On the need and necessity for Playbooks in contract negotiation
Over the last 2 years ago my team and I have engaged with countless large enterprises, fast growing unicorns, government agencies and more. We have interacted with Sales leaders, Legal leaders, Procurement, Legal & Sales Ops and, most often, the AGCs of Commercial who oversee almost all of the buy and sell side contracts that any given company executes. In all of our conversations we always ask them how they make their legal negotiation decisions and if they utilize a playbook. Their answers have been eye opening.
From the chart above you can see that almost the entire market is dependent upon lawyers and their teams making every legal decision in a negotiation based upon a playbook that is either not fully up to date or non-existent! That’s scary to hear particularly when you consider the next natural question: Do you know all your negotiated positions and how they differ from your standard?
Here is their answer in a very simple pie chart.
That’s right. Uniformly, they have no idea.
Whether it’s well established, sophisticated enterprises or companies in hyper-growth mode that have not truly matured their legal functions yet, the answer is always the same. To be fair, bigger companies tend to have layers of approval levels which help ensure that any outliers are few and far between (and only for good reason). Yet, at what cost?
The fact is that every company, whether they know it or not, has a playbook. It’s inherent in what they do every day. Any company that negotiates contracts already has the necessary data to avoid the dilemma of an unrecognized or outdated playbook. Every signed contract is a clear reflection of a company’s legal decisioning process. All the data is sitting right there and it should be analyzed and used. The good news is that software can get a company started right away and help companies avoid countless hours of menial, mind-numbing work trying to create a living, up-to-date playbook.
The beauty of starting with the data is that through AI and analytics one can reverse engineer what a company is actually doing and quickly arrive at a functioning and current playbook.
Why is this helpful?
92% of companies are highly interested in understanding the legal “ground truth” contained in executed executed agreements, but they don’t have an understanding what’s in those documents.
You get to see all your negotiated positions and how often you go there. You get to see what friction points there are in the process that, if removed, would significantly speed up the time it takes to close deals and book revenue. You also get to choose whether you want to start making legal decisions in a modern, empowered way or remain chained to an outdated mode of contract negotiation.
The benefits of opting in are significant. Going forward, every contract that gets executed also gets scored and flagged for negotiated positions. Companies will finally know exactly what they’re agreeing to and won’t need to be so reliant on the personal knowledge to which only a few team members are privileged. Instead, from legal down to sales, it will be right in front of everyone’s eyes.
So, what’s in your playbook? If you are interested in reverse engineering your executed contracts to find out, let us know. We know a thing or two about this and the best part is, so will you in just a few hours time.