The Contract Management Playbook: What It Is and How It Works

icon-contractA contract management playbook provides a single source of guidance for corporate legal departments as they handle negotiations to reach equitable agreements. Unfortunately, these important, and, sometimes, hefty manuals are often too cumbersome to use in the best of circumstances. An attorney knee-deep in contract negotiations may not have time to thumb through scores of pages of content to find the relevant company positions. Obviously, non-use limits the overall effectiveness of the playbook.

Illustration representing the transition to a digital contract management playbook

Digital playbooks, however, have eliminated many common shortcomings associated with a traditional playbook. They can streamline contract review and allow attorneys to search efficiently for the information they need. When combined with AI contract review technology, the effectiveness of the contract management playbook increases exponentially.

Understanding the Contract Management Playbook

Contract management playbooks cover all the dos and don'ts of a specific contract type. The playbooks include specific directives for contract negotiation that include removing certain terms or flagging particular provisions that could damage the company. Although playbooks apply to many types of documents, they are more commonly utilized in contracts that a company will complete over and over again, including:

Non-Disclosure Agreement (NDA) : NDAs limit the release of proprietary information and trade secrets. These agreements are often found between a company and vendors or employers and employees.

Master Service Agreement (MSA): MSAs set the tone for future deals between two companies. These umbrella agreements cover general provisions that could apply to any contract.

Public sector framework: These procurement contracts apply specifically to arrangements with public institutions relating to the delivery of products, services, or individual projects.

End-user License Agreement (EULA): EULAs come from an intermediary organization that provides a product or service, like a platform that sells apps. They govern how the individual may use the apps they purchase.

Software Licensing Agreement (SLA) / Software-as-a-Service (SaaS): SLAs are agreements formed directly between a software provider and a business or person. SaaS agreements are similar but are usually subscription-based due to the nature of the platform. 

Sales and Purchase: These general agreements can lock in negotiated prices and establish deadlines for delivery.

Establishing a contract management playbook for each contract type can help ensure legal departments consider all critical areas of an agreement. They can also streamline negotiations.

How Digital Playbooks Enhance Processes

Searchable

Accessible

Updatable

Digital playbook are easy to search. Some versions allow a simple interface that users can click through to find the information they need. Some may require the individual to use a search navigation bar. In either case, this search capability provides a vast improvement over a paper index.   

While a traditional playbook may stay in a library or file cabinet, a digital one is usually available via a shared drive or network program. Staff can access the information they need from anywhere, even if they are not in the office. Of course, it is necessary to ensure the playbook is secure and password protected when sharing it via an internet connection. 

Digital playbooks are far easier to update than traditional paper playbooks. Revisions can be suggested within the playbook itself, reviewed, and then shared with all users. This process limits the risk of using an outdated playbook, as the original copy is the single source of truth. 

While digital playbooks offer some clear benefits over traditional ones, they are not perfect. Legal departments that use a standalone digital playbook will encounter limitations:

  • They are not enforceable: It is impossible to mandate using a digital playbook without requiring additional software. Users will still have the option to use it or ignore it.
  • Use requires expertise: Someone using a digital playbook will need enough knowledge to search out the terms and provisions they need. If they do not know it exists, they will not look it up.
  • They are long: Contract management playbooks, whether digital or traditional, are extensive (usually scores of pages). No attorney or paralegal, no matter how good, will ever know every provision inside one.

Digital contract management playbooks are undoubtedly superior to traditional ones, but they are not a standalone solution. Most corporate legal departments combine them with technology to eliminate their downside and mandate use.

Boosting the Power of the Playbook with AI Contract Review

Artificial intelligeIllustration of digital playbooknce (AI) has provided significant benefits across wide-ranging industries, and the legal sector is no exception. AI legal technology leverages NLP and data analysis to "read" contracts and return suggestions like a human attorney. 

To build an AI Digital Playbook a legal department submits a series of samples to train the AI as well as its playbook. Once trained, the AI analyzes the contracts presented to it and returns a fully-redlined agreement with revision suggestions in accordance with the sample data and playbook. In this process, the AI Digital Playbook becomes a critical aspect of the contract review and negotiation process. 

For example, one such need that is relatively new but has come to light due to recent world events is COVID-19 provisions. Many legal departments have added a clause to their contracts limiting liability concerning events outside of their control like office closures or supply chain-related delays. While a playbook may direct attorneys to add this COVID-19 clause to all future contracts, it’s inclusion is for naught if the reviewing attorney is not aware of this revision or is too busy to remember to include it.

When combined with AI contract review, the process can be automated. In this case, a contract review and negotiation platform will, depending on the AI Digital Playbook’s directions, return a warning based on playbook guidelines noting the missing clause and/or provide attorney-quality revisions into the contract. If the attorney is happy with the AI-guided revision, they can focus attention on more complex issues in the contract or other matters entirely.

It is important to note that not all AI contract review software offers the capability to make attorney-quality revisions or offer client-specifc guidance. Some solutions only extract data and will do little to support negotiations. When seeking out a solution that leverages digital playbooks, legal departments need to vet software carefully.

What to Look for in Playbook Companion Software

Many options for AI contract review software are available on the market; however, most of those options do not use playbooks effectively. Corporate legal departments should look for the following features when combining their playbook with contract analytics software

Full automation

Minimal samples

 Redlining

Many AI contract analysis tools require extensive human-in-the-loop involvement to ensure accurate results. They may, for example, extract provisions and make them easier to review, but it is still up to the attorney to catch mistakes and review the content. While this is useful, it does not mandate adherence to the digital playbook. Full automation isn't just easier, it's more accurate. 

AI contract analysis runs on data, and in some cases, it requires hundreds of pages of samples to improve accuracy. However, this is not always possible, especially when dealing with multiple contract types. LexCheck's platform, for example, can be trained using fewer than 24 samples, allowing users to get up and running quickly. 

Redlining is a process in AI contract analysis that allows the AI to add or revise provisions. Many technologies will only add a suggestion to review content. A strong solution will offer alternative sections to replace areas that may be problematic. This gives attorneys context and helps them understand why the contract needs to change. 

Negotiation focus  

Security

Speed

Contracts should drive negotiations. The simple act of crossing out a section or adding a new provision is a counterargument to another party's offer. Platforms that support digital playbooks will emphasize the negotiation capabilities that accelerate agreement approval while providing equitable arrangements for both parties. 

Security is vital for any AI contract analysis solution, but it is imperative when using a playbook as a data source. Most legal departments do not want to share their proprietary negotiation strategies. Therefore, the platform itself should undergo regular penetration testing. Likewise, all content and contracts should require encryption to protect confidential information. 

One of the goals of establishing a playbook is to accelerate agreements. Any good contract analysis platform will offer a rapid turnaround, sometimes reaching completion in only a few hours. Turning around contracts rapidly without putting pressure on staff will give any corporate legal department a clear competitive advantage. 

The traditional contract management playbook was undoubtedly a good idea, but we now have the technology to overcome its limitations. Combining a digital contract management playbook with an AI review and negotiation solution is a guaranteed way to streamline operations for a legal department while improving outcomes.

LexCheck can combine digital contract management playbooks with our powerful platform to streamline negotiations and improve outcomes. To learn more, contact us at sales@lexcheck.com, or request a demo.

gary-sanghaGary Sangha | Founder & CEO

Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.