Is It Time to Tear Up Your MSP Agreement?
You offer your clients managed services that help them run and grow their business empires, but is it time for you to tear up your MSP agreement? In this moment in time when everything about business – and our lives – seems to be in flux, this is an important question, so let’s take a closer look. One of the most important points to make on the matter is that the best blanket answer to this question is that now is certainly a good time to discuss the matter with an experienced MSP attorney.
Taking a Closer Look
Given the changes that businesses everywhere are experiencing, it’s a good idea for managed service providers to take a careful look at how they handle the primary contracts that reflect their on-going relationships with their clients. Multiple regulatory platforms push providers in the direction of battening down the hatches and including every conceivable protection in their contracts, but this flies in the face of the streamlined experience your customers have become accustomed to and desire and that you need to continue growing your business. Managed service providers are currently poised at a juncture that requires them to think critically about managing a business online, – determining which elements of their customer contracts belong in their online terms and conditions, and nailing down when electronic signatures can stand in for physical signatures.
The biggest shift in play has to do with when physical signatures are needed and when electronic signatures are a better approach. It used to be that MSPs were advised to obtain physical signatures on master agreements – to ensure that customers signed off on them just like they would execute any other legal contract. As we continue to delve into online business as the norm, however, this is changing. Currently, it makes more sense to turn to electronic signatures for master contracts – with boilerplate language that explains the terms and conditions that apply across the board – and to reserve physical signatures for those terms that are tailored for the unique customer in question. In essence, this means that the big contract (which doesn’t waiver) is easily accessible online. Conversely, it’s the individualized orders, quotes, and proposals that require a more personal approach – and a physical signature.
Streamlining the Process
The idea is to offer excellent services while protecting ourselves and our clients – and to do so as conveniently as possible. This is where streamlining our ability to conduct business online becomes so important. Once you have a master service agreement that coordinates with custom service attachments (that reference back to the original quote or order), then you have a streamlined operation that is better positioned to help you help your clients grow their businesses. In this way, you can establish a far more elegant process in which your sales team configures your customers’ orders and quotes without the need for manpower that engages in negotiations or in retrofitting contracts. In a nutshell, the goal is to drive the entire contracting process through the specific order or proposal that each client physically signs off on – amounting to a seamless flow of on-going business that is anchored by the master agreement and that bypasses all that laborious editing that was once the scourge of MSP contracts.
There was a time when only the major players could get away with online master service agreements, and smaller enterprises had to mind their p’s and q’s by sticking to the letter of the law. Now that the Googles and the Amazons out there have paved the way, there is enough case law and precedent on the books to make a very compelling case for smaller companies to adopt and benefit from this approach.
This being said, simply slapping the master service agreement that has been serving you so well for so many years online is a terrible approach. There are myriad complex and nuanced legal parameters that apply, and every MSP is well advised to work closely with an accomplished MSP attorney throughout this shift toward a more streamlined online presence. Ultimately, your MSA must hold up to the rigors of valid legal contracts in a court of law (if it comes to that).
Incorporation by Reference
It’s not difficult for all parties involved to recognize that the clients of managed service providers sign initial contracts that delineate existing terms. This isn’t a huge stretch. The issue is the enforcement of additional attendant agreements, including:
- The service attachments for managed services
- The cloud attachment
- The backup and disaster recovery attachment
- The managed security services attachment
Ensuring that all relevant terms and conditions remain legally binding when the customer hasn’t specifically signed them is a trickier business. When an order or proposal clearly specifies the client’s intent to incorporate the additional agreements into the signed agreement by reference, it simultaneously renders the additional agreements as contracts that were validly entered into – as if they had been signed in unison with the order or proposal.
Your Master Service Agreement
The master service agreement you’re using right now might have been around for a while, and even if it’s served you well, there’s a good chance that it contains bits and pieces that have been Frankenstein-ed together and is in need of an overhaul. The business landscape is evolving whether you’re prepared or not, and this makes right now an excellent time to tear up that tired master agreement and prepare to face the future with increased confidence and purpose. A practiced MSP attorney has the deftly worded contractual provisions that address the full array of legal snafus you’re likely to encounter, including:
- Taking heat for a third-party software provider’s violation
- Being held financially responsible for ransomware attacks
- Being expected to provide transition services (at the end of the contract term) for clients who refuse to pay termination fees
MSPs face considerable challenges, but having the right MSP attorney in your corner can mean the difference between chaos and continued growth.
The Online Advantage
As you move forward toward a more online approach, you’re going to experience considerable advantages that help make any growing pains far more manageable. The elegance that comes from having a streamlined contractual process not only inspires confidence in prospective customers but can also significantly decrease lag time between proposal and sealing the deal with those prospective customers. When executed correctly, you can move the process directly from signing on the bottom line to providing services and invoicing – and this can help cut out a good deal of the static that you’re likely experiencing currently.
Generate Momentum in 2021 by Reinventing Your MSP Agreement
With everything we took on in 2020, it’s safe to say that you, as an MSP, need to continue growing and finetuning your online presence – and that an important component of this is reimagining your MSP agreements (within this context). While there’s a shift involved, it’s a shift that can prove quite valuable. At Scott & Scott, LLP, our experienced MSP attorneys take great pride in helping managed service providers – large and small – spread their wings and dominate their online share. One of the most important tasks you can tackle in 2021 is crafting a master service agreement that addresses your needs – and that isn’t cobbled together from snippets that served you in the past. When you’re ready to get started, we have the commitment, resources, and legal insight to help guide you in the direction of a streamlined contract process that bolsters both your business and your peace of mind.