MSA Risk Checklist for Consulting Firms (Supplier Perspective)

Table of Contents

1. How to Use This Checklist
2. High Risk Clauses
3. Medium Risk Clauses
4. Low Risk / Standard Clauses
5. Sections to Remove for Consulting Engagements
6. Standard Redline Language Templates
7. Creating the Word Compare Files

1. How to Use This Checklist

Read the MSA in full before making any recommendations. Client MSA templates vary significantly — some are enterprise procurement templates designed for hardware/software vendors that get repurposed for consulting, while others are purpose-built for professional services. Understanding the template's origin helps calibrate which recommendations are worth fighting for.

Prioritization framework:

• Pick 3-5 high-priority items to push hardest on (IP, termination, liability, payment)
• Be willing to concede on lower-stakes items to maintain goodwill
• Frame recommendations as industry-standard or mutually protective
• Always present the risk analysis to the consultant before making edits

Tone guidance:

• "This clause is standard for hardware procurement but creates unintended risk in a consulting context" — good
• "This clause is unacceptable and must be struck" — too adversarial for a client relationship

2. High Risk Clauses

2.1 Early Payment Discounts

Look for: "X% discount if payment is made within Y days" Risk: Directly reduces engagement revenue. On a $500k engagement, a 2% discount is $10k. Recommendation: Strike the discount sentence entirely. Rationale to client: "As a fixed-fee professional services engagement, early payment discounts are not standard practice and were not contemplated in our pricing."

2.2 Termination for Convenience

Look for: Unilateral termination rights with no notice period and no payment beyond work completed. Risk: Client can terminate mid-engagement and only pay for hours/deliverables completed, leaving Metis with committed resources and no revenue. Recommendation: Add (a) minimum notice period (30 days) and (b) payment for non-cancellable expenses committed before termination notice. Do NOT push for a "kill fee" or penalty — that's too aggressive for a client relationship. Rationale to client: "We commit dedicated resources to your engagement; a notice period ensures orderly transition and allows us to manage our commitments responsibly."

2.3 Work Product / IP Ownership

Look for: "All Work Product is work made for hire and shall be the sole and exclusive property of [Client]" — with no carve-out for pre-existing IP. Risk: This is the most critical clause for a consulting firm. Without a carve-out, every framework, methodology, assessment tool, and template Metis uses becomes client property. This would prevent Metis from reusing its own intellectual property with other clients. Recommendation: Add a Pre-Existing IP definition and a limited license-back:

Supplier shall retain ownership of Supplier Intellectual Property, which includes, without limitation, Supplier's pre-existing methodologies, frameworks, analytical tools, templates, processes, know-how, and other intellectual property that existed prior to or was developed independently of this Agreement ("Pre-Existing IP"). To the extent any Work Product incorporates or is based upon any Pre-Existing IP or other Supplier Intellectual Property, Supplier grants to [Client] and its Affiliates a nonexclusive, worldwide, fully paid-up, perpetual, irrevocable, transferable license to use, copy, modify, and prepare derivative works of such Supplier Intellectual Property solely in connection with [Client]'s use of the Work Product.

Important: Check whether the MSA already has a "Supplier Intellectual Property" definition. If so, expand it rather than creating a parallel definition. Avoid duplicative license grants — there should be one clear license, not two overlapping ones.

Rationale to client: "This is standard for consulting engagements and ensures you receive full rights to use all deliverables while allowing us to continue using our established methodologies."

2.4 Offset Rights

Look for: "Lumen may offset against any amounts payable... any amounts claimed in good faith" Risk: Client can unilaterally withhold payment based on their own claims, without Metis's agreement or any dispute resolution. Recommendation: Limit offsets to amounts that are mutually agreed in writing or determined through the dispute resolution process. Rationale to client: "We want to ensure offsets follow the agreed dispute resolution process to avoid misunderstandings."

2.5 Payment Terms

Look for: Payment terms longer than Net 30. Risk: Cash flow impact, especially for a smaller firm. Recommendation: Negotiate to Net 30 or Net 45. Anything beyond Net 45 is a serious concern. Rationale to client: "Industry standard for professional services is Net 30; we'd appreciate alignment with standard consulting terms."

3. Medium Risk Clauses

3.1 MSP/VMS Fees

Look for: Managed service provider or vendor management system fee deductions. Risk: A percentage of every invoice gets deducted by a third-party staffing platform. Recommendation: Strike entirely — MSP programs are for contingent labor, not consulting firms. Many templates include internal notes confirming this should be removed for non-staffing suppliers. Rationale to client: "This section applies to contingent workforce suppliers and is not applicable to a professional services consulting engagement."

3.2 Transition Period

Look for: Mandatory post-termination transition period (often 3-6 months). Risk: Forces Metis to keep working after termination, potentially at unfavorable terms. Recommendation: Cap at 30 days. Ensure compensation continues at agreed rates during transition. Remove any language allowing unilateral extensions. Rationale to client: "For a consulting engagement of this nature, 30 days provides sufficient time for knowledge transfer."

