Negotiating Master Service Agreements for IT Services
Many companies contract with third parties for IT services, and these relationships are often governed by Master Service Agreements (MSAs). Reviewed and negotiated by high-level corporate managers or legal departments, MSAs delineate the working relationship for a complex, multi-stage project or long-term arrangement.
Unlike some contracts that can be drawn up using templates found online, MSAs require significant customization based on the particular parties and projects. A well-drafted MSA serves as a road map containing benchmarks, deliverable timelines, implementation expectations, final evaluations, and acceptance of the work done.
MSAs cover a considerable scope of IT services that would typically take hours, days, or weeks to review and negotiate. However, advances in legal technology now allow the completion of this work by an order of magnitude. Companies on the leading edge are saving time and money by employing the latest artificial intelligence (AI) contract platforms to negotiate the most comprehensive Master Service Agreement for IT services in the shortest timeframe.
What Is Covered in a Master Service Agreement for IT Services?
By setting mutually agreeable boundaries, providing effective ways to maintain progress, and proactively resolving potential areas of dispute before they arise, MSAs offer a flexible framework for a project’s progress and completion.
The following elements are some of those that are considered essential in drafting, reviewing, and negotiating MSAs:
- Intellectual Property Ownership: A delineation between customer data and data that remains with the service provider is necessary. Copyrights, patents, trademarks, and trade secrets must be clearly specified, along with licensing rights that can provide one way to reuse proprietary technology from client to client. And while confidential information can be shared in a unilateral or mutual fashion, a clause must indicate the preferred method. Additionally, a clause should detail how data is stored, secured, and destroyed.
- Dispute Resolution: Increasingly, MSA terms have become a point of litigation, as lawsuits concerning MSA terms have tripled since 1985. The MSA must contain flexible language that can adjust to changing circumstances and provide an effective process to resolve differences and ease tensions without requiring judicial intervention. If a lawyer is needed, the agreement should stipulate which party is responsible for covering the cost of collection or legal fees. Indemnification clauses are among some of the most heavily disputed areas of MSA negotiation. Frequently, customers seek broad indemnification provisions as they do not understand the technology well enough to identify risks; whereas, service providers seek exceptions to avoid paying for the customer’s misuse of technology. Limitation of liability may include damage exclusions, upper limits, and filing deadlines.
- Termination: The MSA must provide the conditions for a clear end to the project. Clearly defining a “job well done” or prerequisites for ending the agreement early due to unmet obligations fall under the termination clauses. The service provider must request the ability to suspend work if payment is not received on time. Any ongoing warranties must be enumerated here as well.
Companies or legal teams that draft many such agreements often develop a playbook of best practices that can apply broadly to most MSAs. Tracking analytics on the most successful negotiated MSAs can also help in reviewing and negotiating new agreements. But how can corporate legal departments accomplish all of this busy, behind-the-scenes work more efficiently?
How AI Accelerates Master Service Agreement Negotiations
Artificial intelligence platforms are now assisting legal departments in reviewing and negotiating Master Service Agreements for IT services. The process is almost fully automated:
- Companies upload their MSAs and playbooks onto the platform.
- The platform scans the data, assessing patterns and marked-up documents.
- Changes are tracked over time, with analytical data stored and “remembered” by the AI.
- New documents are added for review through email or upload.
- The redlined document is emailed back with suggested changes in minutes.
- All changes can be accepted with the click of a button or analyzed by your legal staff.
- Staff can make notes on specific sections that are subject to change with each deal.
- With each new document added, the platform learns how to review and negotiate better.
LexCheck Charts New Territory With Groundbreaking AI Platform
Forget everything you thought you knew about the capabilities of contract management software. Far from the template creators of old, LexCheck’s AI-powered contract negotiation platform not only checks contract documents for adherence to playbook standards and best practices but actually negotiates and rewrites the contract language with stunning precision.
Years of research into machine learning have led to this innovation in legal tech that can relieve legal departments of the most time-consuming and mundane aspects of reviewing and negotiating contracts like Master Service Agreements and many others. LexCheck ensures that these agreements adhere to corporate playbook standards and best practices while attending to any terms that might prove a sticking point in negotiations.
Request a demo to discover how LexCheck can help your legal department work smarter and more efficiently by leveraging the power of AI. Even complex contracts—like a Master Service Agreement for IT services—can be reviewed in minutes.
Gary Sangha | Founder & CEO
Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.