How to Use Drafting Capital to Avoid Contract Redlines
If you work with commercial contracts, you’ve heard of Negotiation Capital. But what about Drafting Capital?
You already know about Negotiation Capital.
It’s the bucket of goodwill you’ve built up with the counterparty that you can spend in negotiations. Use it judiciously and you stand a better chance of getting what you want. Ask for too much and you’ll burn through it and struggle to have your requests met.
What is Drafting Capital?
Drafting Capital works the same way with your contracts.
Drafting Capital is the bucket of goodwill you build — or destroy — as your counterparty reviews your contract.
If you barrage your counterparty with unfair, heavy-handed clauses, one after the other, you’ll burn through your Drafting Capital quickly.
Redlines will pile up. Counterparties will redline the big-ticket clauses so much that they won’t hold back on redlining minor issues too. If they’ve redlined 5 clauses in a row, they expect that they’re probably going to redline the 6th.
How to Use Drafting Capital
But if you establish goodwill with a balanced approach that doesn’t scorch the earth, you build up Drafting Capital.
Clauses that are less than perfect will nevertheless get OK’d instead of getting redlined.
Your counterparty can sense that you’ve tried to present a balanced position, so they’ll try to reciprocate with restraint.
If they’ve approved 5 clauses in a row, you have momentum, and they’ll want to approve the 6th.
Conclusion
Building and leveraging Drafting Capital can help to reduce redlines.
You already know about Negotiation Capital.
It’s the bucket of goodwill you’ve built up with the counterparty that you can spend in negotiations. Use it judiciously and you stand a better chance of getting what you want. Ask for too much and you’ll burn through it and struggle to have your requests met.
What is Drafting Capital?
Drafting Capital works the same way with your contracts.
Drafting Capital is the bucket of goodwill you build — or destroy — as your counterparty reviews your contract.
If you barrage your counterparty with unfair, heavy-handed clauses, one after the other, you’ll burn through your Drafting Capital quickly.
Redlines will pile up. Counterparties will redline the big-ticket clauses so much that they won’t hold back on redlining minor issues too. If they’ve redlined 5 clauses in a row, they expect that they’re probably going to redline the 6th.
How to Use Drafting Capital
But if you establish goodwill with a balanced approach that doesn’t scorch the earth, you build up Drafting Capital.
Clauses that are less than perfect will nevertheless get OK’d instead of getting redlined.
Your counterparty can sense that you’ve tried to present a balanced position, so they’ll try to reciprocate with restraint.
If they’ve approved 5 clauses in a row, you have momentum, and they’ll want to approve the 6th.
Conclusion
Building and leveraging Drafting Capital can help to reduce redlines.