Pro-Tip Tuesday: Creating a Contract Playbook & Clause Library
Traditionally, sales and procurement teams have been forced to rely on the legal department every time they had to create a new contract. Unfortunately, this practice often left the legal team to be the primary contract management owners.
When sales begin to take off, this approach can mean that legal professionals are constantly asked to do more with less time. So how exactly can organizations unite these teams, eliminate contract management barriers, and boost productivity? The answer lies in contract lifecycle management (CLM) software.
A comprehensive CLM solution will not only allow teams to work more efficiently, but it will also improve collaboration and provide optimal contract visibility. It accomplishes this by providing your staff members with access to innovative tools, such as a contract playbook template and clause library.
What Is a Contract Playbook?
A contract playbook is a valuable tool that enables your sales and legal departments to speak a common language. This playbook can best be described as a standardized guide that outlines the terms and conditions of each contract type.
These comprehensive resources often include explanations for certain contract provisions. They also teach sales agents how to defend certain contract terms, which variations they can use as a fallback, and what terms are firmly “non-negotiable.”
In addition, contract playbooks provide real-world examples that will help negotiators better understand certain concepts. These examples use common, plain language, which makes the information more digestible for team members who do not have a specific background in contract law.
In essence, a contract playbook can increase the speed and consistency of contract negotiations, regardless of who is sitting at the sales table.
The Contract Playbook Creation Process
While contract playbooks are excellent tools for CLM, they are not one-size-fits-all solutions. It is important to create a separate contract playbook for each type of contract that you work with on a regular basis. The depth and complexity of each playbook should correspond to the risk associated with that specific contract type.
Every contract playbook should be developed in conjunction with leadership from your sales and legal teams. The sales agents will be responsible for addressing the things that they want to accomplish from a business perspective, whereas the legal professionals should provide clear language that insulates your organization from risk.
The playbook should also have specific provisions and fallback clauses. Each clause should include a brief legal explanation, which ensures that the negotiator understands the importance of specific provisions.
If you would like a more in-depth look into the creation of contract playbooks, check out “CLM Simplified” by Lucy Bassli. She devotes an entire chapter to the topic and covers it in great detail.
What Is a Clause Library?
By deploying modern CLM software, you can also give your team access to a clause library. These libraries serve as massive repositories that include standardized template clauses. Each of these clauses has been carefully crafted and reviewed by legal professionals, including general counsel, to ensure that it will adequately serve and protect your business.
Clause libraries empower all contract stakeholders, including sales and procurement teams. These teams can readily access and utilize pre-approved contract language without relying on your legal department in the midst of negotiation cycles.
Ideally, your clause library should include general guidance on how and when to use certain clauses. It should also note which fallbacks that sales agents should rely upon during the negotiation process.
A robust clause library will streamline the contract creation process. The contract creator can easily insert pre-approved phrases that meet the risk tolerance level as determined by your legal department.
The net result is that your sales and procurement teams become more productive. A clause library can also improve the experience for your clients, as the negotiation and contract ratification processes will be significantly shortened.
Can I Create a Clause Library In-House?
While it is possible to create your own clause library, this is not the most pragmatic approach. The biggest drawback to this strategy is that it is extremely time-consuming. Your legal team will need to deploy some basic data management software and then create separate clauses in small word processing files.
Even if you opt to invest in high-end file management solutions, these platforms are not expressly made for creating contracts.
Specialized clause library tools are included in top CLM platforms. These solutions have extremely sophisticated capabilities and can seamlessly interact with your CRM software. More importantly, clause libraries that are built into CLM software are designed specifically for the purpose of creating custom contracts.
CLM Solutions from Malbek
A modern CLM solution enables organizations to speak a common language and collaborate without friction. Interested to learn more? Read “Why You Need a CLM Solution Now” next!
If you have heard enough and you are ready to invest in world-class technology, we can help. Malbek has developed the most innovative CLM solution on the market.
Known as Contrax, our technology is capable of streamlining every facet of contract lifecycle management. It includes tools such as:
- Contract management repositories
- Contract request forms
- Contract playbook templates
- A comprehensive clause library
- Redlining, negotiation, and review functionalities
- Signature integrations
- Tracking software
- Advanced AI
- 256-bit encryption
- Reporting tools
If you want to change the way your business handles contract lifecycle management, Contrax from Malbek is the clear solution. Schedule a no-obligation demo to see our CLM solution in action.
