Mastering Contract Redlining: Insights from a Legal Innovator (Executive Edge)

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I have with me here is Contract Redlining Etiquette. What kind of gave you the
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initial desire to go down sharing your insights and ideas around best practices
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in contracting generally?
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On this episode of Executive Edge, Simon welcomes Neida Alma-Hafi,
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attorney, best-selling author, and founder of Contract Nerds.
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Nada breaks down the art of smarter redlining, shares how she built a global
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contracts community, and explains why clarity and collaboration are the real
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power tools in negotiation.
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The foundation for the book is 10 Steps. How did you come up with those initially?
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Beginning of the book was that first post on LinkedIn, which said to use explanatory
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comments with red lines.
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That actually became rule number one of contract redlining etiquette.
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At that time, I would say using comments was not the majority practice.
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By using explanatory comments, you absolutely are speeding up the time to close.
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You're creating clarity between the parties.
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It's way more collaborative. Just like in negotiation, there are different styles.
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There are also different styles in redlining. So you can be more of a competitive
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redliner is to take it or leave it mentality.
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And then there's the more collaborative redlining approach, which is actually
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using the comments and the margins to ask clarifying questions.
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Where's the contract nerds out there? Are they out testing redlining AI tools?
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AI is so new and lawyers in particular are not very good with change or technology
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adoption. It's definitely here, and it's definitely going to change the way we redline contracts.
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Hi, everyone. Welcome to another episode of Executive Edge, here with your host, Simon Rycroft.
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Excited to have with me Netta Alnajafi.
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Thanks for coming on, Netta. Thank you.
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Thanks for having me. Netta's an attorney, founder, author, keynote speaker,
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thought leader, contracts expert, redlining expert, and mentor.
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Netta currently serves as a senior corporate council member for Franklin Templeton
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as a Fortune 500 global financial
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services organization. She's part of the BuySide contract review team,
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responsible for a high volume of commercial technology and data privacy agreements for global clients.
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Ned is also founder of Contract Nerds, which is how I found out about her through
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some mutual friends, which is
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a blog for in-house counsel and contracts professionals around the world.
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I'm an author of an amazing book, which we want to get into in a little bit
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of detail. I have with me here is Contract Redlining Etiquette.
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For anyone who might be interested in learning a bit more, it's a number one
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bestseller in contracts law on Amazon.
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And it's a fun read. We were talking a little bit before we hit record on it's
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one of those topics that really isn't talked about, but people do it on a daily basis, right?
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I mean, so understanding best practices, sharing best practices,
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following guidance from an expert on good approaches is pretty important.
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So, all right, let's jump in. How did you get started in this?
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Obviously, legal, law professional as a background, but what kind of gave you
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the initial desire to go down a rabbit hole of kind of sharing your insights
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and ideas around best practices in contracting generally?
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Yeah, so I had been practicing for almost 15 years as mostly an in-house attorney
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and spending all day long working with contracts. So that really became my bread and butter.
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And when the pandemic came in 2020, I found myself, like many,
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with more time on my hands than usual.
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And just being sort of like career-driven, I was thinking, okay,
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what can I do career-wise to really give back to the community?
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I love teaching, I love writing. And so I went on LinkedIn and I saw that there
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was this trend that started happening where lawyers were starting to be a little
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bit more public-facing than usual,
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where they were offering tips and techniques and asking really important questions
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through LinkedIn posts.
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And I thought, well, what do I consider myself an expert in?
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And just having worked with contracts so long, that was an easy answer to that question.
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And then I did my first post on LinkedIn, which was a tip for in-house counsel.
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And it said, in-house counsel should be leaving explanatory comments with your proposed red lines.
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And that got a ton of engagement. And it just, I could tell that there was this
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need for more information and education around that topic because I learned
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everything I know about redlining and about contracts just on the job.
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Even in my Contracts 101 class in law school, I didn't look at a single contract.
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We were talking all theoretical.
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And yeah, so it was kind of like a lonely and long journey when it really,
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I don't think it should have been.
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And that's when I started thinking about engaging more on LinkedIn and then
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building a community that would really help make that learning process and that
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career success something easier for folks to achieve than it was on me because I had a bit of.
