How do you think about the function of legal? The answer to that question can depend on who you ask. A sales leader might tell you that legal is a checkpoint to lob a deal over the fence and get it back with a stamp of approval. Lawyers, on the other hand, consider themselves to be a gatekeeper, a defender, and an advocate of the company—its last line of defense.
If things in the sales organization aren’t going particularly well, a sales leader might view legal as a blocker to meeting their goals. In return, legal might feel like a scapegoat for lower-than-expected sales performance.
Not surprisingly, friction between these two teams often escalates quickly. However, the collaboration between legal and sales is crucial in closing deals and driving revenue. We have outlined our thoughts around an approach that can help reduce conflict and engender harmony between sales and legal teams.
Four steps to reducing conflict between sales and legal
Step 1: Think about your legal team as a resource
Similar to how time and budgets are considered to be limited resources, your legal team is a limited resource as well. When you overspend your legal resource, whether in-house or outside counsel, it can manifest in different, problematic ways.
Overextending your outside counsel will likely result in ballooning legal fees and a giant, unexpected bill at the end of the month. Lean too heavily on your in-house counsel and you might not be able to close all of your deals due to competing business objectives that also need legal support—breeding internal conflict in the process.
Leveraging this limited resource doesn’t have to be an internal battle between your sales and legal team, it just requires a conscious effort and mutual understanding from both sides. To maximize the impact of your legal spend and minimize friction, you should build:
- Trust and rapport between sales and legal. Trust between these two teams is integral to collaborating and working together as a team. Without it, collaboration is difficult—if not nearly impossible. We will go over how to build trust and goodwill between sales and legal in more detail below.
- Alignment in priorities and background knowledge. Sales and legal need to operate with the same set of assumptions and expectations. Misaligned expectations, such as sales expecting to close a deal within a 24-hour window when legal knows it’s going to take three days to turn the contract, will create a lot of friction if not communicated.
- Efficient processes in both legal and sales operations. Efficient processes and best practices can streamline negotiations and avoid wasting time and resources on both sides, especially at the end of the month or quarter.
Steven’s story: “After law school, I went right into the world of enterprise SaaS. The story that we see with sales and legal is one that I not only see with our clients today but one that I saw firsthand at my prior companies. Early in my last role, we were a scrappy, little company and we wanted to do everything it took to get deals done—we weren’t being programmatic about if deals were on our paper or theirs or ensuring that our standardized contract templates were clean or holding the line on some issues a more mature business wouldn’t accept.
In the beginning, we didn’t really know how or where to get legal involved but eventually, after we implemented a process that leveraged legal effectively, we were able to build a 50+ person global sales org that worked well with legal, even at EOQ.”
Step 2: Build goodwill on both sides
Developing a trusting relationship between sales and legal creates a productive environment that can execute a higher volume of deals without burning people out. As a sales leader, it takes a conscious effort to create a culture where people respect legal. You have to show the importance of your legal team from the first day of onboarding. This might mean inviting legal to sales activities, such as annual sales kick-offs or quarterly business reviews. Leaders from both sides can share lessons learned over the past year or quarter and share feedback on areas of the sales process that may be broken.
In some cases, this level of interactivity might not be possible. However, as part of a unified team, legal should still proactively learn about the business and the objectives of the sales team in order to be a good team player. Legal should strive to understand:
- The sales pitch. Understand what products and services your account executives are selling to customers, the compelling points they present to customers, and how they are selling within a company.
- The customer profiles. Is your sales team selling primarily to small businesses without legal counsel or large fortune 500 companies with large procurement departments? Understand your sales team’s target market and any distinctions across customer segments.
- In-depth product and service features. It is not enough to only know the line items in your company’s product catalog. Legal should strive to get a deeper understanding of technical features and how the product functions. This can be done by asking for product demos, feature explanations, or even just talking to an engineer. You’ll better understand what you’re negotiating for—and the time spent discussing unnecessary or inapplicable provisions can be avoided.
Catherine’s story: “I can’t tell you how many times I’ve negotiated across from counsel that has only scratched the surface on the business details. I was recently negotiating an MSA that provided for some development. The other attorney had put in a bunch of provisions addressing joint IP so, during our call, I asked him what joint IP he envisioned being generated under this relationship. He couldn’t really point to a hard piece of intellectual property that was going to be jointly generated – because there wasn’t any.
Those provisions he added really came from this fear that it seemed like there could be joint IP, so ‘I’m going to put in a bunch of provisions just to make sure we’re covered.’ This happens a lot—I’ve even done it in past roles. We see it happen most when lawyers simply don’t go deep enough into understanding the detailed business relationship and functionality of the product.”
