Author: reggers.robby

by reggers.robby

Unlock Contract Efficiency with a Simple Audit of Your Templates

Introduction

Companies often wonder why they should regularly audit their contract templates. This practice, which we implement regularly, often reveals a goldmine of opportunities for streamlining and improving efficiency of contract flows.

When a client approached us to improve its template customer contract, our first step was to conduct a thorough audit of all the contract templates in use. For instance, in one case, we were able to merge 12 separate templates into a single, standardized template applicable across all countries. In other cases, we’ve found multiple templates for different products or specific templates for government-funded versus non-subsidized projects. These findings underscore a crucial step: before improving your templates, it’s essential to first inventory what templates are in use. Only then can you effectively create or refine your templates for maximum efficiency.

1. The Necessity of Regular Contract Template Audits

Contract templates form the foundation of your business agreements, defining the terms and conditions of your relationships with customers, vendors, and partners. Over time, without regular oversight, these templates will (i) be amended in the organisation – often new templates emerge – without knowledge of management and Legal and (ii) be incomplete due to change in laws and products sold, leading to inconsistencies and legal vulnerabilities. A regular audit helps you:

• Risk mitigation and compliance updates
• Maintaining legal efficiency
• Identifying and eliminating redundancies
• Ensuring consistency across all agreements
• Enhancing negotiation speed and effectiveness
• Reducing legal disputes and misunderstandings
• Standardizing terms and conditions
• Keeping templates up-to-date with current laws and regulations
• Uncovering unauthorized or outdated templates
• Improving overall business relationships through clear and fair agreements

2. Steps to Conduct an Effective Contract Template Inventory

a. Gather Information from All Departments

Your legal department might not be aware of every template in use. Engage with various business units—such as Sales, Partnerships, Procurement, and HR—to gather a comprehensive list. Ask them to provide the exact templates they use daily to ensure accuracy.

b. Categorize Templates

Once collected, categorize the templates by:

• Type of Agreement: Customer, vendor, or partner agreements.
• Product/Service: Specific templates for different offerings.
• Geography: Templates used in different countries or regions.
• Language: Versions in different languages.
• Department: Templates specific to various business units.
• Special Conditions: Templates for specific situations, like government-funded projects versus non-subsidized ones.

c. Evaluate and Standardize

Review each template to identify discrepancies and outdated clauses. Standardize the language and format to ensure consistency across all agreements. This process not only reduces errors but also improves the clarity and enforceability of your contracts.

3. Addressing Common Issues in Customer, Vendor, and Partner Agreements

a. Customer Agreements

• Scope of Services: Ensure a clear description of the services or products provided.
• Payment Terms: Standardize payment schedules and terms.
• Liability Clauses: Update liability and warranty clauses to reflect current business practices and legal standards.

b. Vendor/Procurement Contracts

• Quality and Delivery Terms: Standardize terms related to quality control and delivery schedules.
• Compliance: Ensure all vendor contracts comply with relevant laws and regulations.
• Payment Terms: Regularize payment structures and terms to avoid discrepancies.

c. Partner Agreements

• Roles and Responsibilities: Clearly define the roles and responsibilities of each party.
• Profit Sharing: Standardize profit-sharing mechanisms.
• Exit Strategies: Include clear exit strategies to handle potential dissolution scenarios.

4. Uncovering Unauthorized Templates

During your audit, it’s not uncommon to discover templates in use that the legal or management teams were unaware of. These unauthorized templates, often created without prior approval, can pose significant risks. Identifying and rectifying these situations is crucial to maintaining legal and operational integrity. Ensure that all templates are vetted and approved to align with your company’s standards and legal requirements.

5. Benefits of a Well-Organized Contract Template Inventory

Maintaining an organized inventory of your contract templates offers several benefits:

• Improved Negotiation Speed: With standardized templates, negotiations become quicker and more efficient.
• Reduced Legal Risks: Consistent templates minimize the risk of legal disputes.
• Enhanced Business Relationships: Clear and fair agreements foster stronger business relationships.

Conclusion

Regularly auditing and organizing your contract templates is a crucial step in enhancing your business’s legal efficiency. By taking the time to inventory, evaluate, and standardize your agreements, you can streamline your processes, reduce risks, and build stronger, more transparent business relationships.

