contractredlining Tag

by reggers.robby

The Best Way to Efficient Contract Redlining in Negotiations

Lately, there has been a discussions about the best way to redline a contract during negotiations. When redlining a contract, should you simply send an amended redlined Word document and move on? Or should you adopt a more elaborate 6-step plan (including a pdf compare), as highlighted in various legal circles? When we talk about contract redlining, we mean ‘𝘵𝘩𝘦 𝘱𝘳𝘰𝘤𝘦𝘴𝘴 𝘰𝘧 𝘦𝘥𝘪𝘵𝘪𝘯𝘨 𝘢 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵 𝘸𝘩𝘦𝘯 𝘯𝘦𝘨𝘰𝘵𝘪𝘢𝘵𝘪𝘯𝘨’.

In this article ‘The Ultimate Guide to Efficient Contract Redlining in Negotiations’, you will find an in-depth look at how each contract redlining approach works.

I will also explain why we at AMST Legal believe continuing in one evolving redlined document (with occasional compares) is usually the most efficient, transparent and client-friendly method. We will also explore Nada Alnajafi’s (writer of the book Contract Redlining Etiquette) 10-step process so you can see precisely how an experienced contracts professional handles redlining from start to finish.

1. What We Will Cover

• Why the Debate? The origins of the 6-step approach vs. a single redlined doc
• Key Principles: Efficiency, transparency, and clarity for all parties
• When (and How) to Use Compares: Ensuring every edit is captured accurately
• When (and Why) to Avoid Extra PDFs: Why separate PDFs often add clutter
• Nada Alnajafi’s 10 Steps (Quoted in Full): A data-backed method for efficient redlining
• Final Takeaways: The balanced approach that works for most teams

2. Understanding the Debate

The Six-Step Approach vs. a Single Redline Document

As mentioned in my post on Linkedin on this subject, we noticed that in some legal circles, lawyers have embraced a 6-step process to handle contract edits. After they receive the new draft from the counterparty, they take the following steps:

1. Accept all changes in the document you receive from the counterparty you are negotiating with (your new “clean” version).
2. Compare old vs. this new draft to ensure that all changes compared to the previous version are visible.
3. Amend the new “clean” version (can be amended by one or multiple people in the same organization).
4. When finalized with adding comments & amendments, Compare again to show new changes to counterparty and to make the final check.
5. Save the fresh comparison as a PDF.
6. Send both the new “clean” doc (as amended) + the compare PDF.

For the avoidance of doubt, at AMST Legal we do not recommend this approach, except where agreed or desired by your client, customer or counterparty.

Advocates of this 6 step approach argue it helps manage large, complex deals – especially when multiple stakeholders are involved – by producing a neat record of only the latest changes.

Critics see it as time-consuming overkill that can inflate billable hours, make negotiations overly complicated and confuse counterparties who want to see comments and explanations in one place.

We have found that most:

In general, most legal professionals seem to prefer to stick with one progressive redlined document, continuously layering edits and resolving comments as issues are settled. This single-document approach is often more efficient for commercial & smaller deals or simpler contracts, and it preserves the full negotiation trail.

Origins of the 6-Step Approach

The more traditional “clean + PDF compare” method likely emerged when Microsoft Word’s Track Changes was buggy or unreliable in large documents. Many practitioners still worry about hidden edits or formatting issues – concerns that, at one time, were quite valid. Others claim that by resetting to a “clean” version each time, you reduce the clutter of multiple layers of color-coded changes and make it simpler for executives to see only newly introduced edits.

However, Word has significantly improved in comparing documents and most commercial legal professionals do not believe that separate software like Litera and Deltaview) is still necessary. Additionally, best practices between legal professionals have been developed and are widely in use that mitigate most of these issues. That’s why many in-house counsel and lean legal teams opt to remain in a single track-changed doc for efficiency.

3. Key Principles of Effective Contract Redlining

Efficiency

As also advocated by Nada Alnajafi here, in a commercial setting, it’s typically best to redline a single version of the contract. Next to adding explanatory comments, you accept or reject changes as you reach agreement, and layer any new edits into the same tracked document.

This approach:

• Reduces confusion by keeping one “source of truth.”
• Retains comments in context, showing how and why each change evolved.
• Saves time for your counterparties, who don’t have to juggle multiple files.

