In order to successfully win and close deals, sales and legal need to maintain a united front. This means being on the same page when it comes to contracting, as a significant portion of their work together is creating, negotiating, and sending contracts.
The agreement presented to the client is ultimately a collaboration between legal and sales, ensuring all parties are served by the terms within the contract. However, whereas legal wants to double and triple check that the terms are suitable, sales wants to send it off as soon as possible and shorten their time to closed-won.
Still, contracting is one of the biggest bottlenecks in the sales cycle. As many as 85% of sales contracts are still executed manually, and with the approximately 40,000 contracts within an enterprise, sales and legal are spending more time than necessary on contracts that can be automated.
Here are some ways sales and legal can each provide cross-functional support for the other to ensure that the business wins the deal with little to no legal risk.
Here are 5 ways legal and sales can collaborate:
Both sales and legal can improve collaboration between their departments by holding regular trainings. The goal of these trainings is to help both parties understand the why and how behind each process. Regular trainings allow new and existing employees in both departments to exchange information, strengthen their relationships and communication, and breakdown silos.
The more sales understands the risks inherent in the daily running of the business, the more they will keep this top of mind when transacting with prospects. This can also bring to light potential process improvements.
One of the biggest bottlenecks in sales is the contracting process. Traditional contracting manually slows down the sales process, leaves a lot of room for human error, and often gives legal more work to do than necessary. To mitigate this, sales and legal should collaboratively decide what their ideal contracting workflow looks like and choose a solution together that works for both parties.
Having an approvals matrix in place and a delegation of authority can go a long way in saving time. If an organization does not have one in place, the legal department can work with sales (and other departments when necessary) to implement a policy for who can grant which approvals, and when. The legal team can explicitly state which contracts and agreements are included in the policy, which titles hold which authorities, and specific deal dollar amounts that are approved for various title holders.
Legal can share a sales-friendly version of the contract playbook to educate the sales staff about the company’s standard fallback positions. Within the contract playbook, legal outlines standard contracting terms and acceptable variations, as well as non-negotiable terms and an explanation of which terms are mandatory and why. More detailed contract playbooks also include possible client objections and work-arounds.
While the legal team may share a version of the playbook with sales during the quarterly trainings, they may not want to share the actual contract playbook document as it is highly confidential and legal does not want to run the risk of it being shared externally.
The legal department often finds binding terms that should only be included in the master contracts slip their way into Statements of Work (SOWs). During training sessions, legal counsel can detail the dos and don’ts of drafting SOWs to sales.
A problem that often arises between sales and legal teams is sales’ tendency to sign off on large deals without negotiating big ticket items. Because of the magnitude of repercussions, legal can use the quarterly trainings to explain why covering for these big ticket items in the SOW is not best practice. This also helps with legal’s overall workflow on a daily basis because it would mitigate the need for sales staff to send SOWs for legal review before sending it to the client. A related conversation would be how sales can avoid making unintended contractual agreements in email in addition to SOWs.
All in all, if sales and legal approach their relationship as a partnership, better results will follow. Frequent trainings, good communication, and sales having a clear understanding of the contract review process from the beginning will go a long way and help strengthen the relationship between the sales and legal teams.
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