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If you work in a legal department, contracts probably take up a lot of your time. But is every agreement worthy of the same amount of your attention?
The answer is no – giving equal consideration to every deal can be devastating to your bottom line and your business in general. Your high-value agreements and most big-spending buyers deserve the bulk of your attention. So, why do so many legal teams continue to spend valuable resources creating, reviewing, and approving low-value deals that should have been standardized a long time ago?
WATCH: THE ECONOMICS OF CONTRACT DESIGN
By understanding personalized vs. standardized contracts – as well as how to automate an agreement – you can speed up sales cycles to eliminate damaging delays, legal errors, and the potential to lose deals.
A Non-Disclosure Agreement and a long-term partnership, for example, carry dramatically different financial weight – so why dedicate equal time, consideration, and resources to them both? By being more strategic and understanding the differences between personalized and standardized contracts, you’ll be able to reduce overhead costs while freeing up your workday to focus on the high-dollar deals your business needs.
A personalized contract is typically a one-off agreement that’s sent to a specific individual or select group of signers. Despite these deals occurring much less frequently than their standardized alternatives, the bulk of your contract workload should be spent on these efforts. While there could be significant time spent negotiating terms, customizing conditions, and talking through redlining and revisions, the back-and-forth is acceptable because these contracts carry a much higher value than the average agreement.
Mergers, acquisitions, and long-term partnerships are just a few examples of personalized contracts where the juice is well worth your time-intensive squeeze. In these circumstances, eSignature (albeit modern eSignature because traditional methods are still unnecessarily slow) is an acceptable way to finalize the agreement.
A standardized agreement is one that holds your market terms. That is, it is rarely negotiated and often presented as-is to hundreds, if not thousands, of buyers. The majority of contracts used by a business is often standardized agreements. These high-volume, low-value agreements shouldn’t include negotiating or redlining at all – because any attention devoted to these contracts is a loss of time and resources spent on something more important to your team.
Terms of Service, NDAs, and Sales Order Forms (within or below a certain deal band) are a popular example of popular of agreements that are commonly used, sent to multiple signers, and more or less never change from one instance to the next. And, while standardized contracts rarely bring in a lot of revenue, they’re nonetheless important to your business. These agreements contain and protect your market terms – so they shouldn’t need to be rewritten every time they’re sent out to a new buyer.
It takes a lot of time to finalize contracts – so it makes sense that today’s most successful legal teams are the ones that minimize (if not entirely eliminate) delays in their processes to move onto bigger and better opportunities. But without contract automation, that’s much easier said than done.
According to Kingsley Martin, President and CEO of KMStandards, as much as 70% of the total time spent on contract execution is attributed to negotiation, review and approval activities. Traditional workflows and linear processes aren’t helping you close deals or deliver a satisfying digital experience to your customers. Online buyers want a quick and painless transaction – so you should be automating standardized contracts to give them precisely what they want.
Imagine a world where your contracts were pre-approved by your legal team. There would be no need for changes, or redlining, or negotiations later on.
Imagine a world where unnecessary complexity and inefficient steps were removed from your contracting process. Your team could concentrate on strategic deals that impact the organization most – while your customers enjoy a modernized transaction approach.
These scenarios are just a preview of what contract automation can do for you. But, if you’re not quite there yet, follow these four tips to take your standardized contracts to the next level:
Contract automation isn’t reinventing the wheel – it’s rethinking your approach to make agreements easier for everyone to understand (and hopefully accept). And that starts with standardizing the terms used universally across your contracts. The terms that you are least likely to negotiate and/or have the least amount of changes to make to, regardless of who is accepting the agreement.
Simplifying your standard agreements also protects you from human errors like sending different contract versions out for approval. To start setting new standards, take the time to create a single master agreement. It may also be worthwhile to highlight any terms or conditions your team may be willing to negotiate – just make sure you’re only sharing those thoughts with internal stakeholders. Doing so puts you at a competitive advantage where speed and availability can be huge differentiators in your buyers’ contracting processes.
Presentation matters. How you deliver a standardized contract to your signers directly influences how they interact with it. By sending out a Word- or PDF-based agreement, you’re giving someone the indication that there’s room for negotiation.
Presenting your terms and conditions via clickwrap, click-to-accept, or a digitally native agreement, on the other hand, gives them a contract with no option to redline. So, a signer is much more likely to accept your deal as is. Remember, negotiation means time wasted – and time wasted means less value at the end of the day.
The acceptance mindset is a fresh approach to traditional contracting. It’s about moving away from the obsession with collecting signatures, eliminating manual work, and automating one-step acceptance processes to enable frictionless, high-volume deals whenever possible.
Sure, there are some agreements that will never be no-touch or high-volume agreements – but that doesn’t mean they still can’t benefit from automation capabilities and more efficient delivery methods. By adopting an acceptance mindset, you recognize the dollar value of your time and attention by being strategic in where, when, and how you apply it to a standardized contract.
Related Content: How the Acceptance Mindset Can Help You Run a Better Organization
Every organization wants to sell more, sell faster, and sell with as little friction as possible. But if a legal team needs to be involved in every contract, they quickly become a detriment to an increasingly digital customer experience. Instead of running back and forth between sales and your buyers, your time should be spent building out standardized templates that can be autonomously sent out and approved – even better if terms can be dynamically rendered to suit each client with minimal (or no) legal team involvement.
Delivering digitally native agreements to your sales reps gives them confidence that contracts are being sent out to the right people on time – while giving you peace of mind that your terms aren’t being change and adequately protect the company. Using clickwrap, embedded signing, or modern eSignature, you can even present deals in a mobile-friendly manner to establish a convenient, accept-from-anywhere sales approach that accelerates deal closure on average from two weeks to just 14 hours and 26 minutes.
Graph showing the difference in time to sign between a PDF/Word doc and a digitally native agreement
Automating standardized contracts will help you save time, speed up contract negotiations, and eliminate the potential for human errors that jeopardize enterprise safety. But that’s not all. Download our Making Contracts Key to Unlocking Revenue Recovery eBook now to find out how legal can also help businesses grow their revenue through more efficient contracting.