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Diagnostic review means systematically finding problems, inconsistencies, and risks in a contract before you start making changes. It’s like running tests before treating a patient – you need to understand what’s wrong before you can fix it.

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Why Diagnostics Matter

Jumping straight to redlines without proper diagnosis leads to:
  • Missing critical issues hidden in unexpected sections
  • Making changes that conflict with other provisions
  • Focusing on minor issues while major problems go unnoticed
  • Creating new problems while trying to fix others
A good diagnostic review takes 5 minutes but saves hours of back-and-forth.

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Core Diagnostic Techniques

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The Completeness Check

Look for what’s missing, not just what’s wrong: 
Check for missing standard provisions:
- Limitation of liability
- Indemnification
- Confidentiality
- Termination rights
- Dispute resolution
What’s absent often matters more than what’s present.

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The Consistency Check

Find conflicts within the document: 
Look for contradictions between:
- Different sections referring to the same topic
- Definitions and how terms are used
- Main agreement and exhibits
- Specific provisions and general terms

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The Definition Audit

Verify all key terms are properly handled: 
Check that important terms are:
- Defined when first used
- Used consistently throughout
- Not defined multiple times differently
- Actually used after being defined

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The Cross-Reference Check

Ensure all internal references work: 
Verify that:
- Section numbers referenced actually exist
- Exhibit references match attached exhibits
- "Above" and "below" references point to the right places
- Related provisions properly connect

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Advanced Diagnostic Patterns

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The Ambiguity Scan

Find language that could be interpreted multiple ways: 
Flag provisions that:
- Use "reasonable" without defining it
- Say "including" without "but not limited to"
- Reference time periods without start dates
- Use pronouns with unclear antecedents

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The Risk Heat Map

Categorize issues by severity and likelihood: 
Create a quick assessment:
High Risk + High Likelihood = Fix immediately
High Risk + Low Likelihood = Flag for discussion
Low Risk + High Likelihood = Fix if easy
Low Risk + Low Likelihood = Ignore

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The Enforceability Review

Identify provisions that might not hold up: 
Check for:
- Obligations that are impossible to perform
- Penalties that could be deemed punitive
- Broad restrictions that might be anti-competitive
- Terms conflicting with mandatory law

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The Operational Feasibility Check

Find terms that legal can accept but operations can’t implement: 
Flag requirements that:
- Demand reporting you can't generate
- Require response times you can't meet
- Need approvals from people not identified
- Assume capabilities you don't have

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Diagnostic Workflows

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The Quick Scan (5 minutes)

For low-risk, routine documents: 
1. Check defined terms are complete
2. Verify limitation of liability exists
3. Confirm termination rights
4. Scan for unusual formatting (often hides problems)

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The Standard Review (15 minutes)

For typical commercial agreements: 
1. Run completeness check for standard provisions
2. Check all financial terms for consistency
3. Review termination and liability interplay
4. Verify all compliance requirements are clear
5. Flag top 5 risks for deeper review

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The Deep Dive (30+ minutes)

For high-stakes or complex agreements: 
1. Complete all basic diagnostic checks
2. Map all inter-related provisions
3. Test each party's obligations for feasibility
4. Trace payment and liability through all sections
5. Check every cross-reference
6. Run scenarios for ambiguous provisions

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Using AI for Diagnostics

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The Right Prompts for Diagnostics

"Identify all undefined terms that appear to be important"
"Find any provisions that contradict each other"
"List all obligations that have no timeline"
"Flag any rights that only one party has"

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Building Diagnostic Chains

Step 1: "List all major topic areas in this agreement"
Step 2: "For each area, identify what standard protections are missing"
Step 3: "Which missing protections create material risk?"

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Avoiding Diagnostic Blind Spots

Don’t rely solely on AI. Always manually check:
  • Payment terms and calculations
  • Key dates and deadlines
  • Specific numbers and percentages
  • Technical requirements in your domain

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Common Diagnostic Mistakes

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Surface-Level Review

Only looking at obviously important sections while missing buried problems.

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Assuming Completeness

Thinking that if the big issues are covered, details don’t matter.

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Ignoring Interactions

Reviewing provisions in isolation without considering how they work together.

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Skipping the Diagnostic

Going straight to redlines because you “know what’s wrong.”

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Red Flags That Need Immediate Attention

During diagnostics, these issues should trigger immediate deeper review:
  • Uncapped or unlimited liability anywhere
  • One-sided indemnification
  • No termination rights for your side
  • Automatic renewals with short notice windows
  • Audit rights without restrictions
  • Assignment rights allowing change of control
  • IP ownership transfers
  • Non-standard governing law or venue

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Diagnostic Documentation

Keep track of what you find: 
Issue: [What's wrong]
Location: [Section reference]
Risk Level: [High/Medium/Low]
Impact: [Business consequence]
Priority: [Must fix/Should fix/Nice to fix]
This becomes your roadmap for negotiations.

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The Key Insight

Diagnostic review isn’t about finding every possible issue – it’s about systematically identifying what matters for this specific deal. A good diagnostic gives you a clear picture of the document’s problems before you start proposing solutions. Think of it as creating a map of the minefield before you start walking through it.

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Remember

The best negotiators don’t start with solutions; they start with understanding. Thorough diagnostics prevent you from fixing the wrong problems or missing the real issues. Spend time upfront to understand what you’re dealing with, and the rest of the review becomes much more focused and effective.