Enterprises commonly pose the question on how legaltech can possibly automatically detect red-flag issues in contracts when what’s a dealbreaker issue for one organisation may not be so for another, or what wasn’t a dealbreaker issue some years ago may actually be one today. That’s a great question and involves contract playbooks which are an excellent place to start automating the contract review exercise for high-volume as well as high-stakes legal documents.
Why The Need of a Playbook to Automate Contract Review
Contract playbooks are essentially internal guidelines and predefined compliance standards that in-house legal teams use, often crystallising strategies gathered during multiple negotiations over the years. Playbooks typically address clauses which are not mandatory but would be ideal to have (‘nice to haves’), clauses that are acceptable with suitable modifications (‘may-haves’) and clauses whose absence/presence are a deal-breaker and not acceptable (‘must-haves’).
Having playbooks in place facilitates speedy and accurate contract review and help teams maintain consistency in their negotiating stance with counterparties, thus mitigating risk. They’re also a great knowledge transfer resource for getting new team members up to speed.
These playbooks can be as simple or detailed as legal teams want them to be. In fact, legal teams can maintain more than one playbook for the same category of contracts.
For instance to review Service Level Agreements, teams could create two distinct playbooks for contracts where they’re either the Service Recipient or the Service Provider respectively. Global businesses with legal teams across distinct jurisdictions also maintain separate contract playbooks that are in line with domestic laws.
Ideally, playbooks should be periodically revisited by legal teams to capture modifications brought about due to change in legislation, change in negotiating stance (what may be mandatory for an organisation previously may not hold relevant today) and change in business requirements (with growth, new regulatory compliances may kick in).
For organizations keen to embrace legaltech to review contracts, having legal playbooks handy can help automation projects to proceed faster and smoothly.