Management services agreement template

Understanding and managing business contracts can be challenging, but a well-drafted management services agreement (MSA) can simplify the process. 

Whether you're new to MSAs or seeking to refine your current approach, this guide will help you understand their purpose, key components, and best practices for managing them effectively.

What is a management services agreement?

A management services agreement (MSA) is a contract between two parties where one party (the service provider) agrees to provide specific management and administrative services to the other party (the client). These services can range from financial management and administrative support to consulting and advisory roles. 

MSAs are essential in defining the scope of services, terms of engagement, compensation, and other critical details. This clarity helps prevent misunderstandings and sets clear expectations for both parties.

What is the purpose of a management services agreement?

The primary purpose of an MSA is to outline the responsibilities and expectations of both the service provider and the client. It serves several key functions:

Clarity: By clearly defining the scope of services, MSAs help prevent disputes and ensure both parties are aligned.

Accountability: MSAs specify performance standards and metrics, holding the service provider accountable for delivering agreed-upon services.

Legal protection: The agreement provides legal protection for both parties by outlining terms and conditions, including termination clauses and dispute resolution methods.

Financial terms: MSAs detail compensation structures, payment terms, and any additional costs, ensuring financial transparency.

Compliance: The agreement ensures that services are provided in compliance with relevant laws and regulations.

Who manages management services agreements?

Management services agreements are typically overseen by individuals or teams within the client and service provider organizations who are responsible for contract management. 

These may include:

• Legal teams: Legal professionals ensure the agreement complies with laws and regulations, mitigating potential legal risks.
• HR teams: Human resources may be involved in agreements related to employee management services, ensuring alignment with company policies.
• Commercial teams: These teams handle the business aspects, including negotiation, performance tracking, and ensuring the services align with business goals.
• Operations teams: They may oversee the practical implementation and day-to-day management of the services outlined in the MSA.

When are management services agreements used?

Management services agreements are used in various scenarios where one party requires ongoing management or administrative services from another party. Common use cases include:

Consulting services. Engaging consultants to provide strategic advice, management support, and expertise in specific areas such as marketing, IT, or business development.

Outsourcing administrative functions. Contracting out administrative tasks such as payroll processing, human resources management, IT support, and customer service.

Healthcare management. Agreements between healthcare providers and management companies to handle administrative and operational tasks, such as billing, compliance, and facility management.

Financial services. Engaging firms to manage accounting, bookkeeping, financial planning, investment management, and tax preparation services.

Property management. Contracts with companies to manage real estate properties, including maintenance, tenant relations, rent collection, and leasing activities.

What should a management services agreement template include?

A detailed management services agreement (MSA) template should cover the following essential elements to ensure clarity and protection for both parties involved:

1. Parties involved
   • Clearly identify the client (the party receiving the services) and the service provider (the party delivering the services).
   • Include full legal names, addresses, and contact details for both parties.
2. Scope of services
   • Provide a detailed description of the specific services to be provided.
   • Define any limitations or exclusions to the services.
   • Include deliverables, timelines, and milestones.
   • Specify responsibilities of both parties to avoid ambiguity.
3. Term and termination
   • Define the duration of the agreement, including start and end dates.
   • Outline conditions for early termination by either party.
   • Include procedures for notice of termination and any penalties or fees associated with early termination.
4. Compensation
   • Clearly outline payment terms, including rates, frequency of payments, and method of payment.
   • Specify any additional costs or expenses that the client may be responsible for.
   • Include provisions for late payments, such as interest or penalties.
5. Performance metrics
   • Establish clear standards and metrics for measuring the service provider's performance.
   • Define how performance will be monitored and reported.
   • Include consequences for failing to meet performance standards, such as remediation or penalties.
6. Confidentiality
   • Include clauses to protect sensitive and proprietary information of both parties.
   • Define what constitutes confidential information.
   • Outline obligations regarding the use and disclosure of confidential information.
   • Specify the duration of the confidentiality obligations, even after the agreement has ended.
7. Dispute resolution
   • Specify methods for resolving disputes, such as mediation, arbitration, or litigation.
   • Define the process for initiating dispute resolution.
   • Include any specific jurisdictions or governing laws applicable to the agreement.
8. Compliance
   • Ensure services comply with all relevant local, state, and federal laws and regulations.
   • Include clauses requiring the service provider to maintain any necessary licenses or certifications.
   • Outline procedures for handling non-compliance issues.
9. Amendments
   • Outline procedures for making changes or amendments to the agreement.
   • Require written consent from both parties for any modifications.
   • Specify how amendments will be documented and incorporated into the existing agreement.
10. Signatures
    • Provide spaces for authorized representatives of both parties to sign and date the agreement.
    • Include printed names, titles, and contact information of the signatories.
    • Ensure that signatures are witnessed or notarized if required by jurisdiction or company policy.

