Cut negotiation delays with a balanced contract form
August 13, 2008
In a prior life, I was vice president and general counsel of a medium-sized, publicly-traded software company. Whenever a customer asked us to agree to a change in our standard contract form, we treated it not as an adversarial challenge, but as a marketing opportunity: Customer A thinks its life will be better if we can make this commitment. It’s willing to give us money if we do. Hmm — maybe we can tailor our business processes so that we can comfortably make this commitment. That might give us yet another thing to tout to other customers as a reason to buy from us.
Thinking along those lines, in many cases we went back and changed our form, so that our standard offering included what Customer A had asked for.
This approach paid big dividends: As our contract form thus evolved, it began to get rave reviews from customers’ lawyers. My sense was that this significantly sped up our sales-negotiation cycle.
I made notes of customers’ favorable comments, and then finally got smart and quoted the comments (anonymously) on a cover page of the contract form. This turned out to be a good move, because it helped us “sell” customers’ legal people on the idea of using our contract form. Here are a few of the comments, all made by in-house counsel:
- When I first looked through this, I wondered ‘did someone already negotiate this for us?’ It’s a pretty nifty document you’ve got there; I liked it very much.
- I told our business people that if your software is as good as your contract, we’re getting a great product.
- I giggled when I saw the ‘movie reviews’ on your cover sheet. I’d never seen that before – customers saying this was the greatest contract they’d ever seen. But the comments turned out to be true.
Needless to say, our sales people were not unhappy about getting to signature faster.
The above information is not confidential, by the way: With my CEO’s permission, I talked about our approach in continuing-legal-education seminars, and even included a copy of our standard contract form in the written materials.
You might wonder whether we ever experienced legal problems from having a customer-friendly contract form. I’ll note only that my CEO let me talk about our approach in public, and that we were eventually acquired by one of the world’s largest software companies.
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