When it comes to the long-term health of your MSP, few things are more important than properly managing your liability. While protections like cyber insurance are certainly important, your first line of defense should always be your master service agreement (MSA).
A strong MSA offers an essential layer of protection that keeps you safe from liability and further bolsters the effectiveness of your insurance coverage. In fact, insurance providers will often require that your MSP have a strong MSA in place before they’re willing to insure your business.
With that in mind, here are four best practices for developing (and using) an MSA that works.
1. Separate Your MSA from Your Services
First, your MSA should be a standalone document, something that can be equally applied to every client you do business with. Ideally, you should only have to create one MSA, and it should serve your MSP well for many years.
“An MSA should be service agnostic. It should be cost agnostic, price agnostic, client agnostic. Doesn’t matter what the service is,” advises Brad Gross, founding partner of the Law Office of Bradley Gross, P.A. “The MSA is that guiding principle foundational document that governs services. Services themselves should be in a different document: a quote, a statement of work, a proposal, whatever the MSP wants to call it.”
If you put all the specifics about your services into a quote or proposal, you can easily adjust the details based on the needs of the client. But the same MSA can then be attached to each quote or proposal, regardless of how the quotes might differ.
2. Address Situational Realities
Strong MSAs must also be able to address what Gross calls the “situational realities” of running an MSP. This doesn’t just include mistakes, poorly implemented work, or misunderstandings that are your fault — they must also address situations where there’s “the appearance of a mistake.”
Gross offers this example: “An MSP tells a customer that it has to implement the service. The customer declines the service, and then the thing that the MSP feared would happen actually happens. … The customer points its finger at the MSP and says, ‘This was your mistake, you did this.’”
He notes, “Attorneys will argue at hundreds and hundreds and hundreds of dollars an hour, slowly, about who’s right, when the truth is that if that situational reality—the reality of customers decline services—if that was just addressed in the MSA, they wouldn’t be in that situation.”
It can be hard to come up with the dozens of situational realities that could affect your MSP, but thinking through the various situations where a client could try to hold you liable is a must for ensuring your MSA has an answer for every possible scenario.
For example, you might encounter a situation where you need to fire a client. If your MSA doesn’t cover this type of situation, you could find yourself stuck with a bad client who’s more trouble than they’re worth.