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5 Strategies to Strengthen Your Contract Negotiations

By Colby Mangonon

Here are a few ways the technology built into today’s contract management systems can strengthen your position in contract negotiations.

contract negotiations

Contract negotiations consist of far more than bringing two parties together to achieve a mutual agreement. Whether negotiating on behalf of your company or client, the way you conduct yourself during legal negotiations demonstrates how you balance internal interests with your desire for agreement or partnership. Your approach can have a significant impact on the quality of your future relationships. 

Even more, in today’s economy, there is a greater focus on organizational efficiency as clients look for savings across business units, and on mitigating risks. These goals can be achieved through an informed negotiation strategy.

Common missteps during the negotiation process include mismanagement of expectations, holding unnecessary hardline positions and contributing to negotiation fatigue. How can you overcome these pitfalls and move the contract forward? These five strategies can transform your bargaining power in contract discussions and increase your ability to deliver ideal results. Also helpful: They provide a framework to spot early warning signs that walking away from a deal may be best.

1. Manage Expectations

Manually reviewing thousands of contracts to understand the broader view of your organization’s commitments, liabilities and terms is time-consuming, expensive and error-prone. Contract management systems with artificial intelligence (AI) and natural language processing significantly speed up the process by enabling you to search the entire contract portfolio for specific clauses or phrases in just a few minutes.

Gaining a historical understanding of past agreements can inform your future approach to negotiations. With the ability to search and find specific provisions and stipulations within existing documents and auto-populating dashboards, contract management AI builds your awareness of the company’s historical clauses. You can also access data that reveals your most common compromise positions that may be more likely to close your deal and identify language that can lead to pushback and delays. Responding to redlines with your generally accepted compromise positions (or revamping your clause library to incorporate them) can help you move the negotiation forward quickly and maintain goodwill.

2. Recognize the Motivation Behind the Contract

Determine the stakeholders and reasoning for this product or partnership. For example:

  • Does executing this agreement add efficiency to the business model?
  • Will it streamline an operational function?
  • Will it empower the team to do more with less?

Businesses often focus on getting a contract executed quickly, but also keep an eye on which business factors are driving this contract forward and uncover the terms that are important to stakeholders.

Defining the deal’s value to your client, the risk tolerance, available resources, and historical precedents are all essential to ascertain introductory and fallback positions. This awareness establishes an early understanding of when it is time to walk away.

3. Create Your Best First Draft

Once you set objectives and expectations, you can create your best first draft. By using natural language processing on your current contract database, AI helps you generate precisely tailored templates in line with existing provisions. The technology enables you to identify the best language for the current context based on precedent and provides you with real-time insights on what language is and isn’t helping close your deal.

As generative AI matures, you will be able to leverage large language models as a tool to more efficiently draft, redline and negotiate nuanced, industry and deal-specific contracts.

4. Avoid Unnecessary Rounds in Contract Negotiations

Stringent reliance on a pre-set playbook or overly-broad templates can overcomplicate your negotiations. AI assists in this process by identifying and assisting in removing irrelevant provisions and language. Why waste 10 negotiation rounds on terms when the specific use case doesn’t call for those clauses? 

This AI functionality in contract management systems empowers you to stand firm, backed by historical data, when it comes to positions that are hardline requirements and compromise on provisions that are not relevant to the specific contract or where you have identified a previously approved fallback position.

5. Be a Good Partner

Negotiation has evolved from a stringent, no-compromise style to a more collaborative and partnership-focused approach. Businesses, partners and customers are increasingly interested in forging a relationship with an organization that feels aligned with their values and is willing to come to the table.

Gone are the days of locked, uneditable PDF versions of agreements and a complete unwillingness to discuss contract terms. Taking an inflexible approach to contract negotiations is more likely to lead to a relationship breakdown than the execution of a foolproof contract. Your flexibility, fluidity and ability to react quickly (with AI-informed fallback provisions) ensures your bargaining power and trust from your counterparty, ultimately leading to a well-balanced contract and a bulletproof relationship.

Related Reading: “Six Tips for Being a More Persuasive Lawyer”

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colby mangonon Colby Mangonon

Colby Mangonon is Associate General Counsel at Evisort. Colby has provided legal and business counsel to the tech industry for almost a decade. Prior to Evisort, she served as Director, Legal Commercial at SOCi and Senior Commercial Counsel at Citrix. She was a Law Clerk for the California Court of Appeal, Fourth Appellate District and received her J.D. from the University of California, Irvine School of Law. Today, Colby lives in Hawaii where she continues to provide pro bono services to local entrepreneurs, focusing on women- and BIPOC-owned businesses. Connect with her on LinkedIn here.

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