MASTER SERVICE AGREEMENTS & STATEMENTS OF WORK
Master service agreements or MSAs are agreements between a service provider and a customer. MSAs establish a basis for continuous service. They’re often in force for several years. For long term relationships, MSAs are advisable. MSAs reduce the amount of time and expense associated with the continuous negotiation and changing of terms that might occur in a long-term business relationship without such an agreement.
What is in a Master Service Agreement?
MSAs handle most of the legal terms and conditions of an agreement. MSAs are often complimented by Statements of Work, which are shorter agreements that can be quickly prepared and drafted as needs arise. Companies might retain a lawyer to draft an MSA template that they can use with customers. In some cases, a customer might have their own MSA.
MSAs typically cover intellectual property issues, limitations on liability, obligations by both parties, indemnification, terms, termination, remedies, insurance, data security, data privacy among other terms. These terms may lead to intense negotiations as both parties have a vested interest in negotiating the strongest terms to protect their respective bottom lines and to mitigate the inherent risk associated with the transaction.
Importance of a Strong MSA template for Your Business
Drafting a strong MSA template is imperative to engaging in a strong agreement and reducing the time and expense associated with onboarding your new customers. You might have very few edits and thus do not even have to confer with an attorney. The service provider and customer agree to the template MSA and any applicable SOW and the two parties begin or continue their business relationship. Steve Ekechuku has drafted several template MSAs as an attorney in addition to providing input and assisting with this process as a Senior Director of Business Development. Steve regularly provides this service to businesses looking to create a strong MSA template.
Importance of Periodically Reviewing and Revising Your Template MSA
Regardless of how well-crafted the MSA template is, it is advisable to have an attorney periodically review it. Changes in statutes, regulations, services, insurance coverages or a court decision might have a drastic impact on the MSA. It is advisable to arrange a time every year to review your template and make any needed changes. Ekechuku Law regularly provides counsel to clients looking to ensure your adequately protected against inevitable changes in the law, your business, or each party's specific circumstance.
Negotiating Terms of Your MSA with a Customer
A customer might want to change MSA language in a way that might drastically impact your performance obligations, liability, legal rights, insurance requirements, or some other part of the MSA that you deem important. You might be in talks with an international customer, and you’re unsure of the enforceability of the agreement. Steve counsels businesses negotiating MSAs with customers to ensure they’re protected and their objectives remain intact when they’re negotiating the terms of an MSA.
Reviewing another Party’s MSA
If you’re dealing with a sophisticated business, they may have their own MSA that they spent money having a lawyer draft. This is not an uncommon occurrence.
Master Service Agreements are a great way to optimize your Company’s contracting process. They create consistency, increase efficiency, and reduce liability gaps that might occur in a more fragmented contracting process. You should certainly consider these agreements with your regular clients.