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You know, a windy road to get here. And then I came up with the name Contract
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Nerds and it all sort of took a life of its own from there. Yeah, super cool.
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I mean, what's fascinating to me, and this, you know, this really hit home when
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I first saw your profile and I, you know, and I saw or actually listened to
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a podcast that you joined a couple of years ago and then got the book.
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It's so fundamental, right?
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Like most people, and I include myself in this group, assume contracts are this piece of paper, right?
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Often a lot of the times longer than it needs to be. It's standard language, right?
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You know, these illegalies leave the attorneys to it, you know,
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once the deal's been negotiated.
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But the reality is when you're going through a commercial negotiation,
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the contract terms are a critical part of that.
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And, you know, when you're doing large deals, you're doing the back and forth.
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It's actually part of the negotiation.
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It almost becomes the, you know, the trade sheet, an evolving trade sheet that's
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used throughout a negotiation before a contract's finally signed.
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And then it's, you know, the negotiation output is memorialized and,
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you know, and set in stone based on what's written in that contract.
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So it's, it's fundamental, right? So anyone who is a negotiator, right?
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And they're actually need to negotiate for their, for their job,
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you know, should understand at least some of the basics that you have in your
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book, even if you're not a trained attorney, even if you're not a paralegal,
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to even have the conversation with the legal team.
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And so many firms don't have legal teams or they have in-house counsel,
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but that counsel doesn't have the bandwidth to support them.
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So they need to be able to do some of this basic stuff and then just go to them
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for the larger deals, the larger contracts, or when some of the redlining is happening, right?
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So this, I think doing this properly, some of the details and the 10 steps in
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your book could have a material impact, at least in my view,
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from my experience in the outcome of a negotiation.
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I mean, have you, have you, what's the community feedback been since your book,
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since you've grown, you know, grown the ecosystem? Do you have,
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is it just attorneys that share interest in their own experiences and kind of joined your blog?
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Or is there also paralegals and then commercial and then procurement people
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have all jumped in as well?
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Like what, what's the mix that you engage with? Yeah, great question, Simon.
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Contracts are for everyone, not just attorneys.
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So, for example, the Contract Nerds community and the audience that I wrote
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my book Contract Redlining Etiquette for is broader than just attorneys.
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So it does include in-house counsel, outside counsel, big law attorneys,
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private practice attorneys, but at the same time, procurement professionals.
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Sales professionals, contract managers, legal ops professionals.
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And then there's also different business functions that work with contracts, like marketing folks.
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They tend to draft the SOWs for marketing consulting agreements,
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you know, and HR teams are looking at employment agreements,
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you know, not just attorneys.
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And so we have a really nice mix of this big community of people who,
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in their work life, they work with contracts.
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And in terms of the book, I think what made it what makes it so popular,
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because we've sold almost 10,000 copies,
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is that never before have we had a book or a formal trading or a course on the
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topic of contract redlining.
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There's contract drafting.
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There's contract management, but there's not a focus on the redlining portion of it itself.
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And that's a really important component of the entire contracting life cycle,
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because that's the part that takes the longest, that redlining back and forth.
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And if we're doing, I'm doing it one way, and let's say you're up for the other
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party and you're doing it another way, we're going to miss each other a lot.
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We're going to have a lot of miscommunications.
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We're going to each be doing things kind of our own way. document themselves
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gets very messy and it can take time to clean up.
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In all of that, we lose focus of the deal itself and of building the relationship.
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Because when we're getting frustrated or when we're like feeling like we're
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wasting time, it's not good for the relationship either.
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And so what I really like about the focus on contract redlining etiquette is
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efficiency, transparency, and collaboration.
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And that's really what all 10 of the rules in all of my tips always go under
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one of those three main goals that we're trying to meet.
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Okay. Yeah, no, I love that. And then the foundation for the book is 10 steps
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and those kind of distinct learnings, right? You know, hacks or tricks.
