Decreasing Time and Risk
Contract negotiation always presents challenges, but some industries are particularly complex. In particular, contracts in the energy, logistics, and construction spaces are high-risk and prone to human error because of the dynamic nature of the industries and the variables that can impact each contract.
For example, complex knock-for-knock indemnities, environmental warranties, and compliance issues require significant time and effort to address at scale. In many cases, an operator or service provider insists that you negotiate on their terms and conditions, which are attached to a PO or in the form of a master service agreement (MSA).
When faced with these types of complex contracts, you might find yourself caught in the middle of competing priorities. Naturally, you want to accelerate deal flow. But, at the same time, you need a way to mitigate and reduce risk to your organization.
If you are tired of working with outdated traditional contract negotiation methods, we are here to tell you that there is a better way to negotiate complex contracts! But, first, let’s review the pain points of working with traditional modes of contract negotiation.
Challenges with Traditional Contract Negotiation Methods
Many industries are relatively cut and dry when it comes to contract negotiations, requiring little more than a change in names, numbers, and dates when creating a new contract.
Energy, logistics, and construction are not those types of industries.
Instead, these more complex industries often require customized contracts for each new bid, leading to a potentially long, drawn-out process with multiple rounds of redlining between parties. The more redlines and customized language in a contract, the more risk-prone the contract negotiation process.
Here are some other challenges with high-risk contract negotiations that you may have faced in the past or are currently dealing with.
It’s difficult to train AI on low-volume, high-risk contracts
Artificial intelligence (AI) can be an exceptional tool for automating tasks; however, training AI requires inputting massive amounts of data and humans in the loop for AI contract review software to work. Complex contracts are often low-volume, which does not provide enough data to train AI properly. This makes high-risk contract negotiation more of a manual process than it needs to be.
Operator MSAs and PO terms and conditions
When negotiating a contract with a complex industry, you will likely need to abide by their customized MSA and purchase order (PO) terms and conditions. Because these vary from one contract to another, it is challenging to create one standardized set of language that will work when negotiating contracts with multiple companies or even negotiating numerous projects with the same company.
Complex and risk indemnity issues
Complex contracts tend to include indemnity issues that require one party to assume liability for any loss, damage, or injuries that take place during the contract period. Some companies prefer to use a “knock for knock” clause to ensure that each party claims responsibility for any loss or damage to its property or injury to its staff, even if the other party is at fault. Because indemnity issues vary from one project to another, they are often unique and customized to the particular contract.
Varying negotiation leverage
Nothing is ever fully stable in the world of procurement and sales because commodity prices are constantly fluctuating. This means your negotiation leverage varies from one contract to another, making it challenging to create a template that will work in all cases.
Immediate turnaround requirements
Construction, logistics, and energy projects often have immediate turnaround requirements. These requirements can vary, depending on the specific project, which means every contract will need to be adapted to fit the party’s expectations.
Training new hires and business teams
It is challenging to train new hires and business teams on your contract negotiation process when it changes from one contract to the next. Usually, the training process takes a long time because there are so many variables to cover. Even when fully trained, newer hires and business teams may still have to seek answers to questions, making the contract negotiation process inefficient and time-consuming.
AI Contract Review Software by DocJuris
We understand the unique challenges of complex contract negotiations. That’s why we designed our software to help procurement, legal, and sales teams streamline contract negotiations with all types of industries, including the more complex sectors of energy, logistics, and construction.
Decreases negotiation time
Time is money during negotiations. Yet, you don’t want to rush through the contract review and negotiation process. DocJuris consistently decreases contract negotiation time by over two hours across industries without sacrificing quality or accuracy.
Rules-based system speeds up framework review
By employing a rules-based system, our software speeds up the framework review to 1 – 2 weeks.
Analyze any customer document
Use DocJuris to analyze and redline any type of document a customer sends, including PDFs and locked Word documents.
Flag high-risk issues
Even though your high-risk contracts have low volume, our system can still flag high-risk issues in your current contract, including catastrophic loss and environmental indemnities. It can then use that information to flag issues in future contracts. This lets you focus on the areas that present the most risk with each new contract.
Identify team-generated creative examples and fallbacks
Quickly assess when language used in the contract, such as fallbacks and creative examples, has been generated by a team.
Empowers business teams to perform first pass on RFPs
With DocJuris, business teams can confidently complete the first pass on a request for proposal (RFP), knowing they have a playbook to use that will help them identify the critical aspects of an RFP that will let them know how to proceed.
Try DocJuris for Your Complex Contract Negotiations
DocJuris contract negotiation software is designed for complex contracts. It combines human intelligence with transactional tools to accelerate deal flow and risk reduction. Our software empowers legal, procurement, and sales teams to efficiently review and redline high-risk contracts in the energy, logistics, and construction spaces.
Schedule a demo to see how DocJuris can improve the process of complex contract negotiations to secure deal flow for your organization while reducing the risk of errors.