For more detailed insights and personalized advice, feel free to contact us or schedule a consultation.

by reggers.robby

How to Improve Your Negotiation – 7 Best Books to Read

7 Great Books to start with when you want to improve your Negotiation style. You will absolutely see that you will be a better negotiator if you apply the lessons mentioned in these books.

by reggers.robby

Förklaring av NDAs – Vad du behöver veta (del 1) 

Förklaring av NDAs – Vad du behöver veta (del 1)

I den konkurrenskraftiga affärsvärlden där idéer, innovationer, finansiell information och hemligheter är framgångsnycklarna, spelar Non-Disclosure Agreements (NDAs) ofta en viktig roll i att skydda ett företags konfidentiella information. NDA säkerställer att den konfidentiella informationen endast används för det specificerade ändamålet som parterna i en affärsrelation avtalat om. Denna artikel kommer att ge en omfattande översikt av NDA i sammanhanget Business to Business (B2B). 

Vad är ett NDA? 

Ett NDA, även kallat sekretessavtal, är ett juridiskt bindande avtal mellan två eller flera parter med syfte att skydda konfidentiell information som kan komma att delas under tiden av deras affärsrelation. Mer specifikt är företags konfidentiella information icke-offentlig information som skulle kunna skada företaget om det skulle offentliggöras. Vanligtvis inkluderas en lista över den konfidentiella informationen i avtalet. Det kan innehålla exempelvis affärshemligheter, know-how, produkt- och teknikrelaterad information, rabatter, kundlistor, försäljnings- och finansiell information, affärsplaner etc. 

Varför och när behöver vi ett NDA? 

I B2B-sammanhang kan NDA vara ett väsentligt verktyg för att skydda affärshemligheter och annan konfidentiell information som är viktig för ett företag för att bibehålla dess konkurrensfördelar. Denna känsliga information bör därför definieras tydligt och noggrant i NDA. Var däremot försiktig med att inte definiera det för snävt för att säkerställa att du inte har missat en viktig kategori. Genom användande av ett korrekt utformat NDA kan ditt företag skydda värdefull information från konkurrenter eller tredjeparter som kan dra nytta av att sådan information avslöjas. 

Primärt syfte 

Det primära syftet med ett NDA är att säkerställa att den avslöjade känsliga informationen används och hanteras säkert, vilket förhindrar en avslöjande part att använda eller röja informationen utan vederbörligt tillstånd och behörighet. Ett NDA undertecknas ofta i början av en affärsrelation innan man går in i affärsrelationen. 

Exempel 

Vanligt exempel: Ett teknikföretag planerar att sälja och erbjuda specialiserade programvarulösningar till en företagskund. Företagen börjar med att diskutera hur man integrerar programvaran i kundens system för att fastställa priset för integrationen och användningen av programvaran. För detta kan teknikföretaget dela insyn om sin prissättning, SLA, policys och programvara, och kunden kan i sin tur förklara sina utmaningar och dela affärsplaner. När företagen gör detta planerar de således att dela dokument, inklusive icke-offentliga sådana, det vill säga konfidentiell information. Därför rekommenderas det att sådana företag skriver under ett NDA innan de delar sådan konfidentiell information sinsemellan. Ett sådant NDA kan sägas upp när parterna undertecknar ett slutligt kundavtal, vilket också bör inkludera sekretessvillkor. 

Hur skyddar ett NDA din konfidentiella information? 

Precis som för vilket annat juridiskt avtal som helst, medför avtalsbrott av ett NDA rättsliga konsekvenser. Beroende på avtalsbrottets allvar kan konsekvenserna sträcka sig från rättsprocesser och ekonomiska påföljder till åtal i extremfall. Avtalsbrott avseende ett NDA kan också skada en parts renommé, vilket kan leda till andra långvariga konsekvenser för dess affärsverksamhet, särskilt i affärsrelationer och i branscher där förtroende och sekretess är avgörande. Rättsliga anspråk och stämningar rörande avtalsbrott av ett NDA hör inte till vanligheten, men det händer definitivt att ett företag behöver betala vite för avtalsbrott. Vi har även gett rådgivning några gånger tidigare i denna fråga. 

Vilken slags NDA behöver du? 

