Empower your legal team with a cost-effective sales pipeline saas for Legal solution

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hey everybody um I'm excited to have a conversation uh with my friend Darlene tanelli um I am Mike whan uh host of the contract Tear Down Show Darlene was on one of the most popular episodes of the contract tear down show the MSA uh for Salesforce I think it was and um so we're excited to have her this is a new format for us this learning lunch setup we're going to keep it light conversational little War Story Z try to give you some insight into the reality we're going to be a little more honest a little more open probably than this is still recorded though Darling so you can't you know what I mean we can't we can't do too bad um I saw somebody say today on Twitter that they were doing a lawyer lunch which was an energy drink and anxiety so uh this is a learning lunch hopefully you guys are eating something better Darlene uh I want to talk about you uh real quick how are you today great I'm excited so Darlene uh we're having you because uh you and your company are engaged in some of these software deals that a lot of people are interested in your personal background is in entertainment and media law uh but you started inter Al law and uh your firm deals with a lot of software deals um as we get started sort of give the the context the framing for why these kinds of deals are so Troublesome what is it about this SAS environment the software environment you know that gets salespeople wound up in speaking one language and the lawyers speaking another language trying to slow things down so I think to set the stage why I thought that this would be a great one for anyone dealing with SAS contracts is that the challenge is if if we if we look at a typical scenario you've got sales that is focused on Revenue targets they're they receive commission they're focused on sales and often in in the various companies that we work with with there's this this Dynamic where almost sales and legal are viewed to be doing two different things when really sales and legal are both selling the same product they have different roles in the pipeline but they are not at odds and what inter Alia has been trying to do over the sort of decade that we've been working on these deal processes is to try to bring everybody together and so we promised a formula I don't know if it's a formula it's not particularly scientific but for anyone who does these deals I think that they will recognize themselves in either I don't know if there're sales people on the call or legal but usually sales brings in a deal at the last minute we I'm talking vendor SAS vendor deals so just to give you the right background you've got a contract that your company uses and the sales team is tasked with getting that contract you know getting it over the line and usually legal gets it at kind of the end of the process and that's where the trouble starts okay yeah I I I want to frame this because these software deals somebody asked in the in the comments wait what is SAS uh so these software is a service deals right that these happen all the time and and you and I when we started this conversation about what were we going to talk about in this what we were going to talk about in the session that we're going to announce later uh in the workbook that we'll talk about later what's the framing and I think this is important because a lot of times when you go to a continuing legal education program or something it's sort of generic these the updates in whatever area of law that's not what we're talking about we are taking a position we are speaking from a position so that you know people know kind of the stakes and the reason I think that that's important is because there's a big difference between I don't know if this is a industry term if it's just my term but an inbound contract versus an outbound contract right uh we are talking from the perspective of an outbound contract I work at a software company I'm in house counsel our our team is trying to sell software outside there's a lot of issues in software that you know get sales and legal on different pages but but I maybe underline for me why that understanding that perspective is so important in terms of legal being able to preserve or prove their value so I think everyone dealing with contracts wants to be known as a facilitator they want to be known as the person who's not the block so anyone who's done a contract with where you're managing the in-house agreement like you've just described you know the pain of everyone being really excited about a deal and then having all of these last minute discussions that can you know can stop a deal frankly so what we always try to do is build the process so that uh and why it's important is that if you don't have a process if you're just reacting and you're leaving it to the lawyer to deliver the bad news to everybody at the end of the day actually there have been a lot of failures up to that point it's just that it tends to get pinned on legal if I can put it uh Pro that's the way that I would explain it so if we don't get in front of making a process to deal with SAS licenses you're just reacting so you're you're having tough conversations when you're basically forcing your decision maker at the company to do something they don't want to do either to take on more risk than they want or to kill the deal so what I get really excited about and I I'm not even joking about that I know sounds so weird but it's so true is that when the lawyers and the sales team get on the same page when you work like you're both in the same transaction and that you're both a key part of it it's just very rewarding for everybody and it it's the recipe in my opinion for happy lawyers inhouse and it's it does improve revenue for the company so why we're talking about the actual process is that I think the nuts and bolts will talk about you know yes we can talk about the nuts and bolts um at some point but everyone's kind of working with the same nuts and bolts and what I observe in all the different companies we work with is that