Standardizing your master services agreements (MSAs) can reduce unnecessary friction in your sales contracts, empower teams with self-serve and speed things up. How do we do it?
This deep dive looks at who MSAs affect, why businesses might choose to standardize them, how they do it and what the benefits are. Use the navigation below to find out more, or explore our deep dives on other contracts, like NDAs.
What’s an MSA?
In a master services agreement (MSA), a business and its customer agree most of the terms that will govern their commercial relationship. MSAs are common in high-velocity sales organizations, especially SaaS businesses, as they enable reps to send out order forms with key commercial terms for quick decisions, while the lengthy legal terms are appended in the MSA for legal teams to pore over.
Who do MSAs affect?
The stakeholders affected by an MSA will vary depending on your business. For example, the MSAs we typically see in Juro concern of various people at different points:
Salespeople. Account executives and sales managers append MSAs to the order forms they send out to prospective customers - for example, other businesses buying SaaS. Salespeople are incentivized to get deals over the line, which can result in unsanctioned deviations to terms in the MSA, particularly if the contracts are not created and controlled from templates.
Legal counsel. A company’s in-house legal team would typically ‘own’ the commercial terms, defining and approving any changes to standard positions.
Approvers. Different teams in the business might need approval oversight of MSAs, such as sales leadership, finance and perhaps even C-suite, depending on the impact of the contract.
Authorized signatories. Who this is will vary, company to company.
Customers. Potential customers signing up to the terms within the MSA are, of course, key stakeholders in the contract.
Why standardize MSAs?
If your company’s MSA isn’t standardized, contract creators (for example, salespeople) may send out contracts that include unapproved terms. These might be discounts that finance wouldn’t allow, data use provisions that compliance would reject or indemnity caps that would terrify legal.
There’s also the risk of mistakes in signed contracts, or old versions of MSA templates, since superseded, going out. Left unchecked, non-standardized MSAs can expose the business to significant legal and commercial risk.
The MSA is a key touchpoint: it typically accompanies the order form or sales contract, and as such is the foundation of your future relationship with the customer. But the document itself is often dense, unfriendly, extremely long and full of legalese. If not standardized, these problems can compound, with customers having a bad experience that leads to a lower probability of signing without negotiation.
How to standardize an MSA
When creating a standard MSA to be rolled out at scale from a template, these are elements you should consider.
Focus on purpose
It’s useful to remember what this document is for in the first place. It’s called a ‘master services agreement’ because, historically at least, it was a framework that governed multiple statements of work (SOWs).
Before SaaS came along, an IT project was discrete: a company would pay for some software, and then someone would turn up at the office with lots of discs and install it. That first project would be governed by a SOW. Later, there’d be another project with another SOW - but the MSA would sit above both, and the new SOW would be governed by the terms and conditions of that MSA.
Today, for most SaaS businesses, projects don't work like this anymore. Companies buy services by licence or number of users, with a subscription that can be renewed. But while SOWs no longer really exist, we still talk about MSAs, which continue to provide the detailed, overarching legal framework upon which key commercial terms can be layered.
Know your unbending positions
There will be legal provisions in your MSA that you won’t bend on under circumstances. Often indemnities are limited by vendors’ insurers, for example. If data is kept in servers based in the EU, it’s unlikely that this can be changed on a contract-by-contract basis. It’s in any business’s interests, of course, to bend on as few terms as possible - this is why some MSAs are kept in a separate document, linked to from the order form, encouraging people to sign and "assent to the terms of the MSA" without scrutinizing them too much.
Codify your flexible positions
The terms in your MSA that you’re prepared to concede on should be defined by the legal team. Proactively setting this out with a playbook is a well-established approach. If your playbooks are robust and well socialized, legal teams can (within a contract collaboration platform) empower sales teams to negotiate contracts without their involvement. This gives legal visibility and approval rights without adding friction; at the top level, MSAs will be standardized, but with enough flexibility to keep deals moving.
Don't forget good design
Legal design is more than a buzzword and is now the reality at forward-thinking businesses around the world. When standardizing your MSA, think about the experience your end user will have when reading the contract – and consider what impact this might have on your commercial relationship. Verity White’s reverse sandwich approach is a great way to surface the terms that matter most to both parties, rather than burying them and hoping for the best. Check out our blog for more on legal design.
There was a time when it was acceptable for customers to have a friendly, warm, consultative relationship with commercial teams, and then pivot into a scary, jargon-rich world of scanning and printing ugly documents with legal teams. These days are over.
If the MSA is a key part of the transaction it enables and the commercial relationship it establishes, then make sure it has at least some consistency with company branding. Use a contract collaboration platform with a dynamic editor, so you can include logos, images, GIFs and other graphical elements that will help your contracts stand out from the crowd. Check out how this looks in Juro below 👇
Create beautiful contracts with Juro's no-code editor - click above to try it 👆
Automate your MSAs
MSAs that are created and managed across several different systems - typically Word, email and DocuSign - suffer version control issues and data loss, as changes (and the audit trails behind them) often don’t survive the transition from one system or version to another. An automated workflow, with your legal team defining the template and approving any changes through negotiation, is much safer, more efficient and more likely to deliver a standardized MSA every time.
Useful features for standardizing an MSA
If you’re looking to use software to standardize your MSAs, then these features will all help to make that process easier:
Internal/external commenting. This is useful to flag contentious provisions that perhaps shouldn't be standardized.
Approval workflow. This allows approvers in legal or finance can check that no changes have been made.
Tagging by value. Contracts above a certain value might be permitted to deviate from standard terms more frequently. If you use a contract collaboration platform that lets you tag contract elements as metadata, then you can tag those financial values for each contract. If you then sort your contracts by value, using this metadata, in a custom dashboard, it will help you see which contracts are relevant for the higher threshold.
What about when standardizing your MSA isn’t possible?
Every now and then, departing from your standard terms – even significantly – may be unavoidable. For example, if a SaaS company relies on one huge customer at first, like a bank, then with the best will in the world, its legal team will want non-standard changes you’ll have to be prepared to live with. In that case, make sure you have an escape route: being able to export to Word if you absolutely have to.
If your contract workflow is supercharged with all these features, it will enable commercial and business teams to standardize MSAs, leading to less risk, more certainty, and - hopefully - happiness on both sides of the contract.
Is standardizing MSAs a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?
If so, get in touch and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.