Step 3: Define priorities and support enablement
Once you’ve built a foundation for mutual respect between legal and sales, you should set priorities to establish an efficient process with the right guardrails. You’ll want to do this before the end of the quarter hits or you’ll find yourself drowning in a sea of contract negotiations.
Defining priorities starts with rules. Truthfully, the thought of rules can be uncomfortable. Most sales reps don’t want to have rules: they want to be able to sell everything to everyone at any time. And they want it to be the legal team’s job to figure out what each of those contracts should look like. However, this doesn’t make for a happy nor healthy working environment and most likely will work against your company’s bottom line.
By establishing clear and consistent guidelines for when and how to work with legal, your sales team will thrive.
- Be upfront about what is important from a legal perspective, such as flexibility on rights for termination or whether certain products can only be sold in a package with others.
- Every deal is a learning experience and sales should never go to legal with product questions that have already been answered. Create a repository of canned responses which your sales team can utilize as a resource to drive the sales cycle.
- Legal should identify their must-have provisions, such as product features that can’t be compromised or areas of high legal risk, as well as empower sales reps with talking points on how to explain to customers why each of these provisions is necessary.
On the sales side, it’s a good idea to proactively share with legal your quarterly or monthly outlook on high-value deals or deals expected to close. Having this information will help reduce the time legal spends on lower-value contracts and help focus legal resources on your top deals. Defining a specific stage in the sales cycle to bring in legal review is also an important practice because it reduces the occurrence of unnecessary or premature legal discussions while assuring sales reps that they have a partner that will help them close deals.
Steven’s story: “In a previous SaaS business we used to get pushback on our uptime SLA because our solution was mission-critical to the websites we were deployed on. For example, if you had an uptime SLA that was four nines, your product can basically go down an hour each year. In many businesses, that’s not okay—an hour at the wrong time, let’s say, Black Friday for an e-commerce business, could be catastrophic.
What we found was that the SLA in question was actually our cloud provider’s and that our uptime was much better. If you don’t give that information to your reps and legal, they are going to end up negotiating endlessly back and forth and getting into sticky situations.
However, if you learn that once and write it down in a repository or playbook, you can be more straightforward and negotiate more wisely with your clients. If you’re open with your clients and say, ‘Hey, this is the real reason we have this provision in our contract,’ they will want to buy from you. This is what great sales looks like—and gathering and sharing this information with legal can help you close more deals.”
Step 4: Streamline and tweak the contract negotiation process
Once you’ve built a great relationship and collaborative process between your legal and sales functions, we’ve outlined a few more tips to further expedite contract execution and negotiation.
For your sales team:
- Determine all relevant business points in the sales cycle before it goes to legal. Identify who needs to approve what, review with key internal stakeholders, and finish everything you can on the sales side before it goes over to legal review.
- Remember: There are no “hand-offs” to legal. Legal review is not a “hand-off” to the legal team to get through procurement or legal review with the client, and then they send you back a done deal. Sales reps need to drive the process—getting the right people involved to push the deal forward.
- Reinforce what your top deals are and where to focus the legal team’s time. Keep a list of your top deals with next steps, who you’re engaged with, and expected timelines. Set clear expectations about which deals get prioritized and which team members can request legal resources.
- Set SLAs on both sides. It’s okay to hold your legal team to really high standards about response time—apply those same standards to your sales organization.
On the legal side of your business:
- Streamline negotiation with a clear approval hierarchy to escalate issues. Put processes in place that streamline efficiency during crunch times. This should include identifying and getting alignment on which stakeholders and decision-makers need to sign off on issues. Having a clear approval matrix on hand with the legal team is more efficient than having to identify points of escalation on a case by case basis.
- Maintain an internal working playbook of acceptable fallback positions. For example, if your MSA has Net 30 as your default but you know, and it’s been pre-approved by finance and the organization that Net 45 is an acceptable fallback, then you don’t need to escalate this issue each time.
- Keep versions of common business cases on hand. This comes up when different products have different use cases or different risks and, consequently, different legal provisions. If you understand those use cases and how your MSAs have been tailored during negotiations to account for different risks, then you could likely pre-approve certain sets of provisions to address specific product or use case risk profiles.
- Reinforce and standardize processes. Get all of your stakeholders in a room to align everyone on best practices for legal and sales collaboration. However, one meeting may not be enough to standardize these processes as a practice. Reinforcing them day-to-day through consistent communication and leadership is key to standardization.
In order to grow rapidly, your company will need to efficiently execute a large volume of sales contracts while also minimizing legal risk. Whether you’re a sales leader or CEO, or in-house or outside counsel, the best practices outlined above can reduce the friction points between sales and legal and help you reach your revenue goals. You can learn more and hear the full discussion between Catherine and Steven in the webinar: Navigating Sales Contract Negotiations.