sometimes there just isn't a process there's just no one's thought about this so I could set out like a three tips that I think would work for people to think about if you want yeah please so so again the idea is sales has kind of been on their own Island talking to the customer directly the potential customer directly making a pitch making an offer every hey I love this I want to buy this cool I want to sell this to you that's when legal is coming in in the typical scenario and just you know by that process it becomes a bottleneck H how do you stop that give us some tips on how you stop that kind of really late handoff is that just endemic to the process or is there something we can do to get legal involved earlier I think when it when it happens late in the process it it can happen late in the process but only if you've built it out properly so I think number one is to get in a room with sales at the beginning so one of the things we always do is we just say can we talk to the sales team can we look at the document together because one of the old jokes when I was inh House Council before was always like hey darling print me a contract this was the sales and marketing team and what I real although that was like very annoying at the time what was funny about it was that I realized that you know these terms aren't AR the time to explain the indemnity and the risk is not when the deal is about to not close nobody cares you're like the the Charlie Brown teacher M M M risk and then you you kind of wear that so what I like to do is get in the room right at the beginning with the contract and the decision makers and talk to you know have the CEO there the CFO the head of sales the lawyer and talk about what the company can sell so you sell a product that it handles personal information you cannot take on UNCA liability for the reasons that the company has or you don't you're not able to get insurance for a particular risk sales needs to know that and they need to know that from the company head not just from legal so that you can talk about what they're entitled to sell so if it's a product that you can't have on cap liability on sales needs to know that and start messaging it at their relationship stage in the process and so getting in the room and just having everyone understand that you're in the same process is Step number one and you'd be amazed how rarely that happens especially when you're in a startup a scale up it it can happen that the you know there's been no real thought to why you have that template a law firm gave you the template you're trying to get it out there and you don't you're not doing it uh you're not engaged with what it says and your role in making that be understood by the person buying the product so that's number one that make sense yeah keep going what else okay number two so the other thing that I've observed over the years is that often when the lawyers are arguing at the end you're dealing with a scenario where the lawyer on the other side is also getting flown in at the very end so they don't know why what the product is about so if your contract looks very different from the sales pitch you're going to have a disconnect so often with our clients I will actually say can I see your sales deck what are you saying about this product because you know as a as a simple and uh straightforward example if your client sells a burglar alarm if the sales deck says that they are preventing burglaries the lawyers are going to have problems because the lawyers are going to get all kinds of questions like well how many burglaries do you prevent do you prevent 100% of burglaries or do you prevent 99% of burglaries when really if you change the the sales document and it now says we detect you know improve your chances of detecting burglaries we monitor your pro your you know your premises we do the following items then when you get to contract stage then you commit to do those things so that is huge and honestly so often uh the reason why this matters again is that you haven't sold the product really as a salesperson if you have gone and sold that you prevent burglaries because you can't sell that product and your company cannot sell that product or they will be on the hook for all the costs of the client having a burglary which isn't fair or right or the product that they're selling so just aligning the sales documents all the way through the process and teaching working with the sales team to have them get their business team that they're dealing with in the customer side to teach their lawyer what they are buying honestly is half the battle because there are two sides to the to the discussion and what I see a lot is that by the time it gets to legal legal spends all this time explaining to the other side why we can't accept their proposed changes to the V end agreement when it's really honestly half the half of what we're doing is educating them about the product so whenever that happens if I feel myself in that discussion I'm just like okay we got to go back we got to make sure that legal is not the one explaining what the product is or we Lo we lose time we accept more risk than we want to and it just it's everyone's unhappy like the lawyer feels bad salesperson feels bad and it it often is Pres presented like oh legal killed the deal but that's not what happened at all actually the deal was never going to happen because you sold a product that doesn't this company can't sell right let me underline tip one was legal share your paper with sales beforehand in in a way that is adapted to them sales share your paper with legal you know what you're promising so they know right and then what's the third and and I I'm framing this because I want to give you push back or clarification that Ken berer shared on here in a second that I think is really interesting so tell me the third tip and then we'll pivot to that so the third tip is just to give tools that allow sales to have more of a role in the process earlier on so for example that can look like a Playbook it can look like step back positions that they are authorized to negotiate this is going to depend on