Cracking the Code: All You Need to Know About Contract Redlining

Table of Contents

contract REDLINING

During the school days, teachers would assign some work. After completing it, we would go to her for correction or improvement. She’d mark the mistakes and return them for rectification. The project was sent back and forth until it was perfect and finalized properly.

Think of contract redlining in the same way. Before finalizing and making it official, the contract is sent back and forth between the parties involved. The goal is to make the contract acceptable to all the parties.

Let’s understand it in depth.

what is contract redlining?

Contract redlining is the most crucial part of contract management. The initial aim is to produce a document that gratifies all parties. It is the process of editing and negotiating the contract during management where parties mark and track changes.

Traditionally, while reviewing the contract there are chances that some clauses are not acceptable by any party and the particular party marks it with a red pen and sends it back for amends. The editor edits the same. The red ink makes it easier to differentiate from the usual black ink. The term redlining comes from this exact method.

Today, the process is much easier. Digitization has simplified tasks that would usually take every ounce of energy and time out of the employees. Cloud-based contract management helps in contract redlining simultaneously.

how to redline a contract?

Pre-digitally, this was all done manually, just as discussed above. This method is no longer effective. Although the legal industry is late to adopt technology and digitalization they very well know how to make the best use of it.

Contract redlining isn’t just an editing and negotiating process. It’s much more than that. It’s a collaborative procedure where each party works together in order to draft a contract that satisfies all.

Whenever parties come into a contract, they go to and fro during the negotiating process and make amends in the contract accordingly. Copies of both parties’ contracts are reviewed by the software (AI-enabled contract management software), which finally builds a contract that contains all new amends.

how CLM help improve the process?

New technologies are introduced every day in this “tech-savvy” world, especially during the pandemic when everything became available on the computer. From artificial intelligence to machine learning, human beings aren’t ready to stop just yet. The workload is made much easier and simpler, specifically for law firms. Better ways and system means more effectiveness and profitability. Every industry has acquired technology for improvement like never before.

The legal industry is no exception. Technology has made a huge, let alone, a drastic change in the work manner and the outcomes. And believe us when we say, there are no regrets and no one wishes to back.

Contract management tools not only help in negotiating but also aid in contract redlining.

But one might wonder, how? Here’s the answer to all your questions:

  1. Common platform: Colleagues and departments share one single platform, which means complete transparency in the work process. One department can track the other department’s work and therefore it becomes easier to communicate and work consequently.
  2. Easy access: Since it is a cloud-based system, it can be accessed from anywhere. It means, one no longer has to worry about missing out on work if they take a day off as they can simply work from home and track everything.
  3. Simultaneous updates: Changes can be tracked easily as every work done is transparent. Whenever anyone makes changes all looking at the document can see them instantly.
  4. Enable signatures: Lawyers no longer have to worry about going back and forth every time changes are made in the contract or document. All changes can be easily tracked in real time. Parties can accept, edit, and send the document for signatures digitally, in just a matter of time.

This is how a single AI-enabled software can ease the workload and generate more effectiveness and accuracy than before.

Common contract redlining challenges

We’re aware of the advantages of contract redlining and negotiating through contract management software. But what we don’t know yet is its disadvantages or the challenges faced by the firm. It’s not new that every aspect has its pros and cons. Before committing to technology, one must know both aspects. We’ll learn about the cons.

  1. Integration: There is no doubt that negotiating requires several departments of a firm to work together. Coordination between departments can be a real headache.
  2. Dispersal: Contracts or documents stored in different places, whether it’s a hard copy or a digital one can lead to chaos and make it hard to recognize the final document. Decentralization in the firm causes this issue to arise.
  3. Digitalization: We are all new to this digital world. Some employees may want to work in the traditional way or the old-fashioned way, while others may find it difficult to adapt to a particular technology. If people in the firm, work in an old-fashioned way, it will lead to more workload as they will have to handle digital as well as physical workload.
  4. Safety: The major drawback of going all-digital is the security concerns. If one is using basic tools, it’s easy to evade the protection and the data will always be at risk of either being held for ransom or being used by competitors against them.
  5. Transparency: People are still adapting to this change (digitalization). It is challenging to understand how things work for some people.
  6. Contract sharing: Because firms are going all-digital, all documents and comments are shared through emails. Sometimes, these documents are automatically changed and redlines may not be visible.
  7. Reading difficulties: Sometimes documents become hard to read due to so many corrections or edits marked.
  8. Accessibility: Not all contract redlining documents function on mobile. This could make accessibility difficult.

guidelines for effective contract redlining

With the increase in competition, everyone wants to be on top. Here are some tips that’ll not only help to run smoothly but also achieve desired outcomes.

  • Ensure everyone’s on the same page: Before beginning redlining, make sure everyone agrees with the amends that are to be made.
  • Don’t rush: A contract is a very important part of the business. Don’t rush the process of redlining. Make sure to know each and every point and have all the details.
  • Stay amendable: The first priority should be the firm’s financial, legal, and functional needs. Make sure to stay compliant with that.
  • Track changes: In order to a successful agreement, one needs to make sure they are certain about all changes and edits made in the document.
  • Learn about the software: Since contract redlining is performed through software, one should know how it works and what its limitations are.

Contract Redlining Guidelines


How to choose the right tool?

Before committing to a tool, make sure you know that the below factors are in your favor.

  • Price: First one needs to know that the software is within their budget and second they need to know if it’s worth the price.
  • Access: Make sure the tool that is chosen is accessible from anywhere.
  • Safety: Contracts contain sensitive information and one cannot risk losing it. Make sure the software has high security.
  • Customer support: Ensure the software that is chosen allows you to get in touch with the support team whenever required.

Tools for contract redlining

  1. Ironclad editor tool
  2. Real-time collaboration in Google Docs
  3. Juro Redlining Software
  4. PandaDoc
  5. Conga
  6. ContractSafe
  7. Trackado

Contract redlining is vital and a very important process of contract negotiating and management. This little guide will help to get away to the top. Also, we have some advice for all; take a deep breath and don’t pressurize yourself. It is an important job, so don’t rush.

All software is designed to help, make the right choice. Redlining is not easy, but CLM obviously helps!

To learn more: Contract Redlining Mastery: 5 Steps to Captivate Success

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