Additional Considerations

• Force Majeure: Include a clause addressing circumstances beyond the control of either party (e.g., natural disasters, pandemics) that may prevent the fulfillment of contractual obligations.
• Intellectual Property: Define the ownership and usage rights of any intellectual property created or used during the provision of services.
• Indemnification: Include provisions for indemnifying and holding harmless each party against certain liabilities and claims.
• Insurance: Specify any insurance requirements for the service provider, such as liability insurance or workers' compensation.
• Entire Agreement: State that the agreement constitutes the entire understanding between the parties and supersedes all prior agreements, representations, and warranties.

By including these detailed elements, a management services agreement template will be comprehensive and provide a clear framework for the relationship between the client and the service provider.

The manual approach to managing management services agreement templates

Managing MSAs manually involves several detailed steps and can be highly time-consuming. Here is a closer look at each stage of the process to get a better understanding of the friction and responsibilities occurring at each stage of the contract lifecycle.

1. Drafting the agreement
   1. Initial template creation: Legal or commercial teams begin by using a basic template. This template typically includes standard clauses and provisions relevant to MSAs.
   2. Customization: The template must be customized to fit the specific needs of the client and the service provider. This includes defining the scope of services, setting performance metrics, and outlining financial terms.
   3. Legal review: The initial draft is often reviewed by legal teams to ensure compliance with relevant laws and regulations. They check for legal sufficiency and address any potential legal risks.
2. Reviewing the draft
   1. Stakeholder input: The draft agreement is circulated among multiple stakeholders within both organizations. This can include legal, HR, finance, and operational teams.
   2. Feedback collection: Each stakeholder reviews the draft and provides feedback or suggests modifications. This feedback is typically collected via email, meetings, or document collaboration tools.
   3. Revision cycles: The draft may go through several rounds of revisions to incorporate feedback. Each revision must be reviewed and approved by all relevant stakeholders, which can be time-consuming.
3. Negotiating terms
   1. Initial negotiations: Both parties engage in negotiations to agree on the terms of the MSA. This may involve face-to-face meetings, conference calls, or email exchanges.
   2. Term adjustments: Negotiations often lead to changes in terms, such as pricing, scope of work, or performance metrics. Each change must be documented and agreed upon.
   3. Legal safeguards: Legal teams may need to reassess the agreement for compliance and risk after each round of negotiations.
4. Approval process
   1. Internal approvals: Once negotiations are complete, the final draft must be approved by senior management, legal counsel, and other key stakeholders within both organizations.
   2. Documentation: Approval processes often require formal documentation, including signatures from authorized personnel. This ensures accountability and formal agreement.
5. Signing the agreement
   1. Signature collection: The agreement is signed by authorized representatives of both parties. This may involve physical signatures or the use of electronic signature platforms.
   2. Authentication: For added security, signatures may need to be notarized or authenticated, particularly in jurisdictions with stringent legal requirements.
6. Storage and organization
   1. Physical filing: In traditional setups, signed agreements are stored in physical filing systems. This involves categorizing and labeling documents for easy retrieval.
   2. Digital storage: Many organizations use digital filing systems, where contracts are scanned and stored in databases or cloud storage solutions. Proper indexing and tagging are essential for efficient retrieval.
7. Monitoring and compliance
   1. Performance tracking: The client must continuously monitor the service provider’s performance to ensure compliance with the terms of the MSA. This involves regular check-ins, performance reviews, and status reports.
   2. Compliance audits: Periodic audits may be conducted to ensure that both parties are adhering to the terms of the agreement. This can involve reviewing documentation, verifying financial transactions, and ensuring regulatory compliance.
8. Renewal and amendments
   1. Renewal process: As the contract nears its expiration date, both parties need to decide whether to renew the agreement. This involves reviewing the terms, negotiating any necessary changes, and obtaining approvals.
   2. Amendments: Throughout the life of the MSA, amendments may be necessary to address changes in scope, pricing, or other terms. Each amendment must go through the same drafting, reviewing, negotiating, and approval processes as the original agreement.
   3. Documentation and storage: Any amendments or renewals must be documented and stored alongside the original agreement for a complete contract history.

