What does an MSA cost? A service provider who needs a comprehensive service agreement may ask this question. Let’s explore MSA costs and review general information about master service agreements and how they work.
How Much Does an MSA Cost?
An MSA agreement, or master services agreement, is a legal contract between a party that provides services and a client that pays for services. The MSA establishes specific terms and conditions for all current and future transactions between the parties.
It is common for businesses to use an MSA when they know that they will be conducting ongoing business with another party. For example, a supplier who will do continued business with a shipping company. The MSA lays out both parties' broad rights and responsibilities so they can use a more focused contract for each transaction.
MSAs are commonly found in technology because many tech companies have long-term business relationships. MSAs will also be used in the following business relationships:
- Client and vendor relationships
- Government contracts
- Union negotiations
An MSA is essential because it lays out the terms and conditions for a long-term business relationship between two parties and makes future contract processes faster. However, to fully protect the interests of both parties, this contract needs to be drafted correctly. For this reason, it is common for businesses to hire a contracts attorney to draft an MSA.
An experienced contracts lawyer familiar with MSAs will know what clauses and terms must be included in the agreement to protect both parties and facilitate a good working relationship between the two parties.
Based on ContractsCounsel's marketplace data, the average cost of an MSA is $561.25.
What's Typically Included in an MSA?
The terms and conditions in an MSA will vary based on the parties and the industry. These agreements are easy to customize, and an experienced attorney will know what your MSA should include.
It is common to find the following terms and conditions in every basic MSA:
- Confidentiality Clause. A non-disclosure and confidentiality agreement protects both parties because they agree not to share company secrets with outside parties.
- Duration. How long the contract will be in effect.
- Delivery requirements. Terms and conditions surrounding how and when products will be delivered.
- Dispute resolution. How the parties will resolve issues. It is important to put a dispute resolution agreement in place.
- Intellectual property rights. Intellectual property rights will be found in MSAs in the technology industry. The parties should outline how patents and other intellectual property ownership will work and who maintains rights to the intellectual property.
- Limitations of liability. Protects one or both parties from liability if damages occur during the business relationship.
- Payment terms. Total costs and a payment schedule.
- Governing Law. Suppose a dispute over the contract arises. Which jurisdiction will control resolving the issue, whether arbitration or a lawsuit.
- Warranties. Promises were made by both parties pertaining to the transaction.
- Work standards. Lays out measures for good work by each party.
- Indemnification clause. One party or both parties sign a hold harmless agreement for any damages that may occur.
- Insurance. In some industries, insurance is required by one or both parties.
- Termination of the agreement. How can the parties end the agreement, and are any penalties for terminating the agreement earlier than described in the MSA.
An MSA must be as detailed as possible. This will ensure that both parties understand their rights and responsibilities, reducing the chances of a dispute arising between them.
Examples of MSA Projects
MSA Drafting Services
Many businesses that require an MSA choose to hire an attorney to draft the contract. An MSA can be a very complex contract depending on the industry and the particular terms and conditions. Therefore, it is important to be drafted correctly to protect both parties and legally bind them.
An experienced contracts lawyer familiar with MSAs will know what terms and clauses must be included in the agreement to protect both parties interests and comply with all contract laws.
MSA Review Services
Depending on the industry and business relationship, one party typically has the MSA drafted and presents it to the other party. However, before signing a legally binding agreement, it is recommended that the non-drafting party have a lawyer review the MSA.
It is important to remember that contracts often favor the drafter. This means that the non-drafting party may be at a disadvantage, or the terms may not be fair. Therefore, when a company hires its lawyer to review the MSA, the lawyer will review the contract with the client’s best interests in mind.
Drafting an MSA Cost
Drafting an MSA can be a complicated job that will require the time and knowledge of a licensed attorney. In addition, a lawyer will need additional specialized expertise in intellectual property law if the contract is for a specialized industry like technology.
According to ContractsCounsel's marketplace data, the average MSA drafting costs are $750.00 across all states and industries.
Reviewing an MSA Cost
Reviewing an MSA will also require specialized knowledge. First, the attorney will read over the contract to ensure that it is drafted correctly, protects the client’s rights, and is legally binding.
ContractsCounsel's marketplace data shows the average MSA review costs to be $515.00 across all states.
How Do Lawyers Charge for an MSA?
When a lawyer is hired to draft an MSA, they must charge their clients for their legal services. Most contract attorneys use one of two popular fee structures: hourly rates or flat fee rates.
Hourly Rates for an MSA
When a lawyer uses an hourly fee structure, they will charge clients at a set hourly rate for the number of hours it took to complete a project. This is the best payment method for lawyers who want to ensure they are fully compensated for all of their time on a case or project.
The marketplace data for ContractsCounsel shows that a contract lawyer's average hourly rate ranges from $200 - $350 per hour.
Flat Fee Rates for an MSA
When a client hires an attorney for a specific purpose, like drafting an MSA, the attorney may quote the client a flat fee to complete the task instead of charging hourly.
To come up with a flat rate, the lawyer will estimate the amount of time it will take to finish a client's project and quote the client a flat rate fee to be paid upfront. Clients prefer this payment structure because they know how much legal services will cost. They don’t worry about a surprise bill at the end of representation.
On the downside, if a lawyer underestimates how long a project takes to finish, they will not be compensated for their additional time.
ContractsCounsel's marketplace data shows an MSA. The average flat fee MSA is $561.25.
Get Help with an MSA
Do you need help with an MSA project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from contract lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.