How to Negotiate/Redline a Contract Like a Lawyer
I’m attorney Brittany Ratelle, and I am a lawyer for online business owners just like you. I have helped hundreds of entrepreneurs get legally legit so that they can show up with more confidence in their businesses. I’ve helped creators, creatives, e-commerce owners, Etsy shops, influencers, bloggers, and all kinds of cool entrepreneurs doing amazing things online.
And I’m excited to help you, an entrepreneur, show up with more confidence in your business. I’m here to help you figure out all the legal stuff so that you can move forward and create more value, create more awesome stuff in the world and help the people who you’re meant to help. This blog post and corresponding YouTube video are part of a foundational series I’ve created on how to wrangle the legal stuff and the foundations of your business. Today I’m here to show you how to negotiate/redline a contract like a lawyer.
We’ll also talk about how to uplevel your side hustle, hobby, or “jobby” (as I sometimes call it) into a real business. What does that look like and what are the steps you need to be doing if you’re in the driver’s seat? This is especially important if you have not consulted or worked with a lawyer or a legal professional to help you.
Make sure that you check out the other videos in this series as I go over such things like How to Decide Which Entity Structure Would Be Good For You. We’ll get into the whole LLC versus sole proprietorship versus S-corp alphabet debate. Don’t forget to watch How to Write a Contract Without a Lawyer as well as the Five Red Flags that might be showing the world that your business looks more like a hobby than an actual business.
Redlining is Not Just For Attorneys
Let’s get into how to negotiate a contract. What are the actual steps to redline a contract? Maybe you’ve ever been confused by that term, or been sent over our contract and had that nagging feeling that you’re supposed to be checking for something or reviewing it. And maybe you have access to an attorney, or maybe you don’t. Maybe you’re on a tough timeline, or you’re not sure who to call. But you would like to have some resources, some skills, something in your toolbox at your disposal to help you negotiate and redline your own agreements. You need something to help you understand, as best as you can, what you’re signing and what you’re signing your business up for.
Contract Negotiation is a Dance!
The overarching theme here is that negotiating a contract is a dance. There’s back and forth. There’s give and take. Imagine Yul Brynner with his hand out, saying, “Shall we dance?” They’re going to have that beautiful waltz and a big ball gown.
There’s no shame in negotiating. There’s nothing wrong with you. You’re not being greedy. You’re not being manipulative or difficult. And you’re also not necessarily thinking the other side is either. It’s just a reasonable prudent step to take as a business owner to make sure that you’re setting up clear expectations. You want to be sure that this document, this agreement (whether it’s electronic or on paper) has a really clear understanding of the relationship and how you and other people are going to be working together. It’s recognizing that business and promises can be complex. So we’re just going to write it down because our brains are not good at remembering things. And that’s all a contract needs to be and all it really should be. Let’s get into how can we make it the best contract possible for you.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #1: You Can Edit the Contract
If someone sends a contract to you in the signature portal (meaning they send it already in something like Hello Sign, Adobe Sign, or Panda Docs) it may look like the only option is for you to sign. Please do not feel pressured to sign it the way it is. The goose is not cooked. The deal is not done and there is no problem and no drama for you to raise your hand, slow things down just a second and say, “Hey, can I have an editable version of this document?”
If they say no, or they’re taking too long or they’re giving excuses like, “Oh, I don’t know where we have it or whatnot.” You have other options. You can say, “Hey I’d like to make some changes to this agreement” and you can put it right in an email. I like email over phone calls because it’s going to be easier to pinpoint back in the document. Make sure to look at the document. If there are numbered paragraphs, use those when referencing specifics.
If there are no numbers, go to the title. For example, if one section says “scope of work” or “intellectual property,” then say intellectual property and then write your new sentence or your new paragraph of how you would like it changed.
What it Means to “Redline”
Now you can use red text. The term redline comes from when people literally used to use red ink on contracts back in the olden days when we didn’t have document processing. That term has lingered, but you don’t actually have to use red text. You can use whatever font but it’s nice to use something different so people understand what changes you’re making.
