What is Management Services Agreement Negotiation?
A management services agreement is a contract in which a company hires an external party to handle tasks such as admin or operational support. It has to provide clarity on various aspects of the arrangement, such as what tasks are provided, to reduce the risk of disputes.
Before signing a management services agreement, it’s in your best interest to check if there are any clauses in it you’d like to negotiate.
Read the rest of this article to explore commonly negotiated sections in a management services agreement, how to negotiate it for a favorable outcome, and how a qualified lawyer can assist you through the process with their skill and expertise.
What are Common Terms to Negotiate in a Management Services Agreement?
There are various terms you can negotiate in a management services agreement. The most common include the following:
- Service scope. If this section is vague, clarify the service description so that it’s clear exactly what tasks the provider will perform during the agreement term.
- Management fee. There should be an understanding of how the provider will be paid, which you might want to adjust to match the services provided.
- Confidentiality. To protect sensitive business information, there might be a confidentiality clause which could remain in effect long after the contract ends. Check and discuss this if it feels too restrictive.
- Service Level Agreement (SLA). Establishing measurable performance targets ensures quality, but you should check that they are tied to remedies should the targets not be met.
- Term and renewal. If auto-renewal is included, make sure it has a reasonable notice window to prevent parties from being locked into an unwanted contract that could result in disputes.
How Do You Negotiate a Management Services Agreement?
When negotiating a management services agreement, there are some important things to bear in mind to increase your chances of a successful outcome.
Discuss Extra Charges
Prevent scope creep, which is when the provider is expected to deliver additional tasks without this having been agreed on. It’s important to clarify what is out of scope. Should there be additional tasks required, these must be outlined. It should be specified how much extra compensation will be provided to prevent payment disputes.
Include SLA Remedies
While you and the other party might have agreed on SLA metrics, don’t forget to negotiate remedies for how to deal with underperformance to protect your interests.
Structure Fee and Payment Terms
Make sure that there are details about payments and costs. It should be specified exactly how and when fees can be evaluated or adjusted over time. You should also insert a clause that allows you to pause services if accounts exceed a certain amount of time, such as 60 days after their due dates.
Allocate Liability and Indemnification
You should try to limit your financial exposure to a fixed amount and require both parties to commit to mutual indemnity. This prevents one party from being liable for the other party’s negligence.
Get a Legal Review of Your Contract
Since management services contracts can be technical and detailed, it’s worthwhile to get a legal review of them prior to negotiating their terms.
On ContractsCounsel, one of the largest online legal marketplaces, you’ll connect with vetted and reliable lawyers. They’ll provide clarity on the agreement terms and help you to identify areas for negotiation.
To request a legal contract review from a lawyer on the platform, here are the easy steps to follow:
- Go to the ContractsCounsel marketplace, where it’s free to post a project.
- Select ‘One-time project’ and ‘Contract review.’
- Post your project with some details of what you require to match with suitable lawyers.
- Receive bids. You’ll receive multiple bids from lawyers on the platform who are ready to assist you with a contract review.
- Review the lawyers’ information. The platform provides a range of lawyer data, such as location, expertise, credentials, years of experience, and client ratings.
- Select a lawyer. Based on the platform’s information, choose a lawyer to work with and hire them to review your management services contract for a flat fee.
Do You Need a Lawyer for Management Services Agreement Negotiation?
A lawyer is advisable to hire if you’d like to negotiate terms in a management services agreement. They will conduct various activities, such as:
- Reviewing your agreement to highlight any risks and make suggestions for what you can negotiate.
- Negotiating fees and payment terms, such as late-payment provisions.
- Defining each party’s duties and responsibilities. This prevents ambiguity that can result in disputes.
- Discussing term and termination provisions, such as reasonable notice periods and termination for cause.
- Protecting intellectual property and confidential information that’s shared between parties. They’ll fight to protect your ownership and explain permitted uses to prevent disputes.
- Identifying any missing provisions that should be included in the contract.
- Putting all agreed-on changes in the agreement so that there are no misunderstandings in the future.
- Finalizing the agreement so that you can feel confident about all its terms before you sign it.
Where to Find a Lawyer to Negotiate a Management Services Agreement
If you want to hire a lawyer to help you negotiate the terms in a management services agreement, you don’t have to wonder where to find one. ContractsCounsel puts you in touch with qualified, experienced lawyers who will help you formulate an effective negotiation strategy. They will advise you throughout the negotiation process, helping you to get a better deal and have a successful working arrangement with the other party.