Det finns olika typer av NDA som kan användas baserat på de specifika omständigheterna och de involverade parternas behov. Nedan listas de tre vanligaste typerna: 

1. Unilateralt NDA (Ensidigt NDA): I ett ensidigt NDA ålägger en part, vanligtvis säljaren, den andra parten skyldigheten att säkra informationen och inte avslöja eller använda informationen för något annat syfte än det som specificerats i avtalet. I ett B2B-sammanhang, används ensidiga NDA ofta mellan köpare och säljare. Exempelvis kan ett bioteknikföretag (säljare) använda ett ensidigt NDA för att förhindra köparen från att avslöja känslig information de har fått vid köp av produkter eller tjänster såsom immateriella rättigheter och datorteknologi. Det är även vanligt i offentliga upphandlingar och för RFI (Request for information) vid RFP (Request for Price) situationer.   

2. Gemensamt NDA (tvåsidigt eller ömsesidigt NDA): Ett ömsesidigt NDA involverar två parter där båda parter kommer att dela känslig information med varandra och kommer ömsesidigt överens om att båda parter blir bundna av tystnadsplikt. Ömsesidiga NDA används ofta när parter behöver utbyta betydande mängder av konfidentiell information under sina förhandlingar eller affärsrelationer. Sådana situationer kan vara joint ventures, leverantörsavtal eller företagsförvärv. 

3. Multilateralt NDA (tre- eller flerparts NDA): Ett multilateralt NDA inkluderar tre eller fler parter, där åtminstone en part delar känslig information med andra parter och genomdriver tystnadsplikt. Den här typen av NDA förenklar pappersarbetet och administrationen för parterna på så sätt att parterna inte behöver ingå flertalet ensidiga eller bilaterala NDA med varandra. I en affärsrelation som involverar tre parter, där alla förväntar sig att avslöja konfidentiell information, kan ett enda multilateralt NDA ersätta behovet av tre olika bilaterala NDA mellan varje partspar. Sådana situationer kan vara partnerskap, regeringskontrakt (såsom försvars- och rymdfartskontrakt) och konsortieavtal. 

by reggers.robby

NDA’s Explained – What You Need to Know (Part 2)

1. Introduction

Let’s dive deeper in the details of NDAs. After explaining the basics and different kinds of Confidentiality Agreements (NDAs) in the previous article, we will now zoom in on four key elements that are part of NDAs: Parties, Definitions of ‘Purpose’ & ‘Confidential Information’ and the Term of the NDA.

In part 1 of our series ‘NDA’s Explained’, we explained what NDAs are and which different kinds of NDAs exist (link to article: https://amstlegal.com/ndas-explained-what-you-need-to-know-part-1/). Also see this great practical article on NDA’s by Ironclad.

In this article, we will take a closer look at Four Key Elements of NDAs that are crucial:

• Parties
• Definition of Purpose
• Definition of Confidential Information
• Term of the NDA

Whether you are just starting or experienced in drafting, negotiating and signing NDAs, this article ‘What You Need to Know (Part 2)’ will help you understand the Four Key Elements of NDAs for keeping sensitive information safe in business deals.

2. Parties

Why is this important?

As with other contracts, it is often overlooked and easy to forget to add the correct parties in the NDA. When there is only one company in the group of the parties to the NDA this is simple, but when you are dealing with parties that are parts of larger groups this is important. With large companies like Nvidia, Siemens, Google, Nike, etc. this is obvious but when you are dealing with smaller groups, take a moment to consider which entity of the group is actually sharing the Confidential Information.

Most common parties

When in doubt, or when multiple companies in the group are sharing the Confidential Information, it is advisable that the parent / holding company enters into the NDA. The reason for this is that NDAs typically contain wording entitles the Receiving Party to share Confidential Information with affiliates. It is advisable to also add a well-defined ‘affiliates’ definition in the NDA which will extend the rights and obligations in the NDA to the affiliates of the parties of the NDA.

Specific wording

Example of specific Party wording that needs to be completed: [Add Exact full name of the Company including Ltd., Inc., BV, AB, etc.], a company registered under the laws of [add country/state], with registered office at [add full address] and company registration number [add number].

3. Definition of Purpose

Standards ways of defining Purpose

Most commonly, parties add the following purpose to NDA’s:

• ‘discuss the possibilities of a commercial relationship’ or

• ‘exploring potential partnerships or collaborations between Parties’.

