Is It Time to Audit Your MSP Agreements?

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For Managed Service Providers (MSPs), contracts are the cornerstone of your relationships with clients. Yet, many MSPs neglect to revisit their agreements after the initial signing, leaving their business exposed to outdated terms, unaddressed risks, and compliance gaps.

This oversight has become particularly critical. As the industry shifts from traditional break-fix models to comprehensive managed services, what worked even two years ago may now leave MSPs vulnerable to emerging risks.

An MSP agreement audit isn’t just a legal exercise as it’s also an opportunity to protect your business, align with evolving regulations, and strengthen client trust. In this blog, we’ll explore the signs that it’s time to audit your contracts and the key areas you should focus on.

Why Audit Your MSP Agreements?

MSP contracts are not static documents. They must evolve to reflect changes in your services, industry regulations, and client needs. Without regular audits, your agreements can quickly become liabilities.

And what began as simple IT support, has evolved into complex service delivery that often includes cybersecurity, cloud management, and compliance oversight too.

Benefits of Auditing Your Contracts:

  • Reduce legal and financial risks.
  • Address compliance with new data privacy laws like GDPR, HIPAA, and CCPA.
  • Ensure alignment with your current service offerings.

Regular contract audits ensure the risk mitigation of MSPs by keeping agreements updated, reducing legal risks, and maintaining compliance with evolving regulations. This helps MSPs align their contracts with current services, build client trust, and support business growth.

Signs It’s Time for a Contract Audit

Many MSPs don’t realize that their contracts become outdated from regulatory changes due to subtle shifts in how services are delivered.

Let’s learn more about MSP contract review below:

1. Regulatory Changes Have Occurred

Data privacy laws and industry regulations are constantly changing. Contract compliance MSPs must ensure their agreements remain updated to meet evolving legal requirements. If your agreements haven’t been updated recently, they may no longer comply with the latest legal requirements.

Key Risks:

  • Exposure to fines and penalties for non-compliance.
  • Disputes over unclear data processing responsibilities.

2. Your Services Have Evolved

As your MSP grows, your service offerings likely expand or shift. If your contracts still reflect your original services, they may be out of sync with your business.

Key Risks:

  • Clients expecting services you no longer provide.
  • Missed opportunities to charge for new or upgraded offerings.

3. Vendor Dependencies Have Increased

Many MSPs rely on third-party providers for critical services, but outdated contracts may not adequately address vendor-related risks.

Key Risks:

  • Being held liable for vendor outages or breaches.
  • Financial exposure to third-party failures

4. Pricing Terms Are Rigid or Outdated

Inflation, rising vendor costs, and expanding service scopes all require flexibility in pricing. If your agreements lack price adjustment clauses, your profitability could suffer.

Key Risks:

  • Reduced margins due to static fees.
  • Difficulty passing costs to clients when necessary.

5. Cybersecurity Threats Have Increased

The rise of ransomware, phishing, and other cyber threats means your contracts must include clear cybersecurity terms to protect your MSP.

Key Risks:

  • Liability for breaches caused by client negligence or criminal acts.
  • Disputes over ignored security recommendations.

Key Areas to Focus on During an Audit

Modern MSP operations are complex, so contract audits need a structured approach. Which means thorough MSP agreement assessment should check if every part of the contract fits the business’s current needs.

  1. Scope of Services: Ensure services and exclusions are clearly defined and reflect your current offerings. Each attachment should specify both included and excluded services to prevent scope creep.
  2. Cybersecurity Responsibilities: Include terms that allocate responsibilities and limit your liability for criminal acts or ignored recommendations. MSPs need documented security recommendations and client acknowledgment of ignored advice, not just generic clauses.
  3. Vendor Risk Management: Add clauses that protect you from liability for third-party failures. Leading MSPs now maintain a schedule of third-party services that acts as a clear waiver of client rights to sue for vendor-related incidents.
  4. Compliance Terms: Incorporate up-to-date Data Processing Agreements (DPAs) and privacy terms to address GDPR, HIPAA, and state-level laws. Modern agreements need dynamic data processing terms that can adapt to new requirements without requiring complete contract revisions.
  5. Pricing Flexibility: Add provisions for price adjustments to reflect rising costs or service upgrades. Consider tying price changes to inflation rates or industry benchmarks for transparency.

The Cost of Ignoring Contract Audits

The stakes for MSPs have never been higher. There are numerous cases where outdated contracts have left service providers exposed to significant liability. A legal review MSPs process ensures your agreements remain aligned with industry standards and regulatory expectations.

Now, let’s see how failing to audit your contracts can lead to:

  • Legal Disputes: Ambiguous terms or outdated agreements can spark costly disagreements.
  • Financial Losses: Static pricing and unaddressed risks can erode profitability.
  • Compliance Risks: Regulatory violations may result in fines and reputational damage.

How Monjur Can Help

At Monjur, we specialize in helping MSPs keep their contracts current and compliant. Our Contracts-as-a-Service (CaaS) solution ensures your agreements evolve with your business, giving you peace of mind and protecting your bottom line.

Don’t wait for a problem to arise. Contact us today to schedule a comprehensive audit of your MSP agreements and learn how Monjur can help safeguard your business.