Key Takeaways:
- Legal teams focus on minimizing risk, while business teams prioritize speed and closing deals.
- This misalignment causes friction, delays, and mistrust.
- Regular collaboration and playbooks help both sides align on priorities, turning legal into a strategic partner rather than a blocker.
In today’s fast-paced business environment, contracts serve as the backbone of successful transactions. However, a staggering number of deals falter due to misunderstandings between legal and business teams.
Contracts are designed to achieve two goals: business success and legal protection. Unfortunately, these goals often pull in opposite directions, creating a frustrating tug-of-war that slows down deals, breeds mistrust, and exposes companies to avoidable risks.
Understanding the Disconnect
The root of the disconnect lies in how success is measured. For sales teams, the goal is to move fast, close deals, and hit targets. Once the commercial terms are agreed upon, the rest of the contract often becomes background noise from their perspective.
On the other hand, legal is tasked with ensuring that those same deals don’t invite lengthy disputes or create long-term liabilities. Clauses around indemnity, limitation of liability, and dispute resolution aren’t just legal jargon. They are essential risk-control levers that deserve serious attention.
Assumptions made by both sides further compound this tension. Business teams often perceive legal as a bottleneck: slow, cautious, and overly technical. Conversely, legal may view business as recklessly optimistic, willing to trade away protections just to hit numbers. While bot perceptions contain kernels of truth, they are ultimately exaggerated, yet derived from real experiences.
Strategies for Bridging the Gap
Structure
So how do we fix this disconnect? Start with structure. A well-defined contract workflow can reduce unnecessary escalation. Implementing standard templates and clause libraries provides business teams with a solid starting point they can work with without involving legal in every single deal. Legal would have already reviewed these in detail and given a go-ahead, so that these do not have to be reopened in real time when a deal is live.
Education
But structure alone isn’t enough. Business users must be educated on what those templates actually mean. Without that context, fallback positions can be misused or misunderstood, leading to contractual commitments that weren’t fully thought through.
Alignment
The second component of the solution is alignment. Legal must grasp the business context behind a contract, and not blindly obsess over legal minutiae. This means asking more than just what needs to go into the agreement; it requires understanding what the customer cares about, what the business seeks to protect, and which scenarios are improbable enough to be almost unrealistic. What does the customer care about? What is the business trying to protect? Which scenarios are so improbable that they are almost unrealistic? A clause that appears to be a red flag in isolation may be completely palatable when weighed against business realities and priorities.
Visibility
Conversely, business teams need visibility into what is non-negotiable from a legal standpoint and why. Creating a playbook to outline critical clauses and their rationale can preempt conflicts before they reach the negotiation table. Furthermore, it signals to the business that legal isn’t simply playing defense. It is also playing offense by collaborating with businesses to score proactive wins that save money, time, and headache. Business teams will appreciate the gravity of provisions that could either break the business or sap resources due to disputes.
Leveraging Technology for Improved Collaboration
Technology plays a vital role in bridging the gap between legal and business teams. A well-implemented contract lifecycle management (CLM) platform offers more than just document storage; it provides a shared system of records where both teams can track who changed what, when, and why. This transparency around approvals, deviation flags, and institutional memory reduces friction and enables smoother collaboration. When everyone operates from the same platform, the chaos of scattered emails, Slack messages, and document redlines fades into the background.
Of course, no system is perfect. Exceptional cases, key exits, new team members, and unforeseen customer demands will always arise. These exceptions will demand time and energy from both business and legal teams to think through and devise solutions. However, the goal should not be to eliminate every exception, but rather to ensure that they do not become the norm. Regular retrospectives, updates to playbooks, and feedback loops between legal and business are crucial for this purpose.
Cultivating Trust Between Teams
Ultimately, reflecting on your own organization’s contracting practices and implementing these strategies can strengthen collaboration between legal and business teams. By fostering a culture of understanding and mutual respect, companies can enhance their contracting processes while minimizing risks and maximizing business momentum.
The post The Disconnect Between Legal and Business When It Comes to Contracts – and How to Fix It appeared first on Contract Nerds.