More specific ways of defining Purpose

However, these is not the only purposes that we encounter. Other example are purposes relating to: (i) investors in your company, (ii) research and development, (iii) legal proceedings or (iv) visits to companies or factories, etc.

Key aspects for the Purpose

To identify the purpose of your NDA, ensure that its objectives align with your business goals. Typically, the essence of an NDA’s purpose revolves around two key aspects:

• Evaluating Business Relationship Viability: Assessing the feasibility and benefits of a partnership or collaboration by sharing confidential information to make informed decisions.
• Negotiating Relationship Terms: Engaging in discussions and negotiations to define terms, obligations, and parameters, aiming for mutually beneficial agreements through transparent exchanges of confidential information.

Why is it important?

Clearly articulating the purpose within an NDA is crucial for ensuring alignment between sharing confidential information and business objectives. It prevents misuse or unintended handling of information, enhancing trust and enforceability. In other words, the “purpose” is your tool to limit how and when the receiving party uses and shares your confidential information. This clarity not only enhances understanding and fosters trust between the parties involved but also reinforces the enforceability of the agreement by providing a clear reference point for evaluating compliance and addressing any potential breaches.

4. Definition of Confidential Information

Confidential Information refers to sensitive or proprietary data, disclosed by one party (the Disclosing Party) to another (the Receiving Party) during their business relationship. This information is confidential to protect the Disclosing Party’s competitive position, financial interests, intellectual property rights or reputation.

What should be included?

Confidential Information includes a wide variety of information a wide range of materials, for example:

• Trade secrets
• Business plans and strategies
• Financial data and projections
• Customer lists and contact information
• Product designs and specifications
• Intellectual property, such as patents, trademarks, and copyrights
• Marketing plans and sales data
• Technology, Software code and algorithms
• Research and development projects
• Any other information that is not publicly available and is treated as confidential by the Disclosing Party.

When you enter into a NDA relating to very sensitive information, ensure that you add any relevant confidential information that is typically not included in the definition of Confidential Information.

Specify which confidential information needs to be protected

The definition of confidential information in an NDA is crucial and should strike a balance between specificity and generality. Specific enough to ensure the protection of intended confidential information, yet general enough to cover unexpected but related information.

For instance, parties may opt for narrow definitions to protect only specified information, or broader ones to encompass all information exchanged during their business relationship.

Specific wording

A well-drafted NDA should also clearly state what Confidential Information is understood to be and how the confidential information is communicated. In our view a NDA should have a definition for Confidential Information similar to:

“Confidential Information” means any (non-public) information of and all written, visual or oral disclosed by or on behalf of one party or its Affiliates (“Disclosing Party”) to the other party (“Receiving Party”), identified as confidential or that reasonably should be understood to be confidential, including but not limited to information about their business, trade secrets, etc.

5. Term & Non-disclosure period

Standard Term

NDAs typically have a specified term after which they terminate. There is no standard, generally accepted limit, but the length should be reasonable, considering factors like the lifespan of the confidential information and industry specifics. Commonly, parties agree to a 2 or 3-year term for the NDA, with a further term that the confidentiality will be applicable after termination or end of the NDA.

Exceptions

For NDA’s that relate to intellectual property (IP) and Research and Development (R&D) projects, the confidentiality period is often longer – up to 5 years.

Confidentiality Term after NDA termination

After termination, the disclosing party may require the receiving party to uphold confidentiality obligations for additional years (typically also 2-3 years). When parties enter into a specific agreement relating to the purpose in the NDA, the confidentiality provisions in the specific agreement should replace the wording in the NDA. Even though this is not common, it is a possibility to add such wording specifically in the NDA.

6. Conclusion

Hopefully, this article ‘What You Need to Know (Part 2)’ helped you understand the Four Key Elements of NDAs for keeping sensitive information safe in business deals. Please reach out to us via +31650608964 or lowa@amstlegal.com if you need more information or advice about this subject.

by reggers.robby

Contract Management: Two Simple Tips to Optimize Your Contract Templates

Introduction: Understanding Contract Optimization

In today’s business environment, efficiency and clarity in contract management are more crucial than ever. One question we frequently encounter is, “What exactly is Contract Optimization Advice?” This concept might seem intricate at first glance, but it’s fundamentally about streamlining your contract processes to save time, reduce errors, and ensure legal compliance. Let me illustrate this with a straightforward example from our recent advisory work.

