The Anatomy of a Great Master Services Agreement (MSA) - monjur

If you are an MSP, you cannot afford to get your Master Services Agreement (MSA) wrong. After all, it’s the foundation of your relationship with your clients.

If done well, it sets expectations and protects your managed services business from legal and operational risks. And if done wrong, it can create more issues than it solves.

That’s why, if you’re struggling with client disputes, unclear responsibilities, or compliance risks, the first step is to understand the anatomy of an excellent MSA.

In this blog, we’ll break down the key components of an MSA and explain how these elements solve common challenges for MSPs.

1. Clear Scope of Services

Your MSA should provide a precise description of the services you will and will not provide. Clarity here prevents misunderstandings and sets realistic expectations.

What This Solves:

Reduces scope creep, where clients expect services not included in the agreement.
Avoids disputes over unanticipated tasks or responsibilities.

Key Elements:

Include a detailed Service Description or a Service Attachment that outlines each service provided.
Specify what is excluded, such as support for hardware or software outside the agreed scope.

MSPs often start with basic break-fix agreements and struggle to transition to comprehensive master services contracts. The scope creep usually begins when clients assume everything technology-related falls under their service level agreement.

2. Pricing Flexibility: The Ability to Raise Prices

To maintain profitability and adapt to changing costs, your MSA must give you the right to adjust pricing.

What This Solves:

Prevents revenue loss due to inflation or rising costs of third-party tools.
Ensures your business remains agile in response to market changes.

Key Elements:

Include a clause allowing for price adjustments with reasonable notice (e.g., 30-60 days).
Specify triggers for price increases, such as regulatory changes or increases in vendor costs.

Having clear triggers for price adjustments built into your agreement from day one gives you the contractual right to raise prices when you have to.

3. Exclusion of Responsibility for Ignored Security Recommendations

Clients often ignore critical security advice, putting their systems and data at risk. Your MSA should protect you from liability in these scenarios.

What This Solves:

Shields you from claims if a client experiences a breach after failing to implement your recommendations.

Key Elements:

Clearly document security recommendations and client acceptance or rejection.
Include language that absolves your MSP of liability for any resulting damages if security measures are not implemented.

The goal is to document not just that clients declined security measures but that they understood the specific risks they were accepting.

4. Exclusion of Responsibility for the Criminal Acts of Third Parties

Cybercriminals pose a constant threat, and even the best security measures can be breached. Your MSA must clarify that you are not liable for these acts. Otherwise an MSPs could be held liable for criminal acts targeting their vendors.

What This Solves:

Protects you from claims related to ransomware attacks, phishing, or other criminal activities beyond your control.

Key Elements:

Explicitly state that you are not responsible for damages caused by the criminal acts of third parties.
Emphasize your role in helping mitigate, but not guaranteeing the prevention of, these threats.

Excluding liability alone isn’t enough anymore. MSPs also need comprehensive documentation of their security stack and third-party relationships to be on the safe side.

5. Exclusion of Responsibility for Acts or Omissions of Third-Party Service Providers

As MSPs often rely on vendors to deliver services, your MSA should address the risks associated with third-party providers.

What This Solves:

Protects your business from liability when a third-party vendor’s failure impacts your clients.

Key Elements:

Include indemnification clauses requiring vendors to cover damages caused by their actions.
Specify that your MSP is not liable for service disruptions or breaches caused by vendors.

Many MSPs assume their vendor’s terms and conditions will protect them in case of failure. However, real-world cases show that without proper documentation in your MSA, you could end up being the easiest target for a lawsuit, even when the failure clearly originated with a third-party vendor.

6. Data Privacy and Processing Terms

Robust data processing terms are essential for addressing regulatory requirements and managing client expectations.

What This Solves:

Ensures compliance with data privacy laws like GDPR, HIPAA, and emerging state-level laws.
Clarifies your responsibilities and those of the client in handling sensitive data.

Key Elements:

Incorporate a Data Processing Agreement (DPA) outlining how personal data is processed, stored, and protected.
Specify breach notification procedures, encryption standards, and access controls.
Use dynamic MSP contract updates to keep up with changing regulations.

The traditional approach of updating agreements annually is becoming obsolete. Modern MSPs are shifting to dynamic agreements that can adapt to new privacy laws as they emerge.

7. Risk Balancing: Indemnity and Limitation of Liability

Allocating risk fairly is critical to protecting your business from catastrophic liabilities. Without proper risk-balancing provisions in your agreements, MSPs can find themselves absorbing the costs of legal claims stemming from vendor failures or client negligence.

What This Solves:

Prevents your MSP from being overexposed to financial risk for events beyond your control.

Key Elements:

Indemnity: Ensure clients indemnify you for losses arising from their own actions, such as non-compliance or misuse of services.
Limitation of Liability: Cap your financial liability to a reasonable amount, such as fees paid over the past 12 months.
Insurance: Require clients to carry appropriate insurance, such as cyber liability coverage.

Both indemnification clauses and liability caps need to be carefully structured in your MSA.

The Monjur Advantage

At Monjur, we specialize in putting together MSAs that are tailored to the unique needs of MSPs.

Our dynamic contract solutions address these critical areas, helping you mitigate risk, ensure compliance, and protect your bottom line.

Ready to elevate your MSA? Contact us today to learn how Monjur can help you build a better foundation for your MSP business.