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Today on the Leaflet Blog we’ll be talking about a novel application in the world of legal technology. Now, if you’ve found your way to the Leaflet Blog, you’re probably not a first timer diver into the world of legal technology. However, as the ocean is vast, sometimes its easy to miss certain applications of existing technology, or new ventures out in the world. We wanted to take the opportunity to explore a relatively new aspect of automation technology; the application of automation to 3rd party agreement negotiation.
What do we mean by 3rd Party Agreements?
Let’s start with the basics. Most agreements are not negotiated between internal stakeholders. Almost all agreements are going out to a 3rd party for review and acceptance. Sometimes, these will go straight to the other company, sometimes we’ll see agreements go directly to law firms, or government entities.
When working with a third party, depending on leverage and expertise, we may not always be working on our own form agreement. We call this negotiating on 3rd party paper, or using a 3rd party agreement.
It’s important to note that even when starting with our own form, we can end up with a 3rd party addendum, rider, or statement of work. This is a fairly common part of the negotiating process, and accordingly should be considered when looking at Legal Technology scoped around negotiation.
When negotiating, time is a valuable resource. Many a deal has been killed because the parties could not reach an agreement on the terms in a timely manner. And if you’re the individual who is waiting on the results of that deal, like an engineer waiting for a component’s manufacture, or an attorney waiting for your firm to acquire some process improvement technology, each day that the deal takes to close puts your work further behind.
Accordingly, triage is an important part of the negotiation process. Parties will typically look to see if the general terms of the agreement are acceptable, or meet an accept level of risk and focus their negotiation time and energy on the more important items, Key Terms. Key terms are the pivotal points of the agreement. If acceptable values for these terms can’t be reached, the deal is off. These can be prices, dates, service levels, or even requirements to indemnify or provide certain protections. The key terms are determined by the representatives of each party, and accordingly can be whatever matters most to each organization.
This creates a level of complexity in negotiating any agreement, but certainly in negotiating on 3rd party paper. How do you ensure that the agreement contains the key terms that you require, and the embodiment of those terms can be captured, referenced, and reported to ensure compliance with organizational standards? Well, no surprises here, using legal technology.
Capturing Key Terms and Ensuring Compliance
Though we’ve given them a fancy title, key terms are just like any other field or variable within a document. Once their location and value have been identified, extracting the key term information is a basic process that any negotiation tool should be able to accomplish. Referring back to our principles of automation (a common theme here in the Leaflet Blog) a user should only have to engage in a process manually once. Once a key term has been identified, a system should track that term, and any changes made to it. This is how we ensure compliance, and maintain our legal risk standard.
With automatic updates and tracking comes reporting. It’s all well and good to track key term information, however without the ability to query your document repository, there’s no way to ensure that organizational policies are being enacted evenly across transaction.
Lets shift gears a bit and discuss some of the other benefits we can gleam from key term tracking and reporting. The first piece of information is trend data. In our data-driven economy, prediction is just as important as production. By analyzing our transactions with 3rd parties we can gain valuable insight into not only our variable terms (pricing, transaction time, etc.) but also how key terms and requirements are developing across the industry. Identifying and mapping key terms across a variety of 3rd party agreements provides valuable insight into the practices and trends of the industry as a whole.
Key term tracking also gives us valuable insight into our own negotiating process. Because tools can keep track of our starting points, and ending points, we can identify where time and resources can be more efficiently allocated in negotiation, and areas where we believe our risk tolerance to be not inline with our actual practices.
Work Product and Communication
Just like you don’t want your opponent to see your cards in a game of poker, keeping your internal thoughts and requirements away from the 3rd party is imperative for successful negotiation. That means having to keep all communication between stakeholders and language changes outside of the document until the final package is put together, lest the 3rd party gather your work product from the metadata. A negotiation tool should allow you to keep your notes, thoughts, comments, and collaboration within the negotiation space, without fear of a data leak.
The last piece that we’ll discuss in today’s blog is auxiliary tools that can support negotiation.
Playbooks are exactly what they sound like. They are strategies created for use when trying to complete a certain transaction. In the negotiation frame, especially when work with 3rd party agreements, playbooks offer you the ability to quickly and easily identify your preferred key terms and language, and insert those into the document. Playbooks will often feature a variety of terms depending on the circumstances between the parties. The key thing to look for is that the playbook is flexible, customizable, and provides you the opportunity to compare language to identify the best solution at the time.
Clause libraries function similarly to playbooks, but with less specification and greater flexibility. Clause libraries give users the ability to capture information from agreements, or insert clauses into agreements where the key term may be missing entirely, or where the changes are so fundamental, that it is easier to replace an entire paragraph, than make other changes. As Clause Libraries are not tied to a document type, they can be used freely across any number of agreements giving greater flexibility in the quick application of language changes. In many cases, for smaller or less complex documents, a clause library alone is sufficient for a negotiation tool.
Now, this is the Leaflet Blog after-all so I’d be remiss in not talking about the two tools that we offer. Leaflet Negotiate and Leaflet Draftlive.
Leaflet Negotiate is a tool that allows its users to quickly and easily negotiate 3rd party agreements, capture key terms, and do black-line comparisons all within Microsoft Word. Leaflet’s built-in reporting allows users to ensure that terms are compliant with organizational policies and provide a basis for contract intelligent data analytics.
Leaflet Negotiate features an innovative concept-driven Playbook allowing users to quickly map and compare contract language against organization standards. Further, the Leaflet Playbook allows users to immediately import conforming language into a document where it is absent, or outside of the preferred embodiment.
Leaflet Negotiate allows access to Leaflet’s powerful Clause Library for quick inclusions, or clause captures, and provides users the ability to negotiate any document, without the need to build a document type profile.
Tools and Features aren’t the only value adds from using Leaflet Negotiate. Negotiation is still a human-driven process and accordingly, that aspect is a strong consideration. To this end, we’ve provided the Communication and History tabs. Communication gives you a one stop show to reach out and discuss with key stakeholders, while keeping the conversation centered around the transaction and text. History gives you the knowledge of where you’ve been, and how terms have evolved over the course of negotiation.
Leaflet Negotiate empowers users to negotiate faster, more comfortably, and with a greater emphasis on ensuring compliance with organization standards.
Leaflet DraftLive empowers you to create complete, compliant, precisely controlled documents up to 80% faster.
DraftLive plugs right into Microsoft Word giving you multiple drafting modes
for pinpoint control to draft faster with fewer errors. Answer embedded questions and watch dozens of prescribed changes ripple through multiple documents in real-time. One click inserts approved language from your custom Clause Libraries. As your documents assemble, drop your cursor into Word and make fine-tune edits anywhere, in any document, instantly.
Complex transaction documents can contain hundreds of branching and interconnected attributes, any of which can affect dozens of provisions across multiple deal documents. Leaflet manages all of the complex logic for you. Leaflet’s Draftlive smart checklists and filters make it easy to collaborate and keep track of your drafting progress, so you and your colleagues always know what you have and haven’t yet drafted, completed, or reviewed.
Leaflet empowers Lawyers to draft faster, while still retaining all of the control required to make each document bespoke. Attorneys can select pre-automated forms, answer questions, and use the Clause Library to generate dynamic agreements and watch the changes occur live.
Leaflet’s Clio integration allows lawyers to begin the document creation process directly in the matter, and pull in relevant information that has already been added to Clio, such as contact information, and other key terms.