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7 Things every MSP should know about Master Service Agreements (MSAs)

May 23, 2017

7 Things every MSP should know about Master Service Agreements (MSAs)

Legal obstacles that every solution provider must overcome were the topic of an afternoon breakout session during a recent Ingram Micro Trust X Alliance Invitational. 

In what is often known as “unconference” style, attorney Bradley Gross began the session by asking participants to drive the discussion around which legal pain points were of most interest to them. After cautioning that the session was for informational purposes only, and stating that he would not be providing any legal advice specific to situations faced by the individual participants, Gross put several topics on the table, including Master Service Agreements (MSAs), contracts with business partners, non-compete vs. non-solicitation agreements, ownership and blind faith in the business process. The response from the group was almost unanimous in favor of MSAs.

The lively and interactive discussion that followed produced seven key takeaways that every MSP should be aware of when it comes to MSAs:

  • Know where your MSA originated. Gross said he’s had a number of cases where solution providers show up with an MSA and have no idea where it came from. He added that it’s also not uncommon for solution providers to use an MSA they pulled off the Internet, or borrowed from a partner, sometimes even forgetting to change the name of the company or leaving information specific to another solution provider in the document. Solution providers should know the history of their MSA before they start using it in their businesses.
  • The MSA is to solution providers what the U.S. Constitution is to government. MSAs should NEVER change. The MSA is the master document by which the solution provider’s relationship with its customers is governed. If the MSA includes services and pricing specific to one or more customers, it is no longer an MSA.
  • Supplement the MSA with a Statement of Work (SOW). SOWs are designed to change over time, and are unique to specific customer engagements. Unlike the MSA, they can include a list of services to be provided to the customer, the price that will be charged for those services, and any processes that are unique to that customer engagement.
  • Maintain the integrity of the MSA. In some cases, solution providers may be asked by a customer to change their MSA. As mentioned previously, MSAs should NEVER change. Instead of altering the document, which can lead to problems with multiple versions down the road, the solution provider should offer to make an amendment specific to that customer’s request.
  • Have an exit strategy. SOWs live and die on their own, based on the terms of the agreement, but a solution provider’s MSA should have an exit strategy for terminating the contract. If it does not, the MSA could default to general common law, which may or may not be favorable to the solution provider.
  • SLAs are provisions within the statement of work. Unless an SLA applies across the board to all the services a solution provider offers, it should be not be included in the MSA, and should instead be part of the SOW. Solution providers should be very specific as to which services are covered by the SLA. And if multiple SLAs are needed, those should also be outlined within the SOW.
  • Never have customers sign the MSA. A provision should always be made within the SOW for the MSA, and the customer should only sign the SOW. Provisions can include a line item referring to the MSA, or a URL link to the reference document where the MSA is housed. Solution providers should also do their due diligence to ensure that customers understand they are agreeing to terms outlined in another document, i.e. the MSA, and any amendments to the MSA.

For solution providers, MSAs are just one of the many legal obstacles to overcome, and while sometimes you will win and sometimes you will lose, Gross said you should never be afraid or ashamed of failure. All business owners have the same problems, regardless of size, geography or vertical focus, and sometimes you can only learn to solve them through open dialogue and discussion—unconference-style!