What is Redline Legal?
Redline legal is a commonly used email term in relation to a change or a change document. A redline shows the changes made between an old and new document, and can be a useful tool for creating contracts, agreements, and other legal documents.
Redlining has expanded to refer not just to the document itself, but to the entire process of reviewing changes. A redline document can show earlier changes made by another party to a contract. After drafting a contract, the lawyers representing both sides typically exchange revised drafts that show the changes made by each lawyer . As the parties continue negotiations, a single document records every change. The document can then be used as a record of changes that went back and forth in negotiations, along with a detailed accounting of changes made to the document.
When making changes to contracts and agreements, it is important to clearly acknowledge what has been changed. If you don’t, a minor change could later be viewed as a significant change in a way that does not reflect the true agreement of the parties.
Why Redlining is Crucial for Contracts
It is important to understand both the purpose and the methodology used in redlining contracts whether you are an attorney or a business professional. For example, redline format helps to identify changes, highlights the proposed modifications in grey so the proposed edits are perceptible in under a minute, prevents miscommunication between the parties, and drives the negotiation process with more efficiency.
Identification of changes is the essence of the redline document. If the changes are not clear, or if only stated in comments, then the parties will inevitably waste time on clarifications eventually. Certain software uses greenlines or blue lines to highlight the changes instead of redlines, but it is the same process irrespective of the color. Sometimes the redline format is utilized for illustrating final language replacement from a drafting document into the final agreement, or just keeping track of previous drafts. Each law firm tends to have its own template in Word or another format, but the important thing is to understand what you are looking for.
It is important to highlight the proposed changes in grey rather than in red or bright colors because red contributes to the mental perception that the contract or proposed language or term is dangerous and kills the deal. Consistent perception and application of color implementing the redlining process will contribute to its successful adoption within an organization or within the practice.
The redline act as an efficient negotiation tool. The review process is continuous and back and forth until deal terms are complete and have the final form. Redlining compares conflicting provisions quickly.
Redlining eliminates miscommunication related to the final text versus the original, and highlights which parties accept which terms or not. This provides the necessary documentation of discussions among the parties and with external agents such as auditors and outside counsel hired by businesses for the review of their contracts.
Once the deal is made, the contract or agreement in final form does not contain any discussion or internal commentary. This aspect is very important, especially when potential issues arise out of contract interpretation. The parties must be able to show that certain obligations were amended during the negotiation of the contract. A prudent legal practice includes redline documents.
Popular Redlining Tools and Software
Several tools and software applications are commonly used for redlining legal documents. The most basic is Microsoft Word, which includes a "track changes" feature that enables users to make edits and track changes to a shared document. This function is available under the "review" tab in the ribbon menu. It can be turned on and off at will, so that users can see all comments and edits and no edits at once. When this function is enabled, text that is deleted remains visible but is struck through and red in color. Insertions into the text are in a different type font and color, typically blue or green. The added text is automatically inserted into the proper sequence and location in the document, whether it be to add a word, phrase or sentence, or to insert a paragraph after or between existing paragraphs.
Changes to the document can be made by using varied font colors for text changes, indentations, changes to alignment or formatting, use of footnotes or endnotes to edit at the bottom of pages or end of a document, respectively, and highlighting. All of these edits are tracked and can be individually or collectively accepted or rejected in the final document. Because MS Word is so widely known, used, and distributed, it is the program that is most likely to be used in the first instance when making edits to a legal document. However, it is also the program that is likely to incur the most potential issues leading to claims of fraud, deceit, misrepresentation, or misstatement of fact or law, unless the redlining protocol discussed below is carefully followed.
As previously mentioned, there are also stand-alone software programs and systems that are designed specifically for redlining legal documents. For example, document management systems offer search and retrieval capabilities of docketed text. To use a document management system, an attorney creates a profile, uploads files, and then enters information about the uploaded documents. Once the document is uploaded, the filing party proceeds with the upload by assigning each document or file its own unique identifier. Then, the filing party enters and then links the corresponding PDF document to the document data profile. Some of the document management systems permit the user to link related materials as well. The system saves the information entered as a set profile for later retrieval by entering search terms or key words.
