What you need to know about Master Service Agreements
Blog post by AIIP member Ellen Naylor
Have you ever had to negotiate your way through a Master Service Agreement (MSA)? AIIP member Ellen Naylor avoided that process until a couple of years ago. In this post she shares what she has learned from her experiences with MSAs.
What is an MSA?
An MSA covers all the administrative, process and legal details for doing business with the company that hired you, plus the services at the price you quoted in your proposal.
MSAs are written in legalese and can be hard to read, so you’ll need to hire a lawyer to help you negotiate your way through understanding and adjusting the MSA to suit your business.
What should you know when you’re asked to negotiate an MSA?
Different geographies, different rules
Not all MSAs are the same, as each US state has its own laws. Each industry also has its own issues and practices.
My lawyer told me that telecommunications and high-tech firms are the most likely to insist on an MSA, even when dealing with a solopreneur. The MSAs I’ve seen are written as though I was a firm the same size as the company hiring me (often HUGE), and in the same industry, totally inappropriate for a researcher. So, I am kept busy redlining – making changes to the text of the MSA.
If you’ll be doing work that involves holding client contact information in Europe then you’ll need to comply with GDPR. That’s always the case for the work I do, since I conduct interviews. The information I collect from those interviews also needs to be protected as per GDPR.
Here are the general categories of what’s covered in an MSA:
- Work product-Deliverables
- Payment process and terms
- Warranties for your work
- Termination terms and process
- General liability and professional liability (Errors & Omissions insurance)
- Confidentiality (in addition to a Non-Disclosure Agreement)
- Parties Relationship: Independent Contractor
- Subcontractors (if hiring)
- Limits of liability
- Expense Reimbursement
Services and work product deliverables come from your proposal, but often include client expectations for delivery, and might include a penalty for late delivery or not delivering according to client specifications.
MSA’s are a two-way street: I always include what I expect the client to provide me. Termination terms and process is also a two-way street.
Insurance and security
I had to buy general liability and errors & omissions insurance for the first time in my 25+ years of business. I felt lucky to have put it off for this long. As an AIIP member I had a few sources to call on – particular thanks to Cynthia Hetherington, who had shared some insurance sources in AIIP-L. I ended up selecting the same provider she uses.
The company who hired me was security conscious. They asked me how I used my PC and what types of security I used. For example, did I have a virtual private network (VPN), or use encryption and virus protection. I failed their test. So, they mailed me a PC to use for their project. My lawyer said that this practice is becoming more common.
Payment and other process considerations
I had to set up an account with the company’s payroll and abide by their exact process to submit an invoice, which had to match the exact amount in my proposal. I was relieved when accounts payable sent me an email confirming that they had received my invoice, and that it was prepared correctly to get paid.
Payment terms are often a down side of companies that negotiate MSAs. Payment terms are not net30, which is my preference. However, if the business opportunity it right, it makes sense to pay the legal fees, to buy the insurance and to accept net30+ payment terms.
If you find yourself negotiating an MSA, feel free to be in touch. I’m happy to share the details of my experience.
Ellen Naylor is one of America’s pioneers in competitive intelligence (CI) and Win/Loss analysis. Her passion for Win/Loss stems from her sales experience where she learned that customers and those who chose the competition were a continual source of competitive intelligence, product ideas and market insight. Naylor’s book, “Win/Loss Analysis: How to Capture and Keep the Business You Want,” was published in 2016.