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How did you come up with those initially? Are those things that just intuitively you and, you know,
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majority of contract professionals were already doing and you just put it down
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and synthesized it, you know,
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to the layman and less, you know, less legally trained mind or were these things
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that you kind of as you were writing the book synthesized and maybe it's changed
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the way that you negotiate contracts now as well?
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Yeah. So I wrote the book over a two year period of time.
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Beginning of the book was that first post on LinkedIn, which said to use explanatory
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comments with red lines, that actually became rule number one of contract redlining etiquette.
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So from that post, I was, you know, reading and studying all of the feedback
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and the comments and the questions.
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People really wanted to talk about this point. At that time,
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I would say using comments was not the majority practice.
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It was the minority practice. But when I used explanatory comments,
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I saw what an impact it had on the deal process and the time to close.
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By using explanatory comments, you absolutely are speeding up the time to close.
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You're creating clarity between the parties. It's way more collaborative.
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And you can even use the comments to help your business clients understand the
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contract a little bit better.
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So there's that internal alignment component to it as well.
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Just so many benefits for that one tip. So then I wrote it into a longer article
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and I put my ideas and the questions I tried to answer them.
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And then the feedback from what the community was saying about it,
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because I didn't want the book to just be what Netta thought redlining should look like.
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It would be truly what drives efficiency, transparency, and collaboration.
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And I wrote it in the article, and then I published the article through Contract
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Nerds, and then the article itself gets comments on it.
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So then I'm adapting, and I'm
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basically increasing the length of that article, which became a chapter.
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And then i did rule number two and i
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posted on linkedin and then i write the article and then
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i write the chapter and i did that for each of
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the 10 rules and that's why it's really it truly is a reflection of community
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practices best practices and and things that actually work that's super cool
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i don't know if i've heard anyone do that or at least successfully right where
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it's ended in a you know, in a published product.
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Yeah, I love that. So what about the, I think the, the collaboration piece is, is pretty key.
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So from a commercial perspective, I've done, you know, very large BPO deals.
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I've done large, you know, investment round agreements.
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I've done large purchase agreements, right. For, for clients as well as prior
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businesses in the past. And.
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One thing that I guess I don't think I initially appreciated early on,
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I actually probably made some mistakes on, right?
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And then you kind of learn from those failures was the importance of that collaboration, right?
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You know, and this was some of the earlier stage deals were before there was
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tours like Teams and, you know, SharePoint was clunky and you'd have to check
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the document out and stuff will get overwritten.
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So just the discipline in the process, because
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you've got you've got the risk team right you've got
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the internal key stakeholders you've got attorneys in-house
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out counsel on both sides right
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commercial leaders there can be quite sizable teams
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that are involved at different stages of the contract drafting
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right until something is completely finalized i think
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that to me is you know it's
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fundamental and and something i really appreciated from from
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the fact this book even exists or the practice right i know
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that your business is not just necessarily the book it's
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there's a whole community and sharing of ideas but
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that that collaboration piece is shouldn't be under underestimated
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so it's how do you how do you get that across in some of the conversations that
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you have is is the fact that it's not a redlining debate between two people
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right is that you can have what 10 15 you know even larger deals 20 people are
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wanting input on the latest version of something how do you how do you get that point across?
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And does that, is that a common issue that you see in what you've done?
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Yeah, I think there was sort of this,
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you know, false assumption that when attorneys are negotiating,
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they're going to be competitive in their negotiations, that we're sort of trained
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to always like push what our client wants.
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And we don't really care about what the other side wants.
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And it's difficult for us to, you know, find creative solutions and be collaborative.
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You know, we're very one-sided.
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But as an in-house attorney, and when you're working on commercial agreements...
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You're, you're not, you shouldn't be so competitive. You should be more collaborative
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because at the end of the day, you're building a deal where two companies want
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to be working together and both of them want to be successful in that deal. Right.
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And so just like in negotiation, there are different styles.
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There are also different styles in redline. So you can be more of a competitive
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redliner where you just redline their entire document and you send it over and
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you say, this is all we can accept.
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And you don't have any explanations and you don't ask to get on a call and you're
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not interested in clarifying their position.
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It's a take it or leave it mentality. And then there's the more collaborative
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redlining approach, which is actually using the comments and the margins to
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ask clarifying questions. Can you help me understand this point?