The Challenge: Streamlining Contract Processes for Enhanced Efficiency

A client approached us with a common yet complex challenge. They had two separate (fairly long) customer contracts in use, signed approximately 100 times each year. These contracts were:

1. A standard customer contract for clients not receiving subsidies or government funding.
2. A standard customer contract for clients that do receive such financial support.

They asked us to improve the wording of the contract, ensuring that companies signing the contracts understood the contracts sufficiently, avoiding legal jargon where possible. Additionally, they asked to advise them how to amend the contract in such a way that processes would be more efficient. Most importantly, we would of course focus on lowering the risks for the company, where reasonably possible.

Both contracts included a pricing annex, which was subject to regular updates.

Our Approach: Simplification and Innovation

After a brief introductory call with the client and a review of the contracts, we proposed a straightforward yet innovative solution. Our advice focused on two initial key changes which we already proposed without going into the details of the full contracts.

• Consolidation into One Contract: We recommended merging the two contracts into a single document with a distinct annex for subsidy or funding conditions. This approach not only simplifies the contract management process but also ensures that all customers are subject to the same core terms and conditions, promoting fairness and transparency.
• Digital Pricing Updates: To address the challenge of the frequently updated pricing annex, we suggested adding a link to the pricing information on the company’s website. This allows for real-time updates to be made accessible immediately after notifying customers, thereby significantly reducing administrative burdens and enhancing operational efficiency.

The Impact: A Smoother Path to Business Success

Our client implemented these changes and observed a noticeable improvement in their contract negotiation times and overall legal process efficiency. More importantly, this optimization made their business operations smoother and their customers happier by providing clearer, more accessible contract terms.

Conclusion: Let Us Simplify Your Contractual Challenges

Contract optimization is more than a service; it’s a pathway to enhancing your business’s operational efficiency and customer satisfaction. By embracing simplicity and leveraging technology, we can help you navigate the complexities of contract management with ease.

Are you ready to streamline your contract processes and make your business life easier? Contact us for tailored contract optimization advice. Book an appointment with us to discuss possibilities for your company.

Tags: #AMSTLegal #ImproveYourContracts #ImproveYourTemplates #Negotiation #ContractLaw #LegalEfficiency #Legal #CommercialContracts

by reggers.robby

How to improve your Contract Processes with Better Cooperation

Legal should focus on Better Cross-Departmental Cooperation

As we have highlighted in previous posts, it takes leadership and a team to improve your contract templates. Once Legal has taken the lead and the centralized responsibility to improve the contract templates, the next step is to involve and work together on this goal with other departments. The creation and use alone of contract templates will only offer limited benefits This is not only essential to receive all required input for the contract templates, but also for a successful implementation of the contract templates.

Legal professionals often limit their interactions to their Legal colleagues or senior management when creating and implementing contract templates or negotiating contracts. This limitation, while understandable, can lead to contract templates and agreed contracts that are legally sound but are missing critical business insights.

Additionally, as mentioned above, the complexity, inaccuracy and lack of processes will lead to the use of unauthorized or outdated templates and excessive Legal Review due to lack of internal processes and support from other departments.

Insight Integration: A Collective Approach on Template Creation

Therefore, aligning contract templates with the practical realities of the business is essential. Departments such as Sales, Products, Finance and Compliance offer invaluable insights on commercial and financial risks, practical considerations and the specificities of products or services offered by the company.

This input ensures that the contract templates are not only legally robust, but also fit in the commercial roadmap of the company and cover all other company risks (e.g. technical, compliance, operational and financial).

Another important reason to involve these departments in the drafting process of the templates is to create a sense of ownership and support from these stakeholders. When departments contribute in the development of the standardized contract templates of a company, they are more likely to endorse and actually use the templates. This collaborative approach not only enhances the quality and relevance of the contract templates but also ensures their acceptance and utilization across the organization, ultimately leading to smoother operations and reduced risks.

Enhancing Cross-Departmental Collaboration – Improve Communication & Cooperation

Legal´s role in improving the communication and cooperation with the rest of the company cannot be understated. Regular, strategic meetings between Legal and other departments are essential to set the stage for a more integrated and efficient approach to contract management of the company.

