When it comes to agreements, a Master Service Agreement (MSA) is one of the more common ones. A Master Service Agreement outlines the terms and conditions everyone involved must adhere to at the start of a business relationship. 

Here, we will discuss what an MSA is, the MSA review process, the positives, potential challenges, and more. 

What Is an MSA?

While this is information you likely know in-depth, it is important to periodically review the basics of specific agreement types. 

A Master Service Agreement (MSA) is a contract between two parties, typically someone providing a service (provider) and someone receiving said service (client). The agreement lays the foundation for future transactions and engagements. 

The MSA outlines the terms under which services will be provided, including but not limited to payment terms, responsibilities, and legal obligations. Master Service Agreements are meant to make the contractual process more seamless, enabling businesses to initiate multiple projects or transactions without needing to renegotiate common terms each time. 

For example, a firm may decide to enter into an MSA with a client, agreeing to cover a variety of projects over the course of two years. The contract would outline the general terms of service, the dispute resolution process, intellectual property (IP) rights, and confidentiality clauses. The specifics of each project would be covered in a separate contract.

Why Is an MSA Review Important? 

MSA review is a process meant to certify that the Master Service Agreement's terms are clearly laid out, fair, and in alignment with the interests of both parties. Taking the time to review an MSA can help prevent future disputes, reduce legal risk, and increase the overall efficiency of business-related transactions.

• Clarity of terms: A detailed MSA review certifies that all terms are clearly outlined. This can include payment terms, service level agreements, and conditions for termination. 

• Reduce legal risk: MSA review helps identify potential risks so they can be addressed promptly. The process includes evaluating liability clauses, indemnification terms, and other contractual elements that could make a party vulnerable to certain legal or financial risks if they fail to meet the terms of their obligations properly.

• Maintaining compliance: MSA review is also designed to ensure the agreement complies with the applicable laws and regulations. This is especially crucial in highly regulated industries.

Taking the time to make sure a Master Service Agreement is compliant ahead of finalization is a preventative measure that can save businesses from the hassle of fielding lengthy and costly disputes in the future. 

Key Elements To Examine During an MSA Review

When conducting an MSA review, many aspects of the contract should be examined thoroughly. It is important that each clause is clearly and accurately spelled out for both parties. 

Here are five key elements of a Master Service Agreement that should be closely evaluated during the review process.

1. Scope: The agreement should clearly state which services will be provided. 

2. Payment terms: Payment frequency, amounts, and methods of payment should be explicitly stated. It is important to review clauses regarding invoicing, deadlines, and consequences for late payments.

3. Data security: The MSA should include clauses concerning confidentiality and data security. These clauses protect sensitive information and outline the responsibilities of each party in terms of keeping data secure.

4. Termination: The Master Service Agreement should specify the conditions under which either party can terminate the agreement. Some conditions include required notice periods, early termination penalties, and post-termination obligations (if applicable).

5. Dispute resolution: The agreement should also outline the process for dispute resolution — this includes mediation or arbitration processes as well. Dispute resolution clauses help limit the chances of a lawsuit by troubleshooting the issue before it gets to that point.

As mentioned previously, an MSA review should be as detailed as possible, and while contract review processes can be lengthy — they don’t have to be. LexCheck’s contract review software is accurate and low-risk.

The MSA Review Process 

The review process for Master Service Agreements is very intricate and specific. From the initial assessment to the final analysis, not a single element is left unchecked. 

• The pre-assessment: Prior to conducting a more detailed review, there needs to be a preliminary assessment. The preliminary phase consists of analyzing the MSA agreement as a whole and understanding its contents and requirements.

• In-depth MSA review: After the initial assessment, a more in-depth review happens. This phase will cover the scope of services, the payment terms, and confidentiality. 

Phase two is highly specific and meant to help all parties involved in the agreement make it through negotiations more seamlessly. Contract review is an important part of the process when developing an agreement and must be handled effectively to ensure timely and accurate evaluations.

• Compliance verification: A Master Service Agreement should be in compliance with the laws and regulations that govern it.

• Risk analysis: MSA review helps identify potential risks so they can be handled promptly. The process includes inspecting liability clauses, indemnification terms, and other contractual elements that could make a company vulnerable to legal or financial risks if not executed properly.

• The final review and approval: After completing a detailed examination and compliance review, the final step is to review the MSA one more time as a whole. This means ensuring that all terms are consistent and no clauses conflict with one another. Once the final review is complete, the Master Service Agreement can be approved and signed.

The MSA review process allows both parties involved in the agreement to have peace of mind knowing their contract is clear, consistent, and compliant on all fronts. 

How Can LexCheck Assist in MSA Review?