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You know, can you give some clarification on why you struck this,
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but then in this clause, you said this here, you know, or we looks like we need
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a little bit more conversation on this particular clause.
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Why don't we discuss on a live call? And so now what we're doing is we're not
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jumping to conclusions and we're not even taking a position yet.
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We're just trying to understand a little bit better.
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And that understanding gets us so much closer together than if we're just like,
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you know, taking these hard positions.
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And sometimes I think that can get lost in documents.
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You know, like when texting first came in email, there was this conversation about the tone.
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Be very careful with the tone of how you're writing things because you can say
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something in person and you can write it and the tone will come off completely differently.
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I think it's the same with redlining. You know, you have a lot of words on one
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page and then you have these different colors and red can sometimes stress people
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out or make it look like that's incorrect or that's rejected.
00:16:34.563 --> 00:16:40.163
And so your comments that you're leaving soften that message up and they really
00:16:40.163 --> 00:16:45.063
help you deliver no's a little bit softer or ask more questions.
00:16:45.063 --> 00:16:51.423
And I've found that when you have that conversation piece, people are way more
00:16:51.423 --> 00:16:55.863
likely to agree with you than they are if you're just asking for something and
00:16:55.863 --> 00:16:58.303
sort of demanding it without even explaining why.
00:16:58.708 --> 00:17:06.028
So I think that documents and using red lines can really help drive collaboration
00:17:06.028 --> 00:17:08.528
when it's used the right way. I love that.
00:17:08.748 --> 00:17:14.348
And then one question on technology. I hate to bring up AI in every conversation
00:17:14.348 --> 00:17:20.048
right now, but unfortunately it's tough to at least avoid it. Where are you at?
00:17:20.148 --> 00:17:22.668
Where's the contract nerds out there?
00:17:23.208 --> 00:17:28.468
Where's their point of view? Are they out testing, redlining, you know, AI tools?
00:17:28.668 --> 00:17:31.968
Are there any that our community should keep an eye on, but,
00:17:32.108 --> 00:17:35.548
you know, wait until they've been vetted out a little further?
00:17:35.548 --> 00:17:39.748
Are there things that you're excited about, more advising on potentially as well?
00:17:40.528 --> 00:17:44.948
Yeah. So we actually just took a poll yesterday on a big webinar we had with
00:17:44.948 --> 00:17:50.728
almost a thousand attendees and we asked them, where are you in the adoption
00:17:50.728 --> 00:17:53.988
of AI to redline and review contracts.
00:17:54.188 --> 00:17:58.508
And most respondents said that they're in the shopping phase.
00:17:58.628 --> 00:18:04.528
So they're either looking at demos or they're doing an RFP to do a pilot to
00:18:04.528 --> 00:18:06.508
select one they're going to use.
00:18:06.608 --> 00:18:08.668
So that was the majority response.
00:18:08.988 --> 00:18:12.288
Very few said that they were not even considering it. That was probably the
00:18:12.288 --> 00:18:13.908
least popular response.
00:18:14.168 --> 00:18:20.068
And I'd say I'm similar in my path where I am right now, which is I'm looking
00:18:20.068 --> 00:18:25.808
at the market to see what's available. And I've done several AI review tool demos.
00:18:26.368 --> 00:18:33.348
And I think what I'm seeing in terms of functionality is that a lot of them
00:18:33.348 --> 00:18:37.268
have a lot of overlapping functionalities and capabilities.
00:18:37.268 --> 00:18:41.448
What it really comes down to is the quality of the red line.
00:18:41.668 --> 00:18:48.728
So, you know, the quality of the contract database that the tool has been trained on.
00:18:49.148 --> 00:18:54.268
Some companies have hired entire law firms to create templates and playbooks
00:18:54.268 --> 00:18:57.908
and to train their AI and others haven't.
00:18:58.328 --> 00:19:03.848
In addition, I think another distinguishing point is the type of customer service being offered.
00:19:04.148 --> 00:19:11.188
AI is so new and lawyers in particular are not very good with change or technology
00:19:11.188 --> 00:19:16.468
adoption unless you are in the community and that is something you are passionate about.