These discussions should focus on:

• a) Strategic Alignment: First, Legal needs to clearly communicate its short and long term intended contract optimization strategy to all departments. Secondly, these departments should share their strategy and specific requirements and contributions to the contract process and templates. This will give Legal the opportunity to create and roll-out the best strategy to improve the Company´s contract processes and templates.
• b) Issue Identification and Resolution: Facilitating an open dialogue where Legal and all other departments can highlight challenges encountered with current templates and collaboratively develop solutions to streamline cooperation and reduce operational burdens.
• c) Training and Involvement: Initiating internal workshops to educate teams on optimal contract template usage, Legal engagement policies, while encouraging feedback and suggestions for improvements to ensure templates remain relevant and effective.
• d) Proactive Communication: Discussing the optimization of the empowerment of the commercial teams, meaning that all relevant contract-related documents and information are proactively shared with customers and partners by the Sales, Partnerships and Procurement teams.

This will greatly minimize the workload of Legal and maximize their output due to a decreased need of Legal clarifications and Legal involvement in negotiations. The importance of regular, inclusive meetings and training sessions cannot be overstated. When planning, it is essential to engage every layer of the organization, from grassroots employees to top management, in strategic discussions and trainings.

These sessions serve as a cornerstone for aligning strategies, creating an environment where all team members are equipped with the knowledge and skills to navigate the complexities of the contract optimization process and their roles effectively.

By maintaining a consistent schedule of these critical discussions and training, organizations can avoid the pitfalls of reactionary measures during peak periods of activity. Instead, a well-informed and strategically aligned team will be ready to handle the demands of the business efficiently, ensuring continuity and resilience in the face of challenges.

by reggers.robby

Contract Negotiations: How to Avoid Negative Reactions in Redlines and Mark-ups

𝗤𝘂𝗶𝗰𝗸 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻 𝗧𝗶𝗽 𝗼𝗳 𝘁𝗵𝗲 𝗗𝗮𝘆: When reacting to a comment or suggested wording by a counterparty that is commenting on your contract, 𝘢𝘷𝘰𝘪𝘥 using negative language like:

“Adding this wording in the Article is incorrect because it has already been covered in Art. 12.”

Instead, try saying:

“Thank you for your comment. I agree with your addition. Please note that we have already covered this in Art. 12.”

Additionally, for important subjects, you can add:

“If you do not agree with this wording, please let me know”; and/or

“Please let me know if you would like to discuss this topic during our next meeting”.

As we know, during contract negotiations, it’s important to maintain a cooperative relationship with the other party. Remember, the counterparty is also just doing their job and you are working together to reach a mutually advantageous outcome.

By using positive language in your reactions to comments, you can help keep negotiations running smoothly and maintain a good relationship with the counterparty.

For a bit more background on The Importance of a Relationship in Negotiations, please see the following article on the Harvard website.

See our original post on this subject on LinkedIn

#ContractNegotiations #HowtoNegotiateBetter #ContractLaw #AMSTLegal #contracts #negotiation #negotiationskills #relationshipbuilding

by reggers.robby

Legal in the Lead when improving Contract Templates

by reggers.robby

How to Avoid Year-End Negotiation Chaos – 9 Actions

Part 6 of my series ‘Contract Negotiations: How to Avoid Negotiation Peaks

Introduction – Q4 and Year-End Negotiation Peaks are Real

The most challenging time of the year for teams involved in Commercial Contracting is very close. With 5 weeks to go to Christmas and before focusing fully on end of Q4 deals, there are a number of important actions to take to prioritize the right things to do now. We hope to guide you in the right direction with this article ‘How to Avoid Year-End Negotiation Chaos – 9 Actions’.

Why is the countdown clock to Christmas important for B2B Contract Negotiators?

Ever since I started my career in 2004, I noticed that the end of the year is the busiest time of the year for anyone involved in Contract Negotiations, usually until the Friday before Christmas. Reasons for this are financial, commercial and family/vacation.