I’ve used bold font, different colors, or an italicized font. Any way that makes it clear, “Hey, I want to edit this part and this line/word in this part of the contract.” The faster you can help the other person see that, the better. You’re not trying to do any shady games here. We’re all on the same team. The team that we want is a finished, completed fair contract. Let’s work together to make it easier for the other side to know exactly, in a heartbeat, what you’re talking about and make their legal team understand as well.
If that’s not going to work for you and you still want a chance to actually edit the document yourself, if you have legal counsel, for example, there is another option. I do this for a lot of my clients. They get a document, they know they’re going to send it to me and I’m going to review it. So it needs to be in a version that I can review.
I prefer to redline and edit the agreement itself, especially if we’re going to have multiple rounds of contract negotiations (which sometimes we do, depending on the nature of the contract and how big of a deal it is). If that’s something that you want to do, and it’s in a PDF that’s ready to sign, you can ask again for the edible version or take it upon yourself to make one. Go online and search for an online converting tool like PDF to word converter. They kind of look like one of those sketchy websites that have ads that will come up, but they’re fine. They’re just trying to make money.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #2: Have Good Contract Negotiation Manners
Our next step is to have good contract negotiation manners. What do I mean by this? It goes back to our overarching idea. What’s our goal here? We want a fairly negotiated contract and because of that, we’re not going to make it hard for the other side to see what we’re changing. We’re not afraid of it and we’re not ashamed of it. We’re not going to sneak around the contract and slip something in. That’s not how we’re going to show up in our business and that’s not how you want someone else to show up in your business. So good contract negotiation manners and redlining manners say that you make it clear that we’re dealing with a new contract.
So you should save that new contract with the party names if that hasn’t already been done. Make it easy for you and the other side to make sure we’re talking about the right contract and we’re saving it correctly. This way we don’t have any confusion. Be sure to check the file name at the top.
Pay Attention to the Details
If your names are not on there (the party names that should be in the first paragraph), add them to it. I also add the current date and or the version number. I like to add the date and either do it with dashes or dots to make sure I’m not messing up any file name. If you do, slashes, a lot of times the software won’t allow you to save it like that because they think you’re messing with the file extension. So do periods or dashes, and add the current date that you’re working on it. That way someone can look at it and say, “Oh, okay. There was a date from a week ago or a day ago, but we should be working on the most recent copy.”
Sometimes there will be a version number because it’s a contract you’ve received from another party. They could have a hundred different versions (probably not a hundred, but maybe!). They could have several different versions of this contract depending on what kind of deal it is. And it all stems from a mothership contract.
They might need to have their version number in there. And/Or a version number could also show how many times it’s been back and forth. If that’s already been set up and you’re the first one to touch it and they send it to you, add version 1 or V1 on the contract. That will make you look legit and they’ll be thinking, “Oh. They know what they’re doing. They must have a lawyer.” Maybe she does. And maybe she doesn’t. Alright, Maybelline. They don’t need to know how the sausage is made. You just look out for yourself.
Track Changes/Suggesting Mode
If you want to do true redlining, I suggest turning on track changes. If you’re using Microsoft Word, this is fairly easy to go up to the top panel where it’s in blue, go to Review and then toggle on Track Changes. And that means everything you now write on this contract will come up and will be tracked. If you do not have Microsoft Word because you’re a Modern Millennial/Zennial and you don’t play in Microsoft Word pond, that’s okay. We still love you. Business can still be great.
You can also do this in Google Docs. You can turn on Suggesting mode. And so go again, up to the top right corner of the document. You’ll see there’s an option there for Editing Mode. Click on it and turn it into Suggesting instead of Editing directly on the document. It will turn your suggestions into green type.
With Suggesting Mode, you can also add comments. On the right side of the screen, you can click on Add comment with a blue plus sign next to where you want things changed. I usually like those in addition to the changes made in Suggesting Mode. Comments are helpful if there are other questions or if we need to check on something. If I’m rewriting a phrase, I prefer to do it on the document itself, because then it’s really easy for someone to accept or reject that change.