Transparency

Continuous redlining gives all parties a full view of the agreement’s evolution. Rather than delivering a “clean” Word doc that erases prior edits, you preserve the document’s story. This makes it easier for anyone (clients, internal teams, or external counsel) to see what has changed over time. Inline or ‘balloon’ (our preferred method) comments further ensure each party can understand the rationale behind edits.

Clarity

One of the top goals in contract negotiations should be clarity. When you present the counterparty (or internal stakeholders) with a single redlined version:

• They immediately identify recent changes.
• They can refer back to older, accepted edits if needed.
• They see important comments and open questions without having to hunt through separate documents.
• You can ask your internal stakeholders specific questions, which they can resolve in the same document.

4. When (and How) to Use Compares

Validate Your Changes Internally

Even if you prefer to continue in the same redlined doc, a document compare can still be incredibly valuable for quality control – especially in multi-stakeholder negotiations. What happens often in negotiations is that two lawyers lead the negotiation, but they ask input from various specialists like experts in data privacy, tax, data security, product, intellectual property etc.

Before circulating a “new” version externally, run a compare on your own to ensure you haven’t accidentally skipped anything or misapplied a request from the other side. This step helps catch:

• Missed revisions or hidden text changes.
• Accidental deletions or additions that no one noticed.
• Formatting or numbering issues that might cause confusion later.

Provide a Compare Alongside the Redline in Complex Deals

In more complicated deals where multiple stakeholders (e.g., finance, technical, local counsel in different jurisdictions) are editing the same draft:

1. Stick to One Master Redline – Everyone tracks changes in the central Word document.
2. Create a Compare Version (at Key Milestones) – If your CFO, the counterpart or external counsel only wants to see what’s new since the last milestone, you can provide a compare word file or PDF (as a matter of exception) in addition to the main redline.

Tip: Communicate why you take this extra step.

5. When (and Why) to Use or Avoid Extra PDFs

At first glance, PDF redlines can seem like old-school overkill. Why not stick to Word track changes? But in certain cases, like when working with large law firms or complex finance and corporate deals, PDFs are not only accepted but often expected.

Let’s dive into the “mobile-viewing” and “Locked Compare Can’t Be Accidentally Edited” rationale driving PDFs.

The Mobile-Viewing Argument

Some lawyers say they send PDFs because executives often review contracts on smartphones – and a PDF might be easier to read on mobile. While there’s some truth to that, it usually doesn’t justify an entire multi-step PDF approach for each iteration. Instead:

• Ask your client or opposing counsel if they truly need a PDF on every turn.
• If necessary, just export your tracked Word doc to PDF, maintaining comments and highlights.

A Locked Compare Can’t Be Accidentally Edited

Another reason some teams stick to PDFs is that a PDF compare can’t be inadvertently altered, unlike a Word-based compare that might be changed by mistake. To be honest, I have seen this happen more than once in a large negotiation with many parties involved.

This “locked” snapshot can be reassuring for large finance or corporate transactions—especially when multiple parties are scrutinizing each version. However, even this benefit doesn’t mean you need a separate PDF for every round of edits.

In most commercial negotiations, a single redlined Word doc plus occasional internal compares is enough. Extra PDF compares can be saved for big milestones or final checks.

Potential Downsides of Separate PDFs

1. Loss of Comments: Often, inline comments are not as interactive in PDFs. They do not work as well as comments in Word.
2. Extra Steps: You spend more time saving, comparing, and formatting multiple files.
3. Reduced Collaboration: PDFs limit the recipient’s ability to directly edit or reply in real time.
4. Confusion: especially business people (sales, executives, etc.) might be confused why separate documents are sent and questions arise which document to review or amend.

6. How Legal Tech and AI Can Simplify Redlining

A straightforward way to tackle many redlining headaches is to turn to Legal Tech – particularly Contract Lifecycle Management (CLM) platforms and AI-powered solutions. See this article from Krysta Johnson on this subject for example. Below is a quick look at how these tools can streamline your negotiation process:

Key Benefits of Modern Legal Tech

• Centralized Dashboard
  Keep contracts, edits, and comments in one place. No more searching for scattered files or wondering which version is current.
• Automated Workflows
  Easily ping the right teammates or approvers when it’s their turn. Once they’re done, their feedback is automatically saved and organized, cutting down on email clutter.
• Smart Document Comparison
  AI can quickly scan and highlight every edit between drafts, minimizing the risk of missing hidden changes or problematic clauses. This frees you to focus on actual deal issues rather than manual proofreading.

