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Avoiding Unnecessary Contract Negotiation Delays with the “Deal Room”

Getting to the metaphorical contract negotiation handshake can be long or short, relatively easy or painfully difficult. Whenever a contract is negotiated, the negotiation process is burdened by things that are out or our control. Will it be balanced? Does our counterpart care about win-win? Will it be predatory? Will it be truthful? Will unfair contract terms be imposed as a result of the size and economic strength of the other party? This is a partial list of the many things that make contract negotiations challenging, and perhaps even impossible to control. The ability to intelligently manage what can a highly complex process can easily be the difference between a successful negotiation and one that is not. For maximum effectiveness, it only makes sense to control those elements within your purview.

No Keystone Cops. Control What You Can Control

So what about the things you can control? Contract negotiation is a process like any other business process. It is also very different. It can be highly complex and competitive where momentum, clear communications, information control and a negotiation history is necessary to maintain visibility of what has been negotiated and by whom.

If your contracts are basic and easy to negotiate, your negotiation may be fast and straight forward. If, however, you are like many companies and your contracts require the participation of many parties as concessions and deliverable requirements must assessed; reviewed not just by legal, but by manufacturing, operations, compliance, IT and a host of other functions that will actually be responsible for delivering against whatever is negotiated. The back and forth instances of 30 contract document changes or more, are not unusual during the course of major negotiations.

It is sad to admit, but all too often complex negotiations can have the disorganization of a Keystone Cops scenario, rather than the disciplined structure that is much more ideal. Frequently contracts are simply emailed back and forth with little regard to security (they get sent to the wrong parties or get lost) or the inherent problems with trying to manage version control changes. Control what you can. With the right tool these include your overall negotiation processes, negotiation momentum, and document revision control and negotiation history.

What is a Deal Room?

A deal room is a highly secure, compartmentalized and controlled, online location accessible to anyone, from anywhere, with the appropriate credentials. It is a repository where all of requisite documents can be seen and worked on during the agreement negotiation process. Part of a complete Contract Life-Cycle Management (CLM) solution, the deal room also protects visibility to documents and information that should not be visible or accessible to one or more of the negotiating parties.

How to Use a Deal Room

For enabled CLM solutions, a deal room is set up by an administrator as a temporary location where all relevent documents reside. The administrator defines who has temporary access to the system, what they will have access to (view, change or deny rights) giving any individual user or group of users as expansive or as limited access as they require. Negotiators will be mutually granted certain rights to access the file hierarchy and the documents within the deal room. The administrator can also define approval templates and approval process events and reminders that generate notifications to users who must complete a defined task(s). In addition, automated notifications can be generated to interested parties who wish to have visibility into the progress of a particular negotiation.

Document Negotiation Tracking and Oversight

The ability to notify the responsible party/parties of a document that requires review and needs to be approved, and to track the progress of the approval process is critical to keeping the approval process moving forward and to avoid unnecessary delays. Poorly managed negotiations can take weeks or months longer than they need to take and this can involve considerable expense, not the least of which is lost opportunity cost. Relying on email as a means to physically send documents back and forth for review can be a nightmare, especially during long, complex negotiations. When using a deal room, all document access is via the room and when a negotiation is initiated, documents are put into the deal room and email notifications are automatically generated, each with instructions that are sent to the reviewing party/parties via email. Rather than receiving the document itself, each email provides hyperlinks to the task to be completed and the specific document that requires review. Upon selecting the link, it takes the reviewer to the system login and upon login takes the user to the specific document to be reviewed. If his/her access privileges allow it, the reviewer may open the document in Word, make any necessary changes, then upload the revised document back into the deal room as a revised document version. This maintains best practices, assuring that each new version of the document is saved, reflecting changes at each step in the negotiation process.

Others within the system may see review status and receive notifications whenever the review of a document is completed, approved, a deadline is missed or an approval is rejected.

Avoid Final-Hour Negotiation Errors

Upon negotiation completion, the document may be reviewed through a contract compare function, which shows side-by-side, paragraph-by-paragraph and line-by-line differences between any two contract documents. At this point the negotiation is complete, the administrator creates a final signature approval template and emails are sent to those parties. Once completed, the document can be signed electronically, allowing the negotiated agreement business activities and obligations to commence.

File and Negotiation Document Sharing

Upon document signing, all the documents in the deal room folder(s) or just certain designated documents are uploaded from the deal room into each negotiator company’s system for access and archiving purposes and the deal room is closed. Upon uploading, each company with an enabled CLM system now has an ability to set events and reminders within their own system that relate to their agreement obligations.

Approval Template(s) Creation

Whereas different types of agreements will generally require different approval processes, good CLM solutions provide the means to create an unlimited number of different approval templates for different agreement types, whether they are those related to a certain dollar value, or related to a different type of product or service, etc. Each template specifies the responsible parties to be notified, when they will be notified, when they have completed a task and when they are late in completing a task.

Calendar of Events

Part of deal room functionality is each user has a personal calendar of events, showing all reminders and events they are individually responsible for. Each event and document can be either accessed from calendar hyperlinks or from the hyperlinks in the email they will receive. Said email can also provide a link to generate a similar calendar event within MS Outlook, Google calendar, etc.

Controlling the Review and Approval Process

With experience in contract full life cycle management going back to 1995, openSourceCM has a wealth of experience recognizing practices that are both good and bad. As such, all openSourceCM solutions incorporate best practices that maintain the integrity of the contract life-cycle process. What does this mean at a high level? The answer is approval processes are put in place because they are important and should not be able to be changed on an “ad hoc” basis, defeating the intent of having a controlled approval process in the first place. Thus changes in a pre-defined approval process are not allowed in an ad hoc fashion, but rather in a structured traceable fashion.

What this means to the deal room document approval process, where unexpected changes in contract language or negotiations can require unplanned individuals to be pulled into the review process, is this. If a change requires a deviation to the standard review process, then a new template is created by the administrator (this is fast and easy) and it is associated with the revised document. Emails are then sent to reviewers as before. In this manner the integrity of the approval process cannot be intentionally or in intentionally bypassed or compromised.

Tasks and Event Notification(s)

Tasks and event email notifications, specifying notification timing and the responsible individual or groups of individuals can be created.

Action Tracking and Audit Trail

The last thing anyone wants is for a negotiation to be unknowingly hijacked or manipulated to the detriment of either party. For this reason, your CLM solution should date stamp, track and record each and every action by any individual within your system. This means, log in and out, viewing of any folder, subfolder or file, and any changes made in the system.

Momentum, Clear Communications, Information Control and Auditing.

Having a negotiation stalled or delayed due to miscommunication, or by an inability to manage and track document changes and status, can result in lost momentum and lost mindshare. If you have mindshare, you shoudl not allow unnecessary delays and other priorities that will inevitably occur over time, to subvert your negotiation efforts. While delaying tactics may very well be a tactical part of certain negotiation strategies, having “carpe diem” capabilities to keep a negotiation successfully moving toward its conclusion are critical. Efficient communications and a knowledge of where you are in any negotiation process, may well be the most important tool at your disposal to complete your negotiations efficiently and successfully.

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