Contract Redlining Etiquette: How to Negotiate Like a Pro

contract redlining

Contract negotiations can be nerve-racking — especially if you’re a small business contracting with large organizations. It’s vital that you understand the process so you look like a pro. 

The key?

Proper contract redlining etiquette. Keep reading to understand the unwritten rules of contract redlining so you can negotiate the best terms possible.

What Is Contract Redlining

Contract redlining is the process of exchanging edits and proposed changes to a contract until a mutually acceptable agreement is reached.

According to Nada Alnajafi, founder of Contract Nerds and author of Contract Redlining Etiquette, there’s no standard practice for redlining  contracts. Even for lawyers, it’s a skill that’s learned on the job. 

Is it any wonder small businesses struggle to do it right? They’re learning on the job too — but without the mentorship and feedback available to contract lawyers.

This is one of the biggest reasons small businesses struggle to get and keep enterprise clients. Poor contract redlining etiquette makes you look unprofessional or too inexperienced to be of value to the enterprise, ultimately sabotaging your deals.

Contract Redlining Etiquette

Let’s review five basics of redlining etiquette, so you know how to negotiate contracts quickly and effectively with large companies.

1. Use track changes. Always.

If you’re not familiar with it, “Track Changes” is a feature of Microsoft Word. Turn it on, and every change is tracked — underlines for additions and strikeouts for deletions.

Redline documents track changes

 

Google Docs also tracks changes if you set the mode to “Suggesting.” But contract lawyers prefer Word, because its Track Changes feature is more refined, allowing for better redlining.

Sometimes the other party will send you a PDF. When this happens, you have three options:

  • Ask them to send you a doc for redlining
  • Copy and paste the text into a doc, so you can redline
  • Convert the PDF to Word using Adobe Acrobat

It’s important to track every change you make in a contract because it gives the other party the chance to see and respond to your changes. 

If you try to make changes without Track Changes, it looks like you’re trying to sneak something by them. That’s a red flag that you can’t be trusted and can stop negotiations in their tracks.

2. Make the changes you want

Don’t just suggest the change you want in the contract terms — actually write it.

It’s okay if your edits aren’t written in legalese. Use your own words, and the other party can clean them up, if they agree and find it necessary.

The key is to do the work of negotiating for yourself. Don’t expect the other party to read your mind or understand how you want to change a term. They’re not interested in negotiating on your behalf. Make the change, so they can consider what you’re asking for.

3. Explain every redline in a comment

Every contract redline should be accompanied with a comment explaining why you felt the change was necessary. To do this, highlight the section you’re changing, and create a comment with your explanation.

There are a few reasons for doing this. 

First, it builds good will. By explaining your changes, you demonstrate your professionalism. It’s clear that you aren’t making arbitrary demands. You have business reasons for your edits.  

Second, it helps the other party understand your needs. This makes it easier for them to work with you to negotiate a fair contract.

Finally, the word “because” has persuasive power. Robert Cialdini, in the book Yes!, explains that by following a request with the word “because,” you can get people to change their minds — even if your reason is meaningless.

Now, in contract redlining, you aren’t going to share a meaningless explanation. But by justifying your change, you’ll make your request all the more persuasive.

A few tips:

In your comments, speak in third person: “we” and “us.” Not “I” or “me.” That’s how large organizations talk, so it makes you appear bigger and more professional.

Use this same approach when rejecting a redline. If the other party makes a redline that you can’t accept, leave a comment saying, “We cannot accept this request because…”

4. Keep it professional

Keep in mind, the contract you’re putting in place is the starting point of a long (hopefully) and profitable relationship. Your behavior during negotiations sets expectations for your future interactions. So keep it professional.

Even if negotiations become long and drawn out, don’t lose your cool. Don’t make accusations and never make it personal.

Instead, send messages of encouragement as the contract moves forward. Great negotiators often put encouragement in the email enclosing their redlined document because simple words like “We’re making good progress” and “I think we’re getting close to an agreement” can help set the tone for the counterparty’s review of their asks.

5. Remove internal comments before sending your redlines

The other party doesn’t need to see your company’s internal comments as you review the contract. If you and your team make comments or markups during your contract review, delete them before returning the contract to the other party.

If you leave internal comments, you run the risk of telegraphing or compromising your position. That can make it hard to get the terms you want. 

Not only that, if you have an internal stakeholder who's a little verbose or makes embarrassing statements, you may be seen as unprofessional or even inappropriate. And that could end your negotiations altogether.

Get Contract Redlining Etiquette Right

A deal is never done until the ink dries. That’s especially true when a small business is contracting with a large organization.

To ensure you get the deal, you must maintain professionalism throughout your negotiations. Contract redlining etiquette is a good place to start. 

Learn it. Use it. And look like a pro no matter who you’re contracting with.

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DISCLAIMER: Delino is not a lawyer and makes no warranties that its advice will protect your business from lawsuits or damages. Users rely on contract feedback at their own risk. Please consult your attorney for legal advice.