00:19:17.361 --> 00:19:22.601
And so I think it's really smart for AI vendors to have that customer service
00:19:22.601 --> 00:19:27.421
mindset where some of them will even help you create your playbooks or your templates,
00:19:27.761 --> 00:19:31.921
really give you that white glove service, which I think really goes a long way
00:19:31.921 --> 00:19:34.921
in educating and getting that user adoption.
00:19:35.421 --> 00:19:39.041
Because it seems easy, like, oh, it's just a word ad and all you have to do
00:19:39.041 --> 00:19:40.941
is sign in, turn it on and use it.
00:19:41.381 --> 00:19:46.481
But lawyers and contract professionals will want to go deeper than that.
00:19:46.481 --> 00:19:51.441
We really do look at the details and where every comma is placed and what word
00:19:51.441 --> 00:19:55.861
is used and how is it presented and what will it come off like to the other
00:19:55.861 --> 00:20:00.741
party and are the terms benchmarked to market standards, you know, things like that.
00:20:00.741 --> 00:20:06.481
So there is a bit more of research that I'm doing before I think I take a hard
00:20:06.481 --> 00:20:09.641
position on it. But it's definitely here.
00:20:09.841 --> 00:20:14.401
And it's definitely going to change the way we redline contracts,
00:20:14.401 --> 00:20:20.261
where I think we'll be using AI as sort of like another collaborator in the document.
00:20:20.261 --> 00:20:25.621
So it will be like me from legal, you know, let's say someone from the business
00:20:25.621 --> 00:20:30.681
side, someone from compliance, someone from data privacy and AI.
00:20:30.941 --> 00:20:34.661
And be a co-collaborator with us is kind of how I see it.
00:20:34.661 --> 00:20:38.181
I can imagine that being the way that it plays out because you still,
00:20:38.361 --> 00:20:42.021
there's still the accountability and the responsibility of a trained professional
00:20:42.021 --> 00:20:49.181
to make the QA, QC, ultimate risk assessment, you know, before a contract's formally signed.
00:20:49.821 --> 00:20:51.521
You know, when are we going to get to a point?
00:20:51.741 --> 00:20:55.161
And are these vendors, are they all brand new?
00:20:55.421 --> 00:20:59.581
Are you starting to see these features from existing matter management software
00:20:59.581 --> 00:21:04.401
providers as well, or are they kind of a little slower to the table?
00:21:04.661 --> 00:21:09.261
There are a number of brand new, brand new meaning like let's say in the last
00:21:09.261 --> 00:21:14.941
three years, vendors who focus specifically on AI review and redlining.
00:21:15.401 --> 00:21:20.761
And then there are CLM, contract lifecycle management companies that are those
00:21:20.761 --> 00:21:29.721
larger end-to-end systems that now are including the AI review component into their native system.
00:21:29.721 --> 00:21:32.621
And and I think that's
00:21:32.621 --> 00:21:35.901
great when you see a CLM that has that know-how
00:21:35.901 --> 00:21:39.821
in AI not all of them do and and
00:21:39.821 --> 00:21:47.241
then there are some generative AI tools like chat functions like even co-pilot
00:21:47.241 --> 00:21:52.741
is inching in towards contract review or contract summarization so it can do
00:21:52.741 --> 00:21:56.781
probably some basic review and summarizing and maybe like,
00:21:56.981 --> 00:22:00.401
can you tell me what a better clause might be for this?
00:22:00.661 --> 00:22:03.981
But you don't have that deeper legal training there.