Bottom Line: By integrating CLM and AI into your redlining workflow, you’ll reduce manual effort, eliminate confusion, and speed up contract negotiations. This brings the team together to focus on what truly matters: reaching a solid, mutually beneficial agreement.

7. Nada Alnajafi’s 10 Steps for Transparent, Efficient Redlining

To illustrate how a seasoned contracts professional redlines documents in a way that promotes transparency, efficiency, and collaboration, Nada Alnajafi (Founder of Contract Nerds and author of Contract Redlining Etiquette ) has identified 10 key steps in this LinkedIn post. She emphasizes that this framework is backed by real data from thousands of contract professionals, not just personal preference:

Key Points

1. Start in Word: Open the counterparty’s redlines in Microsoft Word to keep everything in one editable format.
2. Get the Big Picture: Skim the draft from start to finish for an overview of the level of disagreement and the other side’s negotiation style.
3. Dive Deeper: Review the document thoroughly to identify areas needing attention, extra discussion, or stakeholder input.
4. Accept & Resolve: Accept any edits you agree with and resolve closed comment threads to keep the document uncluttered.
5. Reject & Propose: For edits you disagree with, reject the changes, propose new language, and add comments explaining your stance.
6. Ask Questions: Seek clarification for any unclear edits—better to ask now than to assume incorrectly.
7. Consult Stakeholders: For business or commercial changes, loop in your internal teams or relevant departments.
8. Summarize Top Issues: When sending your redlines back, highlight the most critical (no more than three) items in a short cover email.
9. Request a Call if Needed: If major disagreements persist or time is short, a quick conversation can resolve more than endless markup rounds.
10. Verify Before Signing: Run a single doc compare of the original draft vs. the final draft to confirm no hidden changes. Doing it more than once often adds unnecessary friction—especially in an in-house environment.

Nada’s final reminder is that one thorough compare is usually enough. If you repeatedly scrub redlines or generate “clean” versions out of fear or distrust, you risk delaying the process and frustrating everyone involved. For more contract redlining efficiency tips, be sure to check out her book Contract Redlining Etiquette and follow her on LinkedIn.

8. Final Takeaways

The Balanced Approach

1. Keep a Single Redline: Work in one main track-changed document, accepting or rejecting changes as deals progress.
2. Add Comments: Use inline comments to clarify reasoning or ask questions; this preserves context.
3. Run Your Own Compare: Internally verify major new versions against the prior version before sending.
4. Consider Sending a Compare: For complicated multi-stakeholder deals, provide a separate compare doc at key milestones, but don’t make it your default for every tweak.
5. Avoid Unnecessary PDFs: Unless it’s truly required or requested, do not to use the PDF-based workflow.
6. Use Legal Tech & AI: If you’re dealing with many contracts or looking to scale your process, consider specialized tools that streamline workflows.
7. Meet in Person: For overly complex or stalled negotiations, a face-to-face (or online) meeting often resolves issues faster than endless redlining.

Why It Matters

• Client-Focused: Clients want clarity, results, and efficiency. They do not want to pay for avoidable drafting detours.
• Reduces Errors: A single doc plus strategic compares minimizes the risk of losing track of changes.
• Saves Time: Keeping everyone focused on one version speeds up reviews and shortens negotiation cycles.

Next Steps

• We advise to move away from the complicated 6-step approach and adopt a single, continuously updated redline with occasional compares.
• For more complex deals, use a hybrid approach: keep a master redline, but generate compare outputs at critical moments in the negotiation.
• Invest in training: Ensure your team is comfortable with Word’s Track Changes, Comments, and Compare features so that everyone contributes to a smooth, transparent workflow.

9. Ready to Streamline Your Redlining?

Contract negotiation doesn’t have to be a complicated (e.g. by using multiple PDFs and “clean” Word files). By adopting a continuous redline strategy—with optional compares as needed—and communicating expectations from the start, you’ll improve transparency, reduce costly errors and keep your clients or business stakeholders happy. Whether it’s an NDA, SaaS agreement or a complex M&A transaction, focusing on one document as your “source of truth” can make all the difference.

Need help? Contact me at rreggers@amstlegal.com or read our blogs for more about efficient negotiation tactics, ways to speed up contract processes and specific contract advice (e.g. relating to NDAs and SaaS contracts). We will work with you to develop a faster, more reliable approach that benefits everyone involved in the deal – based on our 20+ years of experience, aligned with industry-proven methods.