So you’ve started to sell your product and customers are asking you to negotiate and make changes to your sales contracts? The question that often arises of founders is, “Can a non-lawyer redline a contract?” A lot of early startups don’t yet have a legal person that they can rely on. Often early stage founders will rely on external lawyers to help them through the first cohort of customers that they bring on, only hiring legal internally later on.
This leaves you in a difficult area of legal being extremely costly. For this reason a lot of founders look to have templates for their contracts and to do any markup or changes themselves. Although founders are a savvy bunch not all have any official legal training and instead look to lean on the notion of “yeah, I could do that”. The issue is that getting over the line in contract negotiations, as a founder without legal expertise, may have later ramifications they are unaware of. So let’s look at who should make changes and why.
Legal Counsel or Lawyer – Please Don’t Redline Your Own Contract
Lawyers are risk adverse. And for good reason. They study their whole lives to understand how to risk mitigate and how to stop people with no legal background getting themselves into trouble. And they earn damn good pay for it. Engaging legal counsel or a lawyer is often the first line of defense when it comes to redlining sales contracts. These professionals specialize in understanding the legal complexities, mitigating risks, and ensuring the company’s compliance with laws and regulations. Their expertise helps in identifying potential loopholes, liabilities, and clauses that need modification to safeguard the startup’s interests.
Legal counsel handling contract redlining ensures adherence to legal standards, reducing the risk of future disputes or legal issues. They ensure fair terms, protecting the startup from unfavorable conditions or ambiguous clauses that could lead to misunderstandings.
Their role isn’t to decide the appropriate level of risk for you. They should redline, inform you of ramifications, and let the founding team decide if it’s too risky.
Sales Team – Can a non-lawyer redline a contract?
In a startup, the sales team is at the forefront of driving revenue and securing deals. They possess firsthand knowledge of client requirements, market trends, and customer preferences. Involving the sales team in redlining contracts can create trouble, but they should be involved as they grasp the practical implications of negotiating terms.
Sales team involvement ensures contracts align with promises made during the sales process, maintaining transparency and trust. They also provide insights into industry-specific nuances, making the contract more practical for successful deal closures.
The problem with letting the sales team redline contracts is their strong motivation to close deals quickly. This means that the likelihood of them agreeing to bad terms in a deal is not only higher but incentivized.
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Executive Leadership
Executive leadership, including the CEO, COO, or CFO, often oversees major contracts, especially those involving significant value or strategic partnerships. They are often the people who are asking can a non-lawyer redline a contract? Their involvement in redlining contracts is vital as they provide a broader perspective, considering the company’s overall objectives, risk tolerance, and long-term strategies.
Executive leaders ensure that the contracts align with the company’s vision, goals, and risk management strategies. Their input helps in evaluating the contractual terms from a strategic standpoint, weighing the potential gains against the risks involved.
Generally these leaders are the ones who can make the commercial decisions on contracts that others cannot.
Collaborative Approach
If you’re looking to build relationships with customers that will last and negotiate and close deals as fast as possible, collaboration among legal counsel, the sales team, and executive leadership is really the only way to go. While legal experts ensure legal compliance, the sales team brings practical insights, and executive leadership provides strategic direction. A collaborative approach ensures that contracts are both legally sound and commercially viable.
Creating a structured workflow where contracts are reviewed by legal counsel, discussed among relevant stakeholders, and finalized with collective input fosters a balanced approach to redlining sales contracts. This approach minimizes the chances of oversight and enhances the quality of agreements, ultimately contributing to the company’s success.
If you’re a founder of a startup, redlining sales contracts isn’t solely your responsibility. It’s a collaborative effort leveraging legal counsel’s expertise, insights from the sales team, and strategic guidance from executive leadership. By combining legal compliance, practical understanding, and strategic alignment, startups can create contracts that not only protect their interests but also foster better and sustainable business relationships. This is the aim of Contract Sent and the reason why we have unlimited users on all of our contract management pricing plans.