The U.S. government also offers a document redaction tool, with the program available from the U.S. Department of Justice website. The Department of Justice has provided an online preview of this federal redaction tool, so that attorneys can familiarize themselves with the specific features of the redaction tool and understand why and how to use the tool in a particular situation. A demonstration of the system demonstrates how to use the tool to redact documents and save those redacted documents and provides instructions for using the program and tips.
Document redaction software offers various advantages. From opening documents and understanding how to eliminate unwanted documents, to getting rid of superfluous documents, and then improving document accessibility. These advantages accrue to the benefit of law firms and their clients alike. First, redacting documents addresses unwanted information by eliminating any unnecessary data. A second benefit is that it enables a law firm to easily access and retrieve only certain documents. Third, redacted documents can be submitted as evidence in court, without any ancillary worries about security issues.
Redlining Best Practices
The efficient and accurate use of redlining is vital to its effectiveness as a document review tool. First and foremost, when engaging the redlining feature of Microsoft Word or other document review software, a leaving space between each edited or deleted section is critical for preserving the integrity of the document. Document integrity includes both formatting and record keeping. Formatting includes such typographical elements as font size, font color, underline/thickness of strikethrough depiction, indent, and lead spacing. Record keeping, at its most basic level, meaningfully captures for all parties that which was deleted and/or added to the document. The record keeping should be understandable to all persons reviewing the document in the future, including parties unrelated to the document’s previous review. This simple enhancement sometimes escapes the drafter who instinctively believes that subsequent reviewers will remember the genesis of every deletion or insertion presented in today’s term-based environment. Accordingly, some best practices include inserting a page break between lines when deleting and inserting text in an agreement. In Microsoft Word, you can insert a page break by holding down the Control button or Command button, and simultaneously pressing the Enter key. The added benefit of this "page break" method is that the spacing is preserved across all formatting tools in the document—it appears on the document as it is seen on the screen. Microsoft Word’s shortcut for showing paragraph marks on the screen is "Control+Shift+8". Another key best practice is engendering effective communications. A simple caveat on communications is advisable. For example, say, "This document marginally departed from our previous draft. In this document, we illustrate our acceptance of your proposed changes in black and our proposed amendments to your proposed changes in red." Of course , have the communication follow the mark-up. I usually incorporate the caveat into the electronic file name. For example: C2014_CW_AREVALID_redline_09_22_2014.
But, you are not always communicating mere mark-up. Sometimes you must communicate mere comments ("clarifications") or knowledge your client has imparted. Generally, there are four good ways to handle this situation. Use any combination. • Subjective annotation: Adding colored comments to improving clarity, highlighting issues to follow-up on, etc. These annotations are "subjective" in that they are unilaterally added by the annotator and not necessarily intended to be read by others. • Author’s comments: Indicating revisions with some discussion within the document itself or revising section headers or draft notes to guide the reader through the document’s intent. • Companion notes: Text provided outside the document but communicated contemporaneously (i.e., memo, email, etc.) that explains the draft’s revisions and requests full focus on the revisions made. • Highlighting a pattern: Using highlighters (yellow, pink, etc.) to flag an issue, a recurring catch phrase across all pages, or clarifying information that can be grouped by source. Subjective annotation is usually the area where outside counsel gets lost the most. Lawyers have a tendency to want to add footnotes, endnotes, and brackets everywhere; however, they do not realize that double issue spotting is distracting to in-house counsel and other reviewers. I generally consider subjective annotation to be more annoying than helpful. As you can see, the strength in redlining is its propensity to understand amendments in context, not as mere marks on a paper. This strength can be weakened with poor formatting and relaxing communications—two common areas many attorneys overlook.
The Difficulties and Risks of Redlining
As useful as redline-style editing can be, it has its own challenges and pitfalls.
Version Control
When a document appears in multiple versions and a redlining solution is employed, keeping track of the latest "hot-off-the-press" version becomes difficult. A misappropriated document can be rounded out by a change in the margins, or the correct version could get lost among several iteration. The risk of an updated document being overwritten (especially in collaborative environments) means that tracks, version changes and comparing revisions may not accurately reflect the final state of the document.
