The Three-Tier Drafting Approach

In LR-201a, we covered basic redline drafting — identify the risk, draft replacement language, explain the change. At the 301 level, every [REDLINED] provision gets three tiers of alternative language: preferred, acceptable, and minimum. The preferred tier addresses the risk completely. The acceptable tier addresses the primary risk with a concession on secondary concerns. The minimum tier is the line below which you cannot sign. Three tiers give your negotiator flexibility without requiring them to draft language under pressure at the negotiation table.

1. Tier 1: Preferred Language The language that fully addresses the identified risk. Mutual caps, narrow definitions, explicit carve-outs, and specific remedies. This is the starting position — the language you propose first. If accepted, the risk is fully addressed. [RECOMMEND]: Draft preferred language before entering any negotiation round.
2. Tier 2: Acceptable Language The language that addresses the primary risk with a concession the business is willing to make. A slightly broader definition, a slightly higher cap, a less restrictive termination provision. This is the counter-offer you prepare in advance for the predictable pushback on Tier 1. The concession should be pre-approved by the business stakeholder.
3. Tier 3: Minimum Acceptable The language below which you will not sign. This is the floor — the non-negotiable risk boundary. If the other party cannot accept Tier 3, the provision is an impasse that must be escalated to business leadership for a risk acceptance or deal-break decision. [RISK]: Accepting language below your minimum creates exposure that was explicitly identified as unacceptable.