most of document automation during the pandemic and how they’ve achieved superb ROI through using Avvoka. This week’s blog post will follow a similar line, deconstructing contract playbooks and provoking a discussion around why and how you should apply them to your organisation.
A contract playbook is a comprehensive guide for a particular contract. It provides the user with the overall strategy for executing the document, including how to approach the negotiation and markup of a contract to protect the organization’s commercial interests.
Common elements include a malleable precedent containing a number of alternative drafting options, or fall-back positions, for the most common points of contentious wording; drafting advice for the negotiator to understand which alternative wording should be used in any given situation; and ‘workflow’ instructions for any necessary approvals from senior stakeholders.
Is it worth creating one?
In short, absolutely! A contract playbook saves time when it comes to training the user and reviewing the contract. Instead, it sets the foundation for the organisation to achieve better, more consistent commercial outcomes in negotiations. The user knows what to do in each contractual negotiation (on granular per clause level), and the negotiation data from the subsequent negotiation can be utilised by staff responsible for contract maintenance. Importantly, the user can develop professionally by having an excellent resource at hand. The user will be more confident to negotiate independently, thus making them a better negotiator in the long run.
In addition, a contract playbook helps to “democratise” the management of contracts, particularly for in-house business units like the HR or Sales departments. Instead of always seeking the help of the Legal department, individuals in these business units can comfortably manage the execution of a contract on their own, which improves efficiency for the organisation as a whole.
The challenges that emerge when setting up a playbook stem from the use of data: firstly, around capturing it, and secondly, the extent to which it should be used. Data from negotiations via Word and email needs to be captured to refine future negotiation strategy. This way, staff responsible for contract maintenance can constantly iterate upon and improve contracts’ contents. This accelerates contract negotiations and achieves better final negotiated positions. Nonetheless, utilising all of this negotiation data would create an excessively detailed contract playbook. The playbook needs to guide the user, not eliminate the need for exercising intuition; its purpose is to help the organisation and the development of the user, as mentioned earlier. One of the advantages of negotiating contracts with Avvoka, is not only an improved experience in negotiation but also that all that data is captured and can be analysed with our analytics tool. This makes the process of creating contract playbooks easier and accurate.
How do I create a contract playbook?
Having worked with our customers to create their own contract playbook, we thought it would be helpful to share our best practices so you know how to approach creating one too!
Keep it simple
The key purpose of a contract playbook is to make the negotiation of a contract efficient. This can only be achieved if the user is accessing a simple guide with clear instructions. Overloading it with information will result in conflicting drafting and negotiation instructions, which undermines the purpose of the playbook and the fact it will be regularly updated. This is imperative, particularly where the playbook is used by non-legal business users or those without a legal background.
Focus on what matters to you
Achieving better commercial outcomes is at the heart of a playbook. Therefore, it needs to focus on the results that the organisation, and business unit in question, would like to achieve. For example, take a user in the HR team. The user will need to execute new hires, notably lateral executive hires, which is an obvious priority of the business unit. However, the user might want to specialize in managing intern or graduate hires too, thus the playbook for “new joiner” contracts should incorporate specialist advice around this matter too. Remember, the playbook needs to achieve better commercial outcomes, but it should also aid the professional development of the user! How do you ensure this happens? Get everyone involved when establishing and updating your playbook (we’ll cover this in more detail shortly).
Data, data, data
In today’s world underpinned by technology, data is gold. The perfect contract playbook uses data-driven instructions to guide the user through the negotiation of a contract. Therefore, it is critical that users have a way to capture and learn from that data, especially data that is unique to an individual or related suite of contracts.
- At Avvoka, lessons from previous negotiations can be learned using Avvoka’s Clause Heatmaps. This feature uses negotiation data accumulated on Avvoka to show a visual representation of which contract clauses are marked up most by counterparties, using a traffic light colour system. Staff responsible for maintaining and updating the standard contracts can easily spot contract wording that is problematic, and revise it whilst also adding simple drafting advice and options.
- Furthermore, using such data means the contract playbook can feed into future technological advancements within your organisation. For example, if you introduce the use of artificial intelligence (AI) to negotiate simple contracts, a contract playbook provides a fantastic, foundational set of instructions for the AI tool to use and learn from.
A contract playbook will be a perfect product, but it is never the finished product. As negotiations continue and achieve better commercial outcomes, there will be new areas of pushback. Subsequently, the staff responsible for contract maintenance need to keep their finger on the pulse so they can understand the new pushback to update drafting advice and options.
Two solutions are detailed key performance indicators (KPIs) and quarterly reviews about each contract playbook.
- KPIs: This doesn’t mean a specific set of KPIs around the contract playbooks. Each business unit as a whole will have their KPIs, and each KPI will cover an individual or suite of contracts. By adding contract playbooks as a method of monitoring the relevant KPI, these will be reviewed on a regular basis and updated to meet the necessary targets to achieve the KPI.
- Quarterly review: Setting a quarterly review will ensure timely updates to the contract playbook. The time period is enough to capture the data on how contracts have fared since the deployment of the current version of a contract playbook; however, it avoids excessively tinkering with the playbook such that its purpose is undermined.
If you want to find out how you can get started with document automation, check out The Ultimate Guide: Document Automation 2022 – Our very own e-book where we provide expert legal tech advice about everything you will need to know and learn.
Read more from Avvoka:
- Could outdated technology be costing your firm?
- Discover the Benefits of Standardisation in the Legal Sector
- 7 tips on how to prepare your documents to be “automation-ready”
- How can Banking & Finance teams leverage document automation to their advantage?
- House styles – why are they important in law, and how can LegalTech help?
By: Raam Jeganathan