Ask Them to Change the Contract
The last tip is that if you can’t figure out any of this and this is stressing you out, there is an alternative. You might be thinking, “Brittany. This all sounds good and cute, but I am never going to figure out all this.” That’s okay too. Let’s give you another option. You can just always negotiate in your email to the other side or hop on a phone call (I prefer email). Put it in writing. Just say, “Hey. I’m super excited about this project/deal moving forward and working with you. However, I need to see some changes here.” And then just write out what you want to be changed and put it on the other side. That’s always an option.
You just have to ask for what you want. Advocate for yourself and then put it on the other side. Make them figure it out. Make them call up legal to figure out what the text needs to look like. It’s not an ideal situation because I like to control the information. If you do this, then you’ll have to review the text and you’re going to draw out that timeline. But it’s better than nothing. It’s better than you burying your feelings and thinking, “I’ll just grin and bear it. Even though I don’t like the language and I’m not sure it says what I needed to say.” You don’t have to take that.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #3: Be Your Best Advocate
Tip number three is that you need to be your own best advocate. You have limited resources. We live in a finite mortal world. You have limited time and limited energy.
You have limited capacity to do your best work, to be in your zone of genius. There’s everything right with you being your own best advocate for yourself and your business and doing what you need to watch your own back.
No one else is going to do as good a job as you, except for your attorney. Because that’s their job to be your advocate. You shouldn’t feel any shame or judgment, or feel some kind of imposter syndrome when it’s time to negotiate a contract. Be curious about that. Listen to that. See what is underlying that and have some questions about that. But understand that there may be other things that you need to process and resolve and not necessarily a true fact.
Brush Off the Negative Comments
Certainly don’t ever let any eye rolls, little comments, snippyness, or passive aggressiveness from the other side make you feel less than others. Don’t let them make you feel like a diva, greedy, manipulative, cold, or whatever other word you would put on it for negotiating a contract.
You need to look out for yourself so that you can keep showing up and serving people the way you want to.
Because the truth is, if you can’t be an advocate for that for your space, time, mental health, capacities, and resources, then you’re going to burn out. And you’re not going to be able to show up and serve consistently the way you want to and the way you like to serve your audience, customers, and clients. You’ve got to look out for yourself. You’ve got your back. You can do it.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #4: Negotiation Principles
There are a couple of books I recommend. Getting to Yes is a great book. So is Never Split the Difference. Those are Hallmark classic negotiation books that really anyone should read if you want to increase your negotiation skills. Here’s the short version: it’s not personal, it’s just business. The more that you can take the emotion out of the equation and approach the situation with curiosity, the better you’re going to get at finding a collaborative solution.
Make sure you understand what is motivating the other party. If they have a hard line about something and you have a hard line and you’re not moving past that, ask more questions. Understand why they are taking that stance. What is it they’re worried about? Do we need more information about the situation so that we can both feel better about the unknown?
Because that’s what contracts are trying to control: our unknowns. And we’re saying, “Who is better served to take on that risk? Is it me? Is it you? Should we both share that risk? How should we take on that risk?” That’s what a contract and really most of law is trying to figure out. Sometimes we just need more information in there and then we feel better about portioning out the risk.
Remember to generate options. You’re trying to create and problem solve together. You’re on the same team. Because you want a resolution. You want a signed contract, a fair contract that you both agree to. Make sure to try to couch things in terms of facts and not feelings.
Take the Emotion Out
Your feelings are valid. I’m not trying to discount those. But it’s easier when you’re trying to collaborate and work together if we can point out the things that can be substantial, codified, and verified outside of our own psyche. We’re looking for fairness. And we’re looking for third-party data.
Do your research. So if you have a price point and they’re really pushing back and they don’t want to pay for something, it’s so much easier for you to have data. You can say to them, “Actually, the industry average says this is a reasonable rate.” Or say, “This is what I have charged other clients for similar work” or “I’ve done my research on this database/resource.” Bring transparency to the situation. It makes it much harder to argue against when you are presenting facts.