your sales team and how contract Savvy they are and there is a range in in sales teams for across companies so you would need to have your sales team like who you have on the team inform the process as well but if they are saav contract teams which many sales teams in SAS are then you give them a couple of Step backs so that by the time the document arrives at legal you're dealing with the real red flag issues that are outside inside the bounds of the Playbook I'm GNA let me just read from Ken he said the real the real world Point here is competition the salesperson is working two to three years sometimes just to get a meeting and when they finally do they begin to have meetings bringing in the lawyer early on is just a it's just a killer goes over like a lead balloon he said I think that actually underlines something that's business-wise really interesting for the lawyers to understand which is that not all SAS companies all software offerings are not created equal right some companies are looking to have large Enterprise transactions these are sales L organizations they have a really long sales cycle to Ken's point that engagement how a lawyer engages with that kind of circumstance might be a little different maybe not I'll put that question to you but then the other kind of organization might have more of a businesses to Consumer sort of approach that it's more marketing-led they they don't have a large sales cycle they have a lot of printed materials that you know marketing materials that go out that legal is looking at beforehand when you make the argument let's get people in the room before sharing their Points each way and making a plan beforehand does that change based on are these highly customized sales or are these highly systematized sales so these would be I would say that the sales we're primarily focusing on in this discussion are where your vendor doesn't just dictate the terms so this is a scenario where there is negotiation there is a bit of flex in the terms because there needs to be for bargaining power reasons right so this would not be the large vendor imposing their standard terms and just having an order form this is sort of like okay we're scaling up we're a startup we don't exactly know where the sale lands with the legal terms and that that happens at the beginning so you can't dictate the terms from the beginning especially if you're cutting new ground with your product so that people don't really fully understand exactly what you're doing or what the risks are to them from using your product so I would say it's it's that negotiated scenario and when I say get in a room to the point of the commenter I don't mean with the other side and this is a key clarification I mean with your own team get in a room with your own team like you are a team and you are both engaged in the same process I agree that leaving the lawyers out until the last minute particularly uh you know I definitely don't recommend lawyers being in the room for the sales process everyone does their own thing that they're great at but I recommend that the the sales team when they're out selling are selling something that isn't going to stop at the door of the legal department and that's the discussion that I think has to happen because absolutely the sales team is competitive they're dealing with a quarter end they're compensated on Revenue they have targets they have to hit it's very stressful and I think I think that there's too much stress in a lot of these startups and scale UPS uh stacked on the legal and sales relationship as a result yeah I feel like there's something here in the sense like going back to our conversation on the tear down show about the the Salesforce MSA Salesforce doesn't ask for permission right they're a big enough company that they're going out and they're saying this is the contract so if I'm if I'm sales at uh at that company at Salesforce if I'm trying to get companies to adopt and and take on Salesforce as a tool that meeting beforehand is not it's almost not like let me Orient because we're going to have these real long negotiations but I still think that that meeting is important because sales needs to understand what they can offer and what they can offer and and and I'm thinking of marketing in that room too there's so much written content that says we're going to promise this and that and that and then legal is in the back room going the heck are these people talking about right like so so that meeting happens but to your point with these sort of complex deals these long uh line deals where there's a lot of back and forth those communications early on make it so that the deals later can happen how you know you wanted to talk about the specific terms the terms that sales gets aggravated about that legal gets aggravated about I assume that there's not generally a lot of back and forth with legal about you know choice of law or whatever what jurisdiction we're going to litigate in they're probably going back and forth on a few key terms so let's talk about those payments you know when you and I were in contracts class it was like I'm gonna pay you I'm gonna pay you on this date and this is what you getting return the simplest form of a contract talk to me about payments and where sales and legal are starting to Bute heads well I think sale the the key thing that we can do as as legal on the payments is just to make sure they come in at a you know as as needed and that we control the disputed invoice Clause so you see I think one key thing if if people on this call pick up is that to allow Undisputed invoices as the that's the only thing the customer will pay to me that's an immediate area for legal to add value just to put some some boundaries around well what what constitutes a dispute you know how do we deal with it what's the timeline to deal with it that's a simple one um then you get into the other stuff that's a bit more complicated which is really understanding how to contract around the data that you're taking in how to deal with termination um and I think the termination payment on termination um how people can terminate how they can