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Podcast · MSP Unplugged

MSPZone - S6 Ep 309: Surviving MSP Litigation

Rob Scott joins MSPAlliance's Charles Weaver to break down the real-world mechanics of MSP litigation: how cases start, what wild theories plaintiffs' lawyers argue, and what MSPs can do contractually...

Episode summary

Rob Scott joins MSPAlliance's Charles Weaver to break down the real-world mechanics of MSP litigation: how cases start, what wild theories plaintiffs' lawyers argue, and what MSPs can do contractually and operationally to survive. The conversation draws on two decades of actual MSP cases, including a recent arbitration Rob litigated and Charles expert-witnessed, and covers the landmark Acronis case in Sacramento as a cautionary tale for MSPs doing project work without proper agreements.

Rob outlines a concrete contract architecture, including modular service attachments, a schedule of third-party services to block vendor liability pass-through, and a newly codified credentials section that distinguishes user credentials, admin credentials, and third-party platform credentials. He also explains why mandatory arbitration clauses and current cyber liability insurance are non-negotiable, and why settling even winnable cases is sometimes the right call for the client even when it is not the right call for the lawyer.

Key takeaways

  1. Add a Schedule of Third-Party Services to your MSA so clients waive the right to sue you for vendor failures like a Microsoft or cloud provider outage.
  2. Codify three credential categories in your contracts: user credentials (always returned), admin credentials (returned only upon contract compliance and ETF payment), and third-party platform credentials (never transferred to the client).
  3. Treat transition services as a separate, out-of-scope project billed at current rates and available only to clients who are fully compliant, including payment of any early termination fee.
  4. Mandatory arbitration clauses with expedited procedures can get a dispute heard within 30 days, cutting defense costs that would otherwise force an early settlement.
  5. Cyber liability and professional errors and omissions insurance is essential not because you will lose, but because defense costs alone can exceed any reasonable early settlement value.

"Why would I put you in a better position vis-a-vis the risk of using these vendors that you're going to need either way? Why should the MSP be bringing a greater risk reduction? It's not an insurance company."

- Rob Scott

Show notes

Surviving MSP Litigation

Don’t miss this episode of MSP Unplugged for an enlightening conversation on the world of MSP agreements. Rob shares invaluable insights into the critical role agreements play in business operations, from Master Services Agreements (MSAs) to tailored contracts. Discover how the right agreements can provide comprehensive legal protections and why they’re essential for MSPs.

Host: Charles Weaver/MSPAlliance

Guest: Rob Scott/Monjur

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