Unauthorized Changes
It may be a bad faith attempt to alter the text, especially if the redlining solution allows it. Allowing changes may occur without notifying the editor. The alteration may not be highlighted or flagged, posing a legal or financial risk if the document is presented or relied upon in an official setting.
Misinterpretation
Misinterpretations can be triggered by missteps in context-based praise or condemnation for changes in the text. The redlined document’s contents may not provide the intended context for corrections in the document’s structure, format or text. Poorly crafted language can also be used to "lead the witness," raising the possibility of unintended revisions.
Redlining Case Studies
To illustrate redlining in action, let’s consider a generic case that was won through redlining. A legal team representing a well-known environmental group approached outside counsel for assistance in filing a suit against several industrial plants in the region. The environmental group’s basic premise was that the emissions from the plants caused increased asthma rates and birth defects in the surrounding areas. The plants were located in a lower-middle class African-American neighborhood. Through expert testimony and archival research, the environmental group traced some of the health effects to the plants’ emissions. The environmental group sought to sue based primarily on the health impact to the plant workers, subcontractors, and residents of the area surrounding the plants.
The outside legal team quickly recognized that there were two major problems with these claims. First, the plants were in fact doing everything required by law to limit their emissions, which would leave little room for legal recourse. So second, the real issue in the case would be finding a potential breach of law that the plants were guilty of while cleaning up the story about the good things they were doing to minimize emissions in the community.
The first step in redlining is to identify all the potential breaches of law. Once this was done, the legal team began to redline those problems. In order to do that, each alleged emissions issue was compared with the legal obligations to see if any permits or obligations were being violated. The outside legal team discovered a very minor violation because a power generator was leaking a very small amount of cooling fluid because the seals on the generators’ piston head had broken. Because of this leak, the company also did not keep as many replacement parts on hand as they should have. In other words, when a generator was broken down, it took longer than it should have to get it back online.
So the legal team went to the power generators and negotiated a settlement requiring the plants to increase the supply of replacement parts. The outside legal team also went to the power generator and negotiated a settlement requiring that the leakage be cleaned up within a certain agreed-upon period of time. These two settlements satisfied the environmental group’s primary complaint.
The only problem was: the team still needed to win the case. Redlining does not give you a win. It only levels the playing field so that you have a fair chance at winning. If you do not use redlining, you may never make it to the playing field. In this case, the environmental group’s concern over the health impacts of the plants’ emissions was an excellent claim to introduce into the negotiations. Through redlining, the legal team was able to figure out that the plants were following the letter of their state and federal obligations in handling emissions. But here is where redlining really paid off: the legal team went back to each of the plants and negotiated a grant for the environmental group to perform health studies in the neighborhood and use the plants as willing participants. Therefore, the legal team was using redlining not only to create license agreements but also to handle mass tort litigation. By blending their environmental concerns with the public relations benefits of the plants’ cooperation with the health studies, the environmental group came away with two different licenses and the ability to sue for damages to the health of the surrounding residents.
The Future of Redline Legal
The future of redline legal is marked by a transition from manual processes to automated, intelligent systems that predict document revisions and suggest changes based on previous behavior. Future redline legal tools are likely to incorporate advanced AI algorithms, which will help to improve both the accuracy of documents and the efficiency of document exchange and collaboration among legal professionals.
As AI-guided redline legal tools become the norm, the need for more efficient methods of reviewing and resolving comments will become paramount. Potential improvements could include integration with virtual collaboration platforms, allowing multiple legal professionals to review and edit documents in real-time, regardless of location. This could significantly reduce the amount of time spent on reviewing and revising documents .
Intelligent redline technology may also evolve to provide helpful conflict resolution features that suggest potential resolutions to highlighted issues. Today, the burden of resolving conflicts typically falls solely on the individuals familiar with the issues, but redline AI may be able to leverage vast amounts of training data to find smarter solutions to common conflict scenarios.
The future of redline legal will also include better data integration, ensuring that revisions to contracts or other legal documents quickly sync with related information. Solutions from leading artificial intelligence companies are increasingly capable of producing documents that are relevant to the user’s preferences. Likewise, the set of revisions the user makes to documents can potentially be used to make more precise recommendations in the future.