After that notorious Friday, it is very difficult to get contracts signed, not only due to holidays of contract negotiators, but especially because people that are authorized to sign contracts are on holidays. I have worked on getting signatures from directors skiing the slopes or sailing their boats, but these are exceptions that should obviously be avoided. It is a risky strategy to bother directors on their holidays…

Which Teams are most affected by the Year-End Negotiation Chaos?

Next to professionals in Finance, Consultancy and Law, teams that struggle most end of Q4 are the Sales, Legal and Procurement Teams. For our series we use Customer and Vendor Contracts as examples as most companies deal with these contracts. In this stage of Q4, with 5 weeks to go to the end of the quarter, it is important to focus on Preparation, Planning & Early Prioritization. How do we do that? By focusing on the following 9 practical steps you should take.

How to Avoid Year-End Negotiation Chaos – 9 Actions listed

Q3 deals

Bring the Q3 deal teams together to focus on closing these Q3 deals now. It is a great strategy to ensure that the last details are finalized now (e.g. data privacy & security, implementation issues, etc.) to avoid them coming up at the last moment end of Q4.

Q1 ’24 Deals

Communicate the priority for Q4 deals to your colleagues that are involved in the Q1 2024 deals. Focus on having your last negotiation meetings for deals closing in Q1 2024 now and after next week postpose further action to the start of 2024.

Vendor Contracts

Focus now on closing any 2023 vendor contracts. Except for vendor contracts that are absolutely critical to close before end of the year, postpone vendor contract that are not closed next week to 2024.

Training the team

Legal should set up the last Sales & Procurement enablement training meetings of 2023. This is a great opportunity to ensure that the teams knows where to find, how to use and explain the Standard Templates. When giving extra negotiation tips, also re-iterate that we should only negotiate contracts above the agreed minimum deal value amount.

Small deals

By the time of writing of this article in mid November, it is now still relatively quiet for Q4. Thus, it is a great time to pay extra attention to smaller deals. Try to close these deals asap so they do not come up at the last moment when all other contracts need to be signed.

Large and Strategic Deals

Discuss and agree with Commercial and Legal Team Leaders what are the biggest & most strategic deals that need to close before the end of the year. Next, divide these deals to the responsible Legal Team members to ensure hat not that one Senior Legal Counsel is stuck with all the biggest deals.

Discuss Process

Discuss process with the teams – internally and externally. What are the most important timelines and steps to take to get the deal closed on time? Next to negotiating the substance (commercial and contractual terms), this is essential to avoid last minute surprises. I have found this to be incredibly helpful in my negotiations, and it is confirmed by one of my favorite negotiation principles of Harvard called ‘Negotiate Process before Substance’. For example in this article of HBR, it is summed up very clearly:

Control the Negotiation Before it Begins.

The more clarity and commitment you have regarding the process, the less likely you are to make mistakes on substance. Negotiating process entails discussing and influencing a range of factors that will affect the outcome of the deal. Ask the other party: How much time does your company need to close the deal? Who must be on board? What factors might slow down or speed up the process? Are there key milestones or dates we should be aware of? Remember to find out simple things such as, Who will be in the meeting tomorrow? What will the agenda be? Since we are not going to discuss the issues of importance to us in the next meeting, when will we address them?

Customer Calls

It is advised to have calls with all Q4 high priority customers you have not spoken to yet. Introduction calls need to be set up now in the last stage of the preparation stage, before the negotiation of the contract will start and will be concluded. This is also part of the previous tip ‘Deal Structure’.

Dormant Deals

As a final tip, I recommend to get in touch with all Contract owners of contracts that have been dormant in the past 3-6 months and inform them that you assume that these deals will be handled again in Q1 2024 as you are starting to get ready for the final weeks of Q4. In this communication you inform them that this is the last week you can still work on these ‘dormant’ deals and that it would not be possible to close them if they would come up again in a few weeks.

Conclusion

Hopefully it was helpful to read our tips in this article ‘How to Avoid Year-End Negotiation Chaos- 9 Actions’. I have used these tips in practice and seen that the End-of-Year Negotiation Chaos and rush was much less when focusing on these 9 points.

If you would like more tips on this subject or if you want us to jump in and help out your team to improve these processes, please contact us at lowa@amstlegal.com or Robby Reggers at +31 6 5060 8964.

