Updating in-house contract templates and negotiation playbooks is not sexy, nor is it directly related to a particular revenue-generating transaction. However, it may be an efficient way to address the increased pressure on in-house counsel to close more deals in less time – with fewer in-house resources and with smaller outside counsel budgets – brought on by COVID-19.

Your peers are already doing it.

Precarious State of In-House Transaction Support

Drafting and negotiating contracts is much more challenging since the outbreak of COVID-19. According to a recent Altman Weil survey, 44% of Legal departments plan to cut their 2021 budgets. HBR Consulting’s 2020 Law Department Survey reveals that 84% of Legal departments are experiencing increased workloads and 18% are planning layoffs.

The Legal departments surveyed did, however, identify responsive measures. HBR Consulting reported that 70% of Legal departments have adopted templates for standard contracts and that 32% of departments plan (or have begun) to implement negotiation playbooks.

Contract Templates and Negotiation Playbooks to the Rescue

Any investment in developing, or merely updating, contract templates or negotiation playbooks is likely to pay off. The following contract issues are appearing more often and in a new light. Expedite your negotiations by proactively formalizing your attack (and fallbacks).

  • Force Majeure. More frequently, force majeure clauses are no longer only two or three sentences, but are much longer. They now often additionally address notice timing, notice details, and minimum duration of non-performance for an event to qualify as force majeure.
  • Changes in Laws. Changes in laws provisions are becoming more common. Customers and vendors are reacting to the prospect of unforeseen legislative and regulatory activity and are looking to avoid having no contractual mechanism to deal with events like the passage of the future version of California’s consumer privacy law or the invalidation of the Privacy Shield.
  • Business Continuity and Disaster Recovery. Often secondary to force majeure, now more contracts are requiring ongoing and uninterrupted performance even in disaster situations. Many agreements now tie these (new) obligations to force majeure rights.
  • Remote workers. Working remotely is likely to last long beyond the pandemic. For both vendors and customers of technology, new contract terms and terminology addressing remote access and use are gaining traction as to software licensing, cloud access, and other technology user-based provisions, as well as cyber security commitments.
  • Data Security. More customer template contracts are including comprehensive data security terms. Although previously common among customers in financial services, healthcare, energy, and other regulated industries, more vendors are seeing template schedules and detailed provisions from non-regulated entities.

You don’t need to do a front 4½ pike into the deep end of the template and playbook pool to reap benefits. Wading into the shallow end will still generate meaningful returns.

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