3.3 Indemnification (One-Sided)

Look for: Only Supplier indemnifies Client, not mutual. Risk: Metis bears all indemnification risk; client has no reciprocal obligation. Recommendation: Add a mutual indemnification clause — Client indemnifies Supplier for Client's breaches, negligence, and legal violations. Rationale to client: "Mutual indemnification is standard and reflects the reciprocal nature of the business relationship."

3.4 Liability Cap (Missing)

Look for: A Limitation of Damages section with no aggregate cap. Risk: Metis's liability is unlimited. On a $500k engagement, a breach claim could be for millions. Recommendation: Add an aggregate liability cap tied to fees paid or payable under the applicable SOW. Rationale to client: "An aggregate liability cap proportional to engagement fees is standard in professional services agreements."

3.5 Insurance Requirements (Floating Reference)

Look for: Insurance requirements defined by reference to an external portal or document that can change unilaterally. Risk: Client can increase insurance requirements at any time without Metis's consent. Recommendation: Lock requirements to those in effect as of the Effective Date. Future changes require mutual written agreement. Rationale to client: "We want to ensure our insurance obligations are defined and predictable for the term of the agreement."

3.6 Breach of Warranty — Immediate Refund

Look for: "Supplier will promptly refund any amounts paid" as the first remedy for non-conforming services. Risk: Client's first option is a refund rather than letting Metis fix the issue. Recommendation: Add a 30-day cure period before any refund obligation triggers. Rationale to client: "A cure period is standard and ensures we can address any concerns before escalating to financial remedies."

4. Low Risk / Standard Clauses

These are generally acceptable but worth noting:

• Non-exclusive agreement / no volume commitment — Standard, expected.
• No publicity — Can't reference client in marketing without written consent. Standard for enterprise clients. Worth noting if Metis wants to use the client as a case study later.
• Change in control termination — If Metis is acquired, client can terminate within 12 months. Standard for enterprise contracts.
• Jury trial waiver — Mutual waiver, generally acceptable.
• Delaware governing law — Neutral jurisdiction, generally favorable.
• Forum selection (client's home jurisdiction) — Note but usually not worth fighting over.
• Subcontractor restrictions — May require written approval for subcontractors. Fine as long as Metis plans to use only its own employees.

5. Sections to Remove for Consulting Engagements

Client MSA templates designed for product/software vendors often include entire sections that don't apply to consulting:

How to raise it: "We'd suggest removing the Products and Software Specific Terms sections as they apply to product/software procurement rather than professional services. This simplifies the agreement for both sides."

6. Standard Redline Language Templates

Pre-Existing IP Definition

"Pre-Existing IP" means Supplier's pre-existing methodologies, frameworks, analytical tools,
templates, processes, know-how, and other intellectual property that existed prior to or was
developed independently of this Agreement.

Mutual Indemnification Clause

[Client] will indemnify and defend Supplier's Indemnitees from and against all Damages arising
out of a claim resulting from or arising in connection with: (i) a breach of any warranty,
representation or any other obligation expressly set forth in the Agreement by [Client]; (ii) any
act or omission of [Client] that results in personal injury, death or damage to real or personal
property; and (iii) any violation of applicable law by [Client].

Aggregate Liability Cap

IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL FEES
PAID OR PAYABLE TO SUPPLIER UNDER THE APPLICABLE ORDER GIVING RISE TO THE CLAIM, EXCEPT FOR
(I) DAMAGES FOR WHICH A PARTY HAS AN OBLIGATION OF INDEMNITY UNDER THIS AGREEMENT; (II) ANY
GROSSLY NEGLIGENT OR FRAUDULENT ACT OR OMISSION; OR (III) ANY BREACH OF PROVISIONS RELATED TO
[CLIENT] MARKS OR CONFIDENTIALITY.

30-Day Cure Period

If the Services do not conform to the warranties in this Agreement, [Client] shall provide
Supplier with written notice specifying the nature of the non-conformity. Supplier shall have
thirty (30) days from receipt of such notice to cure the non-conformity at no additional cost
to [Client]. If Supplier fails to cure the non-conformity within such 30-day period, Supplier
will promptly refund any amounts paid for the non-conforming Service.

7. Creating the Word Compare Files

python-docx does not support Word's Track Changes (revision marks). The reliable approach:

1. Save the original: Copy the MSA template to [Name] - ORIGINAL.docx
2. Edit a copy: Copy again to [Name] - Metis Redline.docx and apply all changes
3. Provide exact text: Always output the full before/after text for each change in the chat, so the consultant can apply changes manually if working in a separate file with Track Changes
4. Word Compare: Consultant opens Word > Review > Compare > Compare Documents, selecting the original as "Original document" and the redline as "Revised document"

This generates a proper tracked-changes document that the client's legal team can review.