The challenges of manually managing management services agreements 

This manual process is prone to several challenges:

Inefficiencies: Manual processes involve multiple steps and stakeholders, leading to delays and inefficiencies. Each step, from drafting to approval, requires significant time and coordination.

Human error: The likelihood of errors increases with each manual step, including missed revisions, overlooked terms, and misfiled documents.

Compliance risks: Ensuring compliance with regulatory requirements and internal policies can be difficult without automated alerts and checks, increasing the risk of non-compliance.

Limited visibility: Tracking the status of agreements, performance metrics, and renewal dates is cumbersome without a centralized system, leading to potential missed deadlines and obligations.

Resource intensive: Managing MSAs manually requires considerable human resources, diverting attention from strategic tasks and core business activities.

How Juro solves these problems for management services agreements

Juro's AI-native contract management platform addresses the challenges of managing management services agreements (MSAs) manually by offering several key features:

Juro improves efficiency

Automated workflows: Juro automates the entire contract lifecycle, from initial drafting to final approval. Customizable workflows ensure that each step is completed efficiently, with minimal manual intervention.

Template management: Juro allows for the creation and storage of customizable templates, enabling quick generation of MSAs tailored to specific needs. This reduces the time spent on drafting new agreements from scratch.

Real-time collaboration: Juro’s collaborative workspace lets multiple stakeholders work on contracts simultaneously, reducing the time needed for feedback and revisions. Comments and changes are tracked in real time, ensuring swift resolution of issues.

Juro puts safeguards in place to prevent errors

AI-powered drafting: Juro uses AI to draft contracts based on pre-defined templates and data inputs, ensuring consistency and accuracy across all agreements. This reduces the risk of errors that can occur with manual drafting.

Compliance checks: Juro’s AI tools automatically check for compliance with relevant laws and regulations, flagging any potential issues before they become problems. This ensures that all contracts meet legal standards.

Version control: Juro maintains a detailed version history of each contract, allowing users to track changes and revert to previous versions if necessary. This reduces the risk of discrepancies and ensures that all stakeholders are working with the latest version.

Juro streamlines contract compliance management

Automated alerts: Juro provides automated alerts for key dates, such as renewal deadlines and compliance reviews. This ensures that no critical dates are missed and that contracts are regularly reviewed for compliance.

Regulatory updates: Juro keeps track of regulatory changes and updates, automatically adjusting contract templates and compliance checks to reflect new requirements. This reduces the risk of non-compliance due to outdated information.

Audit trails: Juro creates comprehensive audit trails for all contract activities, documenting changes, approvals, and interactions. This ensures transparency and accountability, which is crucial for regulatory compliance.

Juro improves visibility into contracts for the wider business

Single repository: Juro provides a centralized contract repository for all contracts, making it easy to access and manage MSAs. This eliminates the need for decentralized storage systems and reduces the risk of lost or misfiled documents.

Search and retrieval: Advanced search capabilities (OCR capabilities) allow users to quickly find specific contracts or clauses, improving efficiency in contract management and retrieval.

Dashboard overview: Juro’s dashboard offers a comprehensive overview of all contracts, including statuses, key dates, and performance metrics. This provides valuable insights and enables proactive management of contractual obligations.

Why businesses use Juro for management services contracts

Businesses choose Juro for managing their management services contracts due to its ability to streamline and enhance contract management processes. Here are the key reasons:

Automated administrative tasks

Juro automates routine contract admin tasks such as sending reminders, tracking changes, and generating reports. This automation reduces the burden on human resources, allowing teams to focus on more strategic activities that drive business growth and efficiency.

Reduced legal workload

Juro's self-serve capabilities enable teams to create and manage contracts without constant legal intervention. This reduces the workload on legal teams, freeing them to focus on more complex legal issues rather than routine contract tasks. By empowering non-legal teams, Juro accelerates the contract lifecycle and improves overall productivity.

Integration with existing tools

Juro seamlessly integrates with other essential business tools. This integration ensures that contract management processes fit naturally into existing workflows, minimizing disruption and enhancing efficiency. By working within the systems that teams already use, Juro streamlines contract management and improves operational coherence.

Juro's AI-native contract automation platform empowers all teams to create, agree, execute and manage contracts up to 10x faster than traditional tools. To find out more, hit the button below to book your personalized demo.