For more information about prioritization at work and how to motivate your team to do more than just meeting deadlines, please read the following great article of Harvard Business Review.

by reggers.robby

NDAs Explained – What You Need to Know (part 1)

NDAs ensure that confidential information is used solely for the specified purpose set out between the parties in a business relationship. In the world of business, where ideas, innovations, financial information and secrets are the keys to success, Non-Disclosure Agreements (NDAs) often play an important role in protecting a company’s confidential information. This article will provide a comprehensive overview of NDAs in the context of Business to Business (B2B) dealings.

What is an NDA?

An NDA, also referred to as a Confidentiality Agreement, is a legally binding contract between two or more parties to protect confidential information which may be shared during the course of their business relationship. More specifically, confidential information is non-public information of a company that could harm the company when it would be shared in public. Usually a list of the Confidential information is included in the NDA, containing for example: trade secrets, know-how, products and technology-related information, discounts, customer lists, sales and financial information, business plans, etc.

Why and when do we need an NDA?

In the B2B context, NDAs can be an essential tool for protecting proprietary knowledge, trade secrets and other confidential data that is important for a company to maintain its competitive advantages. That sensitive information, therefore, should be defined clearly and carefully in NDAs. However, be careful not to define it too narrow to ensure that you have not missed an important category. By using a properly drafted NDA, your company can secure valuable information from competitors or other third parties who may benefit from the disclosure of such information.

Primary objective

The primary objective of an NDA is to ensure the disclosed sensitive information is securely used and handled, preventing its use or disclosure without proper permission and authorization by the disclosing party. An NDA is often signed at the beginning of a business relationship or before entering into a business relationship.

Example

Common example: a technology company is planning to sell and offer specialized software solutions to an enterprise customer. The companies start by discussing how to integrate the software into the customer’s systems to ascertain the price for the integration and the use of the software. For this, the technology company might share insights about their pricing, SLA, policies and software, and the customer, in turn, might explain their challenges and share business plans. While doing so, the companies therefore plan to share documents including non-public, hence confidential information. This is why it is advised that these companies sign an NDA before sharing this confidential information to each other. Such an NDA can be terminated when the parties sign a final customer contract, which should also include confidentiality terms.

How does an NDA protect your confidential information?

Like any other legal contracts, an NDA carries important legal consequences for breach of contract. Depending on the severity of a breach, its consequence can range from lawsuits, financial penalties to – in extreme cases – criminal charges. Breaching an NDA can also harm a party’s reputation, which may lead to other long-lasting consequences to its business, especially in business relationships and industries where trust and confidentiality are crucial.

Claims and lawsuits relating to a breach of an NDA are not common, but it absolutely happens that a company needs to pay out a penalty for breach of confidentiality. We have even advised on this matter a few times in the past.

What type of NDA do you need?

There are various types of NDA that can be used based on the specific circumstances and the needs of the parties involved. Below are the three common types of NDA:

• Unilateral NDA (One-sided NDA): In a unilateral NDA, one party, typically the seller, imposes on the other party the obligation to secure the information and not to disclose or use the information for any purpose other than what is specified in the agreement. In a B2B context, unilateral NDAs are often used between buyers and sellers. For instance, a Biotech company (seller), may employ a unilateral NDA to prevent the buyer from disclosing sensitive information they have gained during the purchase of products or services, such as intellectual property and computer technology. Also common in Public Tenders and for RFI (Request for information) in RFP (Request for Price) situations.
• Mutual NDA (Two-sided or Mutual NDA): A mutual NDA involves two parties, and both parties will be sharing sensitive information with each other and agree that both sides will be bound by confidentiality obligations. Mutual NDAs are frequently used when the parties need to exchange considerable amounts of confidential information during their negotiations or business relationship. Such situations can be Joint Ventures, Vendor Contracts or Mergers and Acquisitions.
• Multilateral NDA (Three or More Parties NDA): A multilateral NDA includes three or more parties, where at least one party shares sensitive information with other parties and enforces confidentiality obligations. This type of NDA streamlines the paperwork and administration for the parties in a sense that the parties do not need to enter several unilateral or bilateral NDAs with one another. In a business relationship involving three parties, where all anticipate disclosing confidential information, a single multilateral NDA can replace the need for three different bilateral NDAs between each pair of parties. Such situations can be Partnerships, Government Contracts (like defense and aerospace contracts) and Consortium Agreements.