I had the opportunity to sit down with one of the top Legal experts in our industry, Brad Gross, last week when we were at our Peer Group Meetings. For those of you that aren’t familiar, Brad is one of the best MSP lawyers in the country, and I 100% recommend his work.
We talked about several topics that are important to MSPs so buckle in as this article has a bit of length to it. You can also check out the video of the interview below.
The Importance of Agreements
As MSPs become increasingly ubiquitous and cloud services gain even more traction, companies are relying on MSPs in ways they never have before. The days of handshake deals are long gone. With this shift, the allocation of responsibilities is becoming a focal point. When something goes wrong, companies tend to point outward, and in this case, they will point to their MSPs. That’s why agreements are crucial. They provide a strong legal foundation that protects MSPs as the industry evolves. MSPs must position themselves in a stable and legally sound place to avoid potential issues down the line.
AI in the MSP Space
Artificial Intelligence (AI) is a hot topic in the MSP space. While AI has the potential to revolutionize the industry, it’s not yet ready to replace human technicians entirely. AI should be seen as a tool to amplify and augment existing solutions, rather than a complete replacement for human expertise. MSPs should exercise caution and not rush to cut down staff in favor of AI implementation. At this point, AI still requires human intervention and oversight to ensure optimal performance.
The Pitfalls of AI-Generated Contracts
AI-generated contracts are gaining popularity, with platforms like ChatGPT offering to draft contracts at a fraction of the cost of hiring a lawyer. However, relying on AI for contract drafting can be a risky move. While AI can generate a boilerplate agreement, it lacks the ability to understand the nuances and realities of the industry. Important details and industry-specific considerations can be overlooked, leading to ineffective and potentially harmful agreements. MSPs should exercise caution and ensure their contracts address specific needs and potential challenges. In other words, talk to a lawyer: Ideally an MSP specific lawyer.
Dealing with Clients with Past Due Invoices
One common issue faced by MSPs is non-payment from clients. When clients fail to pay, MSPs may wonder when it is appropriate to shut off their services. While each situation is unique, there are a few general principles to consider. First, according to foundational contract law, if one party doesn’t perform, the other party is not obligated to continue providing their services. However, it’s essential to exercise caution and not shut off services immediately. Following the example of utility companies, it’s advisable to provide notice and give the client an opportunity to rectify the situation. A step-by-step approach can help manage expectations and maintain a professional relationship while still protecting the MSP’s interests. In this case, you should notify the client that their invoice is past due. Send a second notice if payment is not received. On the third notice notify the client that you intend to shut off services on a specific date. Then, you shut down services if they don’t pay after the third notice.
Managing Expectations and Communication
Managing expectations and fostering open lines of communication with clients is vital in the MSP industry. Contracts should be used as a tool to explain how the business relationship will operate. Instead of treating contracts as mere formalities, MSPs should ensure they are clear, concise, and written in plain English. This clarity helps avoid misunderstandings and disputes in the future.
Handling New Commerce Experience (NCE)
The New Commerce Experience (NCE) is a growing trend pushed by Microsoft, and other companies are likely to follow suit. MSPs must address NCE in their contracts to adapt to this new way of doing business. For contracts signed prior to the introduction of NCE, it is advisable to propose an addendum that outlines the terms and conditions related to NCE. This addendum should explain the implications of the discounted rates and require the client to commit to paying the full subscription cost in case of termination. It is crucial to manage expectations and ensure the client understands the ongoing commitment involved in NCE agreements.
Conclusion
Legal considerations are becoming increasingly important in the MSP industry. MSPs should position themselves legally and protect their interests through well-drafted agreements. While AI has its merits, it is not a complete replacement for human expertise, and caution should be exercised when using AI-generated contracts. Managing expectations, maintaining open lines of communication, and adapting to industry trends like NCE are essential for long-term success. By prioritizing legal considerations, MSPs can navigate the evolving landscape with confidence.
How to contact Brad
Brad can be reached several ways:
- Website: bradleygross.com
- Email: brad@bradleygross.com
- Podcast: technologyBRADcast.com