00:22:04.389 --> 00:22:07.229
In in those kinds of tools so it's really
00:22:07.229 --> 00:22:10.109
i think there's a lot of options on the market right
00:22:10.109 --> 00:22:13.249
now and i think folks first need to ask themselves
00:22:13.249 --> 00:22:16.169
what are your pain points what are you trying
00:22:16.169 --> 00:22:19.109
to use technology to solve for and then
00:22:19.109 --> 00:22:22.009
go out and do the demos because otherwise if you're if
00:22:22.009 --> 00:22:25.429
you're just demoing without knowing what you need i think you could easily get
00:22:25.429 --> 00:22:28.589
lost in all the different options one thing i don't
00:22:28.589 --> 00:22:31.349
know whether there'd be huge value in this but one thing i
00:22:31.349 --> 00:22:34.389
think i'd i'd like to see would be something around the alerts
00:22:34.389 --> 00:22:37.369
of tracking of changes right you know
00:22:37.369 --> 00:22:40.389
kind of basically highlighting you know changes that haven't
00:22:40.389 --> 00:22:44.709
haven't been tracked or any version control issues because i've i've definitely
00:22:44.709 --> 00:22:48.709
faced that a few times in the past and made the mistake myself you know we're
00:22:48.709 --> 00:22:53.149
just in in saving the document and you know and sharing the wrong one or not
00:22:53.149 --> 00:22:57.249
making a change in one one version versus the one that's shared and and you
00:22:57.249 --> 00:22:59.589
know do you miss stuff, potentially, right?
00:22:59.749 --> 00:23:04.549
Whereas, you might pick that up, especially for really complex legal documents.
00:23:04.929 --> 00:23:08.929
That might save some time, I guess. I think AI is helping us with that,
00:23:09.069 --> 00:23:12.449
and it's improving those document comparison tools. And then.
00:23:12.986 --> 00:23:20.246
A CLM platform that has AI and the dot comparison feature, some of the ones
00:23:20.246 --> 00:23:25.886
I've seen really do help you with version tracking and keep it nice and organized.
00:23:25.886 --> 00:23:30.806
And I think that definitely reduces the risk of disorganization or documents
00:23:30.806 --> 00:23:36.546
getting lost or even an internal party sending an internal version out externally,
00:23:36.546 --> 00:23:41.506
which could be a risk and potentially waive attorney-client privilege or attorney-work products.
00:23:41.506 --> 00:23:45.526
So version control is one of those things where you're like, okay,
00:23:45.826 --> 00:23:50.486
that just seems so common sense, but it's actually, you know,
00:23:50.566 --> 00:23:56.686
takes quite a bit of organization and mindfulness to make sure that you're managing it appropriately.
00:23:56.926 --> 00:24:01.266
Otherwise, you can spend way too much time finding a document.
00:24:02.026 --> 00:24:06.546
And that I would consider an inefficient use of the professional's time.
00:24:07.146 --> 00:24:10.806
Yeah, yeah, for sure. and a margin for human error as well, which,
00:24:10.846 --> 00:24:13.086
you know, is pretty important for some of these deals.
00:24:13.266 --> 00:24:16.666
I enjoyed geeking out on this just as much as I thought I would.
00:24:16.986 --> 00:24:18.986
So I wanted to say thank you again.
00:24:19.346 --> 00:24:22.426
A reminder for the other people that, you know, that watched or joined late
00:24:22.426 --> 00:24:27.266
and didn't see the book, Contract Redlining Attica or CRE for short,
00:24:27.446 --> 00:24:30.406
and, you know, definitely take a read of But I think anyone,
00:24:30.786 --> 00:24:36.006
even up to, you know, legal counsel level, COOs,
00:24:36.666 --> 00:24:40.786
investors, and, you know, definitely procurement professionals and sales as
00:24:40.786 --> 00:24:45.206
well would benefit from understanding a bit about the approach and,
00:24:45.206 --> 00:24:47.606
you know, brushing up on their skills.
00:24:47.606 --> 00:24:51.246
Even if it means they just have an easier time having conversations with,
00:24:51.386 --> 00:24:54.486
you know, the real professionals and the attorney group.
00:24:54.666 --> 00:24:57.886
So thank you very much, Netta, for your time. Appreciate it.
00:24:57.886 --> 00:25:01.406
I'm glad that we were able to chat and hopefully we could have you on again
00:25:01.406 --> 00:25:04.126
at some time in the future. Thank you so much, Simon.
00:25:04.386 --> 00:25:06.986
Thank you. This is really fun. I really appreciate it. Okay.
00:25:07.126 --> 00:25:08.086
All right. Awesome. Thank you.