How To Build a Sales and Legal Standard Operating Procedure

As every business owner knows, the Sales and Legal teams often don’t get along. Sales wants to move fast and close deals, while Legal wants to be careful. Since their goals are so different, you can expect some friction between these two departments during the contract management process. While friction isn’t always a bad thing, prolonged disputes and disagreements between Sales and Legal can slow down or sometimes even kill deals. 

Luckily, it doesn’t have to be this way. Read on to learn how you can better align Sales and Legal by building a Sales and Legal standard operating procedure.

A big reason Sales and Legal don’t see eye to eye is that they both have different goals for contract execution.

Sales wants to get deals done, hit quotas, and keep everyone happy. They aren’t doing this just to earn commissions or make a good impression on management—they also want to boost your organization’s revenue targets and return on investment (ROI). In other words, their goal is to maximize profits by finalizing contracts as quickly as possible.

Looking at deals from a different perspective, Legal’s goal is to protect the company. They want to ensure that contracts are enforceable in court and comply with all relevant legislation. As such, they aren’t concerned with getting deals done quickly. They can spend a lot of time vetting and editing contracts to minimize and mitigate risk exposure, looking at every word and clause to see if anything needs to be changed.

Although they’re very concerned about risk management, Legal defines “risk” differently from Sales, since they don’t see stretching deals out as a risk. They don’t know how other departments evaluate risk and that stretching deals out can affect the organization as a whole. This is particularly true if Legal works in a silo rather than collaboratively, which is a common occurrence for many big companies.

Sales, on the other hand, knows the dangers of stretching deals out. That is why they prioritize closing deals as soon as possible. They may even make unauthorized changes to contracts to move the deal along more quickly. Unfortunately, these changes usually increase risk exposure, as Sales lacks legal insight. In some cases, Sales’ unauthorized changes may even kill deals and decrease your organization’s ROI.

As you can see, Legal and Sales have very different approaches to closing deals. However, neither department is right or wrong; they just have different approaches to contract management.

To maximize efficiency and get the most out of your business contracts, you should build a standard operating procedure for Sales and Legal. This will enable them to work together. When Sales and Legal work together, you’ll be able to close deals faster without incurring additional risks. 

A standard operating procedure for Sales and Legal will give Sales the autonomy they need to sell and close details while also allowing Legal to provide input into the sales contracts without micromanagement. This procedure will also give Sales insight into contracts when Legal is dealing with them, including:

• How many redlines are on those contracts
• How long a particular contract has been in a specific stage of the contract lifecycle
• Which clauses Legal is redlining the most.

You should also leverage digital contracting tools to integrate your operating procedure into Sales and Legal’s workflows. Unlike analog contract management tools, digital contract lifecycle management (CLM) tools can be a game-changer for drafting, managing, and executing contracts. They digitize every step of the contract management process and integrate with other software in your workflow

Ironclad, for instance, is an enterprise-grade contract lifecycle management (CLM) solution that can give Sales and Legal transparency into contracts at any given time. With powerful tools like a centralized hub for storing contracts and a codeless Workflow Designer for creating contracts from templates, Sales and Legal can draft, edit, manage, and execute contracts faster and easier than ever before. 

Ironclad also comes with a powerful editor that allows teams to negotiate with internal and external stakeholders in real-time. 

Here’s how your Sales and Legal operating procedure could look like if you used a contract management tool to create and organize contracts:

Launch

First, Sales will create contracts from templates instead of waiting for Legal to draft a contract from scratch. This will jumpstart the process of contract creation and give Sales more power to decide when certain milestones should be reached. 

Don’t worry, though—Sales won’t be able to go rogue with contracting. Top-notch contract management tools provide up-to-date contract templates with built-in guardrails to ensure 100% compliance. They also provide users with a simple drag-and-drop user interface that anyone can use to build and launch approval processes and contracts in minutes. 

Ironclad, for instance, allows users to create contract workflows by uploading a template, tagging fields that need to be included, and adding signers and approvers. Users can also add conditional approvers and contract clauses as needed.

Submit Redlines

After Sales has created a contract, they will use your contract management platform’s editor to update the workflow with counterparty redlines. Legal will then review the contract and identify issues for internal discussion and alignment.

If your CLM solution comes with a shared platform that allows you to collaborate with colleagues, Sales can use internal comments and @mentions to loop Legal in for their opinion. Otherwise, Sales would have to save a contract, attach it to an email, and wait for Legal’s response every time they have a question. That can lead to a lot of downtime, frustration, and miscommunication—all of which can frustrate the relationship between Sales and Legal. 

Align

After Legal has reviewed the contract internally, they will look through the contract with stakeholders and answer any questions or concerns they have. Here’s what they would typically discuss:

• Data handling
• Support
• Security
• Accounting
• Professional services
• Product handling.

Like Sales, Legal will loop stakeholders in through internal comments and @mentions. They will also use the editor to accept and reject tracked changes made by stakeholders. 

Finalize and sign

When Legal has finished editing the contract on the editor, Sales will be responsible for coordinating final approvals and signatures. Once everything’s approved, they will email a DOCX copy to stakeholders and counterparties directly within the CLM software.

As you probably already know, Sales and Legal teams aren’t usually on the same page. But a standard operating procedure can help better align Sales and Legal. Your operating procedure should split duties between Sales and Legal and ensure that each department is working efficiently and effectively. 

For example, Sales should be responsible for launching contracts from templates so Legal doesn’t have to waste time on drafting contracts from scratch. Similarly, Legal should be responsible for reviewing the contract with internal and external stakeholders since they have the legal expertise to do so. 

You should also integrate your operating procedure with a digital CLM like Ironclad, which empowers you to turn contracts from roadblocks to enablers. Unlike traditional CLMs, Ironclad offers a gamut of automated tools that you can use to advance team collaboration and accelerate the contracting process.

Interested? Try our sandbox demo to experience the Ironclad difference.