Redlining Red Flags: Common Mistakes to Avoid in Contract Negotiation

Recently held a webinar explaining the ins and outs of redlining. You can learn more by clicking the image

More than an agreement, contract negotiation is a conversation. It’s about aligning each party’s interests and expectations to ensure they’re accurately represented. However, drawn-out negotiations can stall progress and negatively impact the outcome.

Like any other process, efficiency leads to better and more timely results. The issue is that most contract professionals learn redlining tactics and best practices on the job. This makes them prone to costly mistakes and inefficient workflows, due to inexperience.

While learning the ins and outs of contract redlining takes practice, avoiding common mistakes can significantly improve time and accuracy. Here’s a list of the most frequent redlining errors and how to prevent them:

Using too much of a single color

Just because it’s called redlining, you’re not limited solely to the color red. A dominant color is more efficient for indicating changes, although various alternatives can also be used. However, if you opt for a very colorful approach, it’s better to exercise caution and not go overboard with too many options. Excess colors can create visual chaos and make the contract challenging to interpret.

It’s better to take a minimalistic approach. You can use colors like yellow for internal changes or green for agreed-upon changes. Before implementing a complex color scheme, ensure all parties involved understand the meaning of each color and have a simple way to reference it. A clear legend or set of guidelines prevents misinterpretation and simplifies the process.

Not tracking changes 

This mistake is a common cause of confusion and distrust among negotiators. One of the issues with not tracking changes is that it can be considered hidden redlining, which is the unethical practice of intentionally concealing edits from the other party.

By not tracking changes, you’re erasing reference points and comparisons for others without considering their input. One of the best solutions to prevent this is to use different versions of the contract, ensuring the main document remains untouched until you’re sure the revisions you’re making are final. This approach allows you to review new revisions against the ones drafted, without conflicts.

Redlining everything:

Negotiating contracts effectively means finding the balance between thoroughness and excessive redlining. In high-stakes agreements, meticulous review is essential, but initially, concentrating on the most impactful clauses (like financial terms, liability, and termination) clears the path to review more minor clauses. 

Instead of simply striking out text, proactively suggest alternative wording. Contract management software, like Zeal, allows you to use commenting tools to add context to your revisions, streamlining communication between parties. Remember, excessive redlining can slow down negotiations unnecessarily. Offer clear solutions, and explain your reasoning. 

Using the wrong software

Ensuring you’re efficient also lies in using the right tool for the job. Inefficient platforms often lack robust change-tracking features, making it difficult to follow the evolution of a contract and see who proposed specific edits. This lack of clarity can lead to confusion, misinterpretations, and, ultimately, stalled negotiations. For this reason, your CLM of choice must at least have these features:

  • Clear change tracking: The ability to see every edit made, with timestamps and identification of who made the change

  • Version control: Automatic saving of different contract iterations, making it easy to revert to previous drafts if needed.

  • Centralized collaboration: A shared workspace for all parties to make comments, suggest edits, and track discussions tied to specific sections of the contract.

  • Intuitive organization: Easy ways to store, tag, and search for contracts, ensuring quick access to the right documents.

Contract negotiation is a delicate balance between protecting your interests and fostering collaboration with the other party. Unfortunately, common redlining mistakes can derail this process, leading to confusion, delays, and even distrust.

Zeal addresses these pain points with its robust change tracking, version control, and collaboration features. Its intuitive organization tools make it a powerful tool for navigating complex negotiations. 

To negotiate contracts more efficiently, schedule a free consultation by clicking here.