10 Things to Consider When Writing MSP Contracts

The contract is probably one of the most important parts of a managed service provider’s (MSP’s) relationship with their clients, and there are some major items to consider when you’re setting it out. Always keep in mind, any legal contract needs to be reviewed by an attorney—one who understands your business, contracts, and the jurisdiction that governs that contract.

Contracts serve multiple purposes, but the most important, in my opinion, is to set expectations for the relationship between the client and the MSP. By establishing the boundaries and ground rules early on, you can prevent disagreements occurring in the future.

The second most important reason to have a contract in place is to limit the MSP’s liability and therefore, risk. This becomes exponentially more important as you scale and have more employees representing your company in various capacities.

How long should your contract be? I have seen contracts that are two pages and contracts that exceed 22 pages with appendices. Neither is necessarily right or wrong, it just depends on your business environment.

Below is a broad outline of what you might include in your contracts. We will be going into these items in more detail in future posts, but this should get you thinking about what needs to be included in your contracts.

1. Who

Who are the parties involved? Of course, you have the client and yourself, but what about any third-party vendors, like line of business (LOB) software vendors and phone or print/copy vendors that you are expected to deal with on the client’s behalf? You should outline these relationships in detail.

2. What

What services are you providing? What devices are you covering? The inverse of those two questions is also important. What services are you not providing? What devices are not covered? What do you expect the client to provide in terms of access, resources, etc.?

3. Where

Are only remote services included or are on-site services included as well? If on-site is not covered, what is the hourly rate to do any on-site work? What client locations are included? Are on-site visits for employees that work from home included?

4. When

What are your normal operating hours? When are your company holidays? What are your SLAs for response time, resolution, etc.? Do out-of-hours services need to be charged at a different hourly rate? How long is the contract for? How can it be cancelled?

5. How

What are your processes for customers to submit a service request? How do they escalate an issue? How are customers expected to pay you and how often?

6. Confidentiality

You have access to your client’s data. Assure them that you recognize that this access is a point of concern and that you are bound to provide reasonable confidentiality in regard to their data and business practices.

7. Non-Hire

Your employees represent a significant asset to your business. Protect yourself from customers engaging your employees directly by warning them not to do it and providing a financial recompense to yourself if they do.

8. Baseline

This is critical for “all-you-can-eat” plans. You must define your baseline for accepting devices and LOB software as part of your cover. For example, workstations must be less than three years old and still under manufacturer’s warranty, servers must be less than five years old and still under manufacturer’s warranty, LOB software must be up-to-date and have an active support contract in place, etc. Remember to specifically exclude devices that do not meet your criteria.

9. Liability

There is a lot of boiler plate text you can use for this, but it is best handled by your attorney. Just make sure you include wording that covers Warranties, Disclaimers, Indemnification, Remedies, etc.

10. General Provisions

Again, this is mostly boiler plate text, but it is critical to the enforcement, effectiveness, and overall performance of the contract. It can also be very specific to your situation and jurisdiction, so make sure you consult an attorney on this part as well.

This is, of course, not an exhaustive list. Your business needs might have additional requirements, but you can use this list as a way to start your own outline of what you want covered in your managed services contract. By the way, many of these items apply for break/fix engagements as well.

I strongly suggest using a contract with any customer that you have a recurring revenue relationship with to set expectations properly. Once you have your outline, you have a basis for engaging your attorney to formulate that outline into a real contract. As tempting as it may be to do your contracts yourself, please engage a professional! Would you prefer to support a network you installed or one the client built themselves? Most likely your attorney is the one who will have to defend the contract if it ever needs to be defended, so let them write it.

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