Sales teams have long viewed the legal department as an impediment to quickly closing deals, but the legal team is actually a valuable asset in accelerating deal velocity. The key to shortening the sales cycles? Modernizing contract processes.
More than 50% of organizations report losing revenue due to contracting inefficiencies, and a lack of standardization is a significant contributor. Nearly 70% of contracts don’t follow a guidance document. Comprehensive guides – known as contract playbooks – solve this problem by providing organizations with a uniform approach to contract management, negotiation and review. By using these playbooks, legal can shift from a service provider to an empowering partner, equipping sales teams to manage more of the negotiation process.
What Is a Contract Playbook?
Contract playbooks provide clear guidance on what to do – and not do – for specific contract types within an organization. This consolidated document standardizes definitions, preferred negotiation positions and best practices to reduce risk and increase operational efficiency.
By providing clear guidelines upfront, playbooks enable cross-functional cohesion across sales, legal, finance and other business departments. The uniformity minimizes contract risk and reduces legal escalations, allowing sales teams to bypass unnecessary reviews.
An effective playbook should include company-specific guidance on:
- Regulation and jurisdiction-specific clauses
- Limitations of liability
- Confidentiality
- Delays, force majeure and liquidated damages
Companies most commonly develop playbooks for recurring contract types, such as non-disclosure agreements (NDAs), master service agreements (MSAs) and sales and purchase contracts.
The Benefits of a Playbook
Legal and sales teams frequently encounter bottlenecks during high-volume periods, like the end of a quarter. When lawyers must manually review even standard contracts, workloads pile up, and, as a result, deals often slip into the next quarter. Playbooks expedite the review process to accelerate negotiations and empower sales teams.
For many years, cumbersome paper manuals limited a playbook’s effectiveness. Fortunately, companies can now digitize their guidance to make it accessible, searchable and updatable. Training AI contract review solutions on these documents enables businesses to reduce workloads while applying best practices to every contract.
AI reviews and redlines faster and more accurately than a human. The technology replaces problematic language with approved clauses and flags high-risk issues, freeing lawyers to spend their time solving, not finding, problems.
Leveraging AI-powered playbooks to automate the review process provides many benefits, including:
Reduced risk – The resulting contracts align with best practices and regulations and are uniform across the organization. AI finds ambiguous or problematic clauses so humans can resolve surfaced issues.
Increased autonomy – The ability to review contracts and universally apply preferred language gives sales teams more autonomy to negotiate contracts. Salespeople can easily access their company’s best practices to redline high-volume, low-risk contracts and resolve most issues independently. Playbooks eliminate significant internal back-and-forth between legal and sales.
Accelerated contract negotiations – AI can review contracts in minutes rather than hours, drastically shortening the approval timeline. And when sales teams have autonomy to manage some contracts, legal teams can spend more time working on more complex issues. This heightened efficiency breaks bottlenecks and quickly returns documents to the other party.
Increased sales velocity – The ability to review documents quickly accelerates contract negotiations, shortens deal cycles, and increases sales velocity. Closing more deals more quickly leads to faster revenue recognition and stronger partner relationships.
How do you build a playbook?
Rome wasn’t built in a day, nor is a complete contract playbook. Start the process by creating and perfecting guidance for a single agreement type by following these steps.
Collect data
Examine the full scope of documents handled by the business and identify impactful trends. Key considerations include the most heavily negotiated positions and the company’s fallback stances. Companies must also understand the critical revenue-generating documents and terminology for their organization or industry to prioritize playbook creation. For example, a tech company relies on technology licenses and SaaS agreements, so those documents would be first priority.
Create a Team
Key stakeholders should comprise a playbook design team. For example, a sales contract group might include people from the sales, finance, procurement and legal teams working together to determine the document’s priorities.
Create and Implement
A playbook document will include the key items to review, standard language, a checklist of first-pass negotiations and a list of fallback provisions and how to apply them. Because playbooks are often used to train algorithms, the documents must contain clear, unambiguous language to ensure machines understand the meaning correctly.
Maintain Content
Businesses evolve, and their playbooks should, too. Companies must maintain their playbooks to keep the content current and reduce risk. For example, new AI capabilities might require some organizations to shift their positions or add new clauses.
It’s a fact of business: Efficient contract processes yield greater profitability. Legal teams have the opportunity to leverage contract playbooks and AI to evolve from service centers to strategic advisors, empowering their sales counterparts to close deals faster and more reliably.
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