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The playbook is a documented confidential manual that sets out the commonly negotiated contractual terms of business and sets out the parameters of acceptable and unacceptable amendments to those terms. It should also set out the circumstances where proposed contractual terms that are regarded as unacceptable need to be escalated within the organisation, either to senior managers, the in-house legal team or the company’s external legal advisers.
The playbook can take any form appropriate to the organisation and the type of contracts it is meant to cover. It may include flowcharts, checklists, escalation matrices, process diagrams and hyperlinks to relevant information elsewhere in the business or the internet. It will be an evolving document with information added over time and should be regularly reviewed and amended in consistency with the current business needs, customer markets and changing regulations.
A well designed playbook will enable the sales negotiators or procurement team to manage contractual negotiations in a more controlled manner within set parameters without involving escalation to senior managers or legal. Decisions on acceptable positions can be taken quickly without the need for internal approvals. This frees up the legal team to deal with more complex issues and negotiations. It provides time and cost savings as well as risk management benefits since it prevents sales being signed off on unfavourable or risky terms.
It is essential that the playbook is backed up with training of the sales negotiators / procurement team and other intended users so that they know how to use the document and when and to whom escalation is needed.
Existing contracts will need to be reviewed together with feedback from multiple stakeholders in the business. The review process will need to consider important clauses in the documents and consideration of the risks those clauses will cover.
Acceptable and unacceptable positions will need to be determined taking into account the balance between minimising risk and facilitating business transactions.
Including relevant internal stakeholders in the formulation of the playbook ensures buy-in from a business perspective during negotiations. It also creates a forum for discussions on risk management in the business.
Step 1 – scoping
Step 2 – playbook design
Instructions |
Specific drafting |
Explanatory statements for internal use (because they may include confidential business information) which could include traffic light RAG ratings |
Rationale statements suitable for sharing with contract counterparties (and not containing confidential information) which can be used to explain positions |
Internal approval processes required for deviations from the acceptable positions stated in the playbook |
Checklists |
Contract clause |
Reason for the clause |
Acceptable amendments |
Approval process |
Set out the clause |
Explanatory statement |
Set out any acceptable positions that do not require additional approval |
Any changes to the clause other than the acceptable amendments must be approved by the Legal Team |
Step 3 – start building the playbook
Existing risk management documents in the business |
Interviews with internal and external lawyers |
Interviews with internal stakeholders from all relevant teams in the business |
Samples of previously negotiated contracts and existing positions commonly taken |
Information about any specific positions taken with specific contract counterparts |
The policy documents in the business that are relevant to the contract, such as anti-bribery and governance processes |
Existing template documents |
Details of insurance cover |
Market data |
Step 4 – internal approval and regular review
Step 5 – create more playbooks!
If you would like to discuss any of the issues raised in this article please contact Brigitta Naunton at [javascript protected email address].
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.
To contact us, please fill out this form and we will get back in touch as soon as possible. Your personal data will be processed in accordance with our privacy policy which can be found here.