How I Contract: Amy Duvanich on Contract Review and Common Pitfalls

This interview is part of our How I Contract interview series. We talk to lawyers and professionals about how they approach balancing legal risk with business objectives. In this interview, we talked to Amy Duvanich, Outside General Counsel at Scale LLP.

Biggest Challenges in Contract Negotiation

What was your biggest challenge when you started working with contracts? If you could go back in time, but keep all the knowledge and experience you have now, how would you deal with it?

I used to assume that all contracts are treated equally.

Particularly in my current role, I now see that the time an attorney spends with a contract or the attorney’s knowledge of the business can vary and then have an impact on the negotiation.

For example, clients on a budget often try to handle portions of the negotiation on their own and just escalate to me. It isn’t my recommendation and sometimes makes things messier, but it might keep fees down if that is ultimately most important to them.

I have seen so many agreements drafted by attorneys that are just plain wrong, and I used to assume that was the result of bad lawyering. Now, I can appreciate that the client might not have explained the need well, the attorney might not have been given the luxury of time, etc.

Understanding that we all approach the negotiation table from a different place allows me to handle contract negotiations with more perspective.

First 30-Day Plan in a New Contracts Role

When you just start working with contracts, what should your first 30-day plan look like?

In a perfect world, you should begin with the most straightforward and routine contracts that originate from your template agreements.

Review and redline on your own, then double-check with past work to ensure that you are on track.

Starting on “easy” contracts is great – lower risk and less pressure.

It is hard to learn how to contract properly if your workflow cannot start this way unless you have a great supervisor looking over your shoulder.

Common Mistakes to Avoid in Contracting

What mistakes should contract lawyers and professionals avoid when working with contracts? How would you avoid them?

Don’t trust the other side… or even your own side.

You should never trust that the version you have in your hands is exactly what you think it is.

Be skeptical when you receive a contract and work backwards to run a comparison document rather than trusting an internal or external redline (Microsoft Compare usually does a decent job).

On multiple occasions, I have found my own client accidentally negotiating against us or unmarked changes from the other side (often, it is innocent and caused by limitations of Microsoft Word; for example, rejecting a redline might not show up as a marked change).

If you cannot own the signature process, you should expect to check line by line that the content of the contract has not been modified.

I had a colleague at a prior role who took a lot of pride in “winning” contract negotiations by modifying the terms during the signing process without letting the other side know.

Key Questions to Ask Before Drafting a Contract

What is the one question you always ask (yourself/others) before drafting a contract?

“What is our leverage?”

If we have the ability to walk from the deal or at least have time on our side, I can generally land a reasonable contract.

When there isn’t much in the way of leverage, the expectations should be lower in a contract negotiation.

My review and first round of redlines look very different in these scenarios and it is more of an exercise to make sure the client understands what they are agreeing to.

Critical Elements to Focus on When Drafting Contracts

What should you never ignore when drafting a contract? Why?

The business terms of the contract.

Clients regularly do not provide the ordering document (SOW, Order Form, etc.) when they ask me to review a contract.

Legal terms make their way into these documents often, and the ordering document should nearly always take precedence (from my perspective).

Understanding what the business is actually buying should shape the way you negotiate and advise if you know what you are doing.

The contract documents need to all play nicely together to achieve the business and legal goals of a deal.

Top Five Elements to Look for in First Contract Drafts

What are the top five things to hunt for in first contract drafts?

I’ll narrow this down a bit first so it can be more responsive.

I will assume I’m reviewing a customer contract for a SaaS provider client:

1. Ensure there is a liability cap, and if there are carve-outs, make sure the client can live with them.

2. See how broad the indemnification provision is and make sure the client understands what the expansion means.

3. Look to remove all opportunities the customer has inserted to allow them to exit the contract (unless the client is okay with essentially accepting a month-to-month deal). While a termination for convenience provision is an obvious place to check, escape hatches can exist in a variety of places including within the Service Level Agreement or Code of Conduct.

4. My clients generally need the ability to assign the agreement in the event of a change in control. Assignment provisions are often written in ways that sound mutual and reasonable, but needing to get consent in the event of an exit is a headache, which I know about first-hand!

5. Make sure the pricing model, including when payments are due, is clear and that there is no chance for misalignment.

Improving Contract Drafting and Negotiation Skills

Are there any simple hacks our readers can use right away to improve their contract drafting and negotiation skills?

Get familiar with your company’s contract playbook.

If a good one doesn’t exist, build it yourself!

Make sure to consider different scenarios and when approvals must be received. Truly understanding a playbook and your client’s risk profile is a great upfront investment, and if you do it well, it will make future negotiations feel much easier.

Otherwise, it can feel like you are re-inventing the wheel each time, and if you aren’t experienced, this can be overwhelming.

Practical Contract Tips for Better Outcomes

If you could give just one practical contract tip, what would that be? Why?

Gather information from the business before you review or start drafting a contract.

Clients often do not know what they need, and you should not assume that the contract will even accomplish the expected goals as drafted. Figure out the information that is helpful to know upfront for each type of contract and create an intake process that only allows contracts to be submitted for review along with that information.

For example, for a customer agreement, it is helpful to know the dollar amount of the current and future anticipated contract, how the deal might be different than typical deals (ex. whether it is going to be self-hosted, whether it's a reseller instead of a direct customer, whether they were given a unique pricing structure, etc.), and so on.

If you are receiving services, you need clarity on what is being bought and how it will be used. It is helpful to get a confirmation that your client has read the contract and that it is accurate from a business perspective, you should know whether PII will be shared, etc.)

Would you like any further adjustments, or is this draft ready for your next steps?