get out of the contract that's where we kind of live on the business terms that sales can have a lot of input on and then when we get into the strict what I call the strict legal terms that just generally don't come up in the sales process those would be the liability caps the indemnification and I am always a believer in the client can know a bit or enough about those those topics to just not feel at Sea when they come up because I think a a bad thing that happens is just thinking it's someone else's job to think about those things is its own problem because you do have to be aware of what the risks are in your own product and understand how to sell with those risks Incorporated clear terms clear termination but I do want to ask about the strict legal stuff because it feels like the legal team is not going to understand what indemnification and and what these liability you know they're not they're not probably going to really go take your class on indemnities uh so how do you fix that because that will be a holdup right if if the salesperson is going out and they're saying you know this is the offer and the other side comes back and they say well we won Indemnity caed whatever now it's going to come back to you you're going to be the holdup because the salesperson doesn't know what the heck an Indemnity is so how do you when that transfer does happen when there's that moment of we need a decision to be made about this thing it seems like it's inherently going to frustrate sales because their brains like how do you get their brains wrapped around that well I think that's why you get senior management decision makers the people who have the final signing Authority which typically is not sales um it's usually has to be approved by Finance or certain business approvals that have to happen and so what often occurs is that there's this like final showdown between legal and sales the eve of the deal supposed to close and someone in the decision-making capacity has to to make a hard call and usually it goes something like legal saying there's too much risk sales is saying this has to close CFO is looking at what revenue is needed for the year and so they close it but to me that can be a failure on the lawyer side because why did we get to that point where we're talking indemnities with the CFO only on the eve of the deal there should be a scenario where you've discussed what the optimum provision is the lawyers typically aren't making the decisions on these deals they're advising of risk they're proposing language that's best for the company and at the end of the day someone else is going to make the call so I think to to bring this the sales team in very simply and I agree no nobody nobody including frankly maybe sometimes lawyers wants to be in an Indemnity discussion but even to just say you know here's where this would come up like this is where you would have sold a deal where we're on the hook for their cost if they want to sue us for not doing what we said because it's an all claims Indemnity so I tend to not use the legal terms when I'm talking to the teams about it I just say so to put this in plain language what we're talking about is the following and that isn't okay with the company so you can't sell that how do we get to get tactical to get practical in most organizations we're talking about who's copied in on an email right and uh obviously there's a lot to talk to about this but I think that communication flow might be Central to the point that you're making which is like if legal is copied in and sales is copied in and the leader is copied in the decision and everybody's pinging these emails back and forth it's almost impossible for sales to see anything other than legal is stopping this and legal to see anything other than so I guess maybe I wonder if there's some way to have a Comm I mean email is just awful we all know email awful slack creates a lot of other issues because it's the inefficiency of email plus the anxiety of social media but like these kind of communications with that lack of flow with everybody's just copied in pinging in is there a better way for those teams to your point to have structured conversations to say at these stages of the deal we're going to talk about these different things so it's not either last minute or vague bcc's in the background yeah the way to get in front of it is to have a process where it's like here's the template and we really thought through what the template says so your standard agreement it should be something where you are prepared to stand behind it because you have to to me put the document out there that you will stand behind if every single time you're backing down on what you have in the document at the last minute something is wrong well and sales will know that right like as soon sales be like ah the contract doesn't really matter yeah well and it will also affect the credibility of the team and even the Senior Management because they are backing down on it so the tool is the Playbook that the tool is you go into the it doesn't have to be a formal Playbook it can also be an annotated contract where the decision makers have said in these circumstances and you can actually lay out and we do with most of our clients you know this circumstance no movement on the terms this circumstance possible you can accept or propose this language this one this and then if you can't get any of these goes to the CEO or the CFO or whoever the approval process Matrix says this issue goes to and that is just everyone knows the plan you know as opposed to it's the lawyer's kind of like decision of how this is going to get to the end goal which is honestly how it works often and it excellent excellent pivot darling tanelli um I I'm going to tell you one of the smartest things that I have ever said as a manager and I want everybody to hear this because there's so few smart things that I say but it is easier to manage paper than to manage people right and what we've just had this whole conversation about was how to manage PE how to deal with people how to interact with people and you see the complexity and the difficulty of that