LexCheck’s review software can evaluate MSAs and catch deviations from your preferred positions quickly and effectively. For instance, LexCheck identifies potentially problematic contract language and explains why it requires attention, as well as redlining it for the legal team reviewing. 

Large Language Model-powered playbooks are trained on the most common provisions and are ready to use on virtually every contract type. Get started with your custom playbook in minutes by uploading your template — your preferred positions are automatically captured. 

This level of automation allows for contract review in significantly less time than doing so manually, freeing up the legal team's time for more in-depth work and client relations.

Tips for Conducting an MSA Review

To ensure a thorough and effective MSA review, consider implementing the following practices to help inform the process. 

Contact Legal Experts

Legal professionals specializing in contract law can provide valuable insights and help identify potential issues that may be easily overlooked by the untrained eye. 

Standardized Templates 

Utilizing standardized MSA review templates can help speed up the review process. It is important to note that these templates will need to be customized to match the specific needs of all parties involved.

Track Document Changes 

Keep a record of all changes made during the review process. If there are disputes in the future or questions concerning the details of the agreement, this record will be quite useful. 

Regular MSA Updates

MSAs need to be reviewed and updated regularly. This is to reflect changes in business practices, new legal requirements, or updated industry standards. Reviewing the contract periodically helps ensure the agreement remains relevant and therefore effective.

Technology Solutions

Leveraging technology like LexCheck can enhance the efficiency of the review process. These tools often include features that enable a user to track changes, manage documents, and maintain compliance.

An MSA review doesn’t have to be conducted by a singular person. There are several resources available to help the review process move along more efficiently, like lawyers and smart technology. 

The Role Technology Plays in MSA Review

Technology plays a significant role in the MSA review process. Certain tools and software can help simplify many aspects of contract management. 

Aspects include but are not limited to:

• Automation: Contract management software typically includes automation features that can handle some repetitive tasks such as drafting, reviewing, and tracking amendments. This feature (and ones like it) reduces manual labor and lessens errors.

• Analytics: Technology solutions can offer insights into contract performance and compliance metrics. This data helps assess the effectiveness of a Master Service Agreement and identify potential areas for improvement.

• Collaboration: Digital platforms promote real-time collaboration among stakeholders. This means faster reviews and even faster approvals since parties can easily share feedback and make the necessary adjustments.

• Contract review: Before the advent of AI, legal teams had to spend time manually reviewing a contract. This takes away time and energy that could be spent on more complex tasks. LexCheck’s contract review software, however, is built to significantly reduce the time that lawyers need to spend reviewing contracts because the AI technology automates much of the contract review process.

• Security: Contract management systems offer high-quality security features to protect sensitive information. Encryption, access controls, and secure storage all enable data to remain confidential and safe.

LexCheck offers advanced contract review solutions that leverage AI and automation to speed up the MSA review process. 

Four Challenges in MSA Reviews and How To Overcome Them

As with anything, MSA reviews can come with challenges as well. However, these issues can often be avoided. 

Here are some potential challenges and how to troubleshoot or prevent them altogether. 

1. Unclear terms: Terms that are not outlined in a straightforward way can lead to many issues during the execution of the agreement. To prevent this from happening, ensure all terms are defined clearly and precisely in your playbook. Use specific language and avoid generic terms that could be open to interpretation.

2. Compliance issues: Maintaining compliance with ever-changing laws and regulations can be difficult. Regularly update the MSA so it reflects any changes in the above. Additionally, consider consulting legal counsel to stay informed about relevant laws.

3. Dispute resolution: Even with an exceedingly well-drafted agreement, disputes may still happen. To help mitigate this, include detailed dispute resolution procedures in the MSA. These procedures might involve attempting mediation or arbitration, and if those fail, resorting to litigation.

4. Managing multiple MSAs: For companies that are handling multiple agreements, managing and tracking different them all can be complex. Implementing a contract management system helps keep track of various agreements and ensure that all terms are being followed.

MSA review can present some challenges, but luckily, many of these potential challenges are not too difficult to prevent or fix if they do happen. 

Final Thoughts

MSA review is a process meant to certify that the Master Service Agreement's terms are clearly laid out, fair, and in alignment with the interests of both parties. Taking the time to review an MSA prior to its execution can help a company in many ways.

Reviews aid in the prevention of future disputes, reduce legal risk, and increase the overall efficiency of business-related transactions. LexCheck can help speed along what is often a lengthy review process and get both parties to signing sooner — saving valuable time and revenue. 

Sources: 

What Is a Master Service Agreement? | Indeed

Indemnify | Cornell Law

Mediation | Cornell Law

Arbitration: What It Is, How It Works, Special Considerations | Investopedia