Some people may argue with you. But if they don’t have the budget, then we need to adjust the scope of work. The facts are the facts. This is the value of what they are asking for. If you get stuck, ask more questions. Be open, try to keep the drama and anger out of it, don’t be passive-aggressive, keep things civil, and keep things moving along. Those are big-picture negotiation principles.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #5: Hot Legal Terms
Let’s talk about the hot legal terms that you need to be looking for in an agreement. We dug into more of these in my previous video – How Do You Draft a Contract Without a Lawyer? What are you looking for? How should you go about this process? These are things if you were reading and reviewing a contract, you should be watching out for these words. You can use Control F to search for these in a document, especially if you get handed a really thick document, like a licensing agreement. Those are famous for being very long. Use Control F and find some of these terms and at least find out the general area where they are. Make sure to read everything, but then look above and below those sections because they tend to be grouped together.
Look Out For These Terms:
- Correct party names – These should be in the header. You should be named correctly, especially your business entity.
- Payment – How much is due and by when? Be sure it mentions late fees and the method of payment.
- Exclusivity – You need to know whether it’s exclusive or not.
- Intellectual Property – This is a big one, especially if your business centers around intellectual property. If that is your main product, your main commodity, your main brand, and what you sell, this is critical information. You need to make sure you’re understanding what you’re agreeing to in every single contract that you sign. You need to be looking for terms beyond intellectual property. Look for license, usage, “in perpetuity,” “name, image, and likeness” (or NIL for short), copyright, work for hire, assign, and reversion of rights. All that language can be used to describe intellectual property. Do we wish there was just one way to describe things and make it easier? We do. Take it up with the lawyers.
- Scope of Work – You want a tight scope of work. It should be clear and precise, not vague and ambiguous. Are there change orders? Are the rounds of revisions? What’s the approval process? How many people get to approve? How many times? Is there a deadline? If we don’t get your approval, can we move forward?
- Other Documents – There may be other documents referenced in the agreement. Sometimes I see, especially in influencer contracts, they’ll reference brand guidelines or a social media policy. You’re agreeing to abide by those as well. You have to make sure that you’ve seen them and that you agree with them. You should not be thinking, “I’m never going to be able to do that,” or “I’m not okay with that.” Or frankly, “I just don’t like signing things and agreeing to things without knowing what I’m agreeing to.” So make sure you’re clear because those documents could be integrated and could be considered part of the contract (Schedules ABC, scope of work, etc.). All of those are really common other documents that can be part of the real contract. So you need to have access to those before you sign. Those are all basic legal terms.
We could go into more in future posts. Make sure you’re following along on my YouTube channel so that you can get more info.
How to Negotiate/Redline a Contract Like a Lawyer – Tip #6: Meeting of the Minds
My last point here is to make sure that there’s a meeting of the minds of the contract. Meaning you sign it, and the other party signs it. You’re not in a Bridgerton novel here, unfortunately. You don’t have to worry about paper and ink signatures while wearing a Regency-era dress (although I’m tempted to do that). But an e-signature is fine. If anyone tries to give you grief and says you need to print it out and sign it with blue ink and scan it back, call them on their bluff. That’s no good anymore. “That’s why that no work” (My Big Fat Greek Wedding).
E-signatures are fine. They are enforceable in all 50 states. Use Hello Sign, Adobe Sign, Panda Docs, Dove, Sato, HoneyBook, or 17 Hats. Whatever works, as long as you can authenticate the person signing it, usually via their email, and a login that they do. It’s legit. You can take that to judge duty and beyond. It is enforceable.
Now, if you are going to be the one setting up a signing portal and sending a contract off for signatures, you’re going to need someone’s full name and email address. If you haven’t gotten to that point in negotiations and you’re ready for signatures, ask who’s going to be signing the document. It may be different than the person that you’ve been talking to. It could be the CEO, manager, or someone higher up with signing authority that can bind the business and speak for the business and enter into a contract on behalf of the business.
This is a lot of information, but thanks so much for being here. I hope these tips on how to negotiate/redline a contract like a laywer are helpful for you. If you want more tips on how to move forward with confidence in your business and how to make sure you understand this legal stuff, like and subscribe to my YouTube channel. I’m here to help you show up with confidence so that you can make more money, have less drama, sleep better at night, show up the way you want to, and serve people the way you want to. You can also connect with me on Instagram. I’d love to hear what you’re learning and digging about this information and what questions you have next that I can answer for you.
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