Master Services Agreements Can Help Cultivate Long-Term Business Interests

If your organization is seeking to expand business opportunities and foster long-term relationships, one of the most beneficial tools to use is a master services agreement (MSA). This document not only serves as a blueprint for how mutual business interests or projects between two parties are to be addressed and conducted, but it also helps organize business relationships in a contractual but not burdensome manner, making it a very user friendly tool.

MSAs are popular for establishing relationships among a wide array of businesses, including information technology, communications, and life sciences. Traditionally, they have been used frequently for union negotiations, government contracts, and supply chains aimed at long-term relationships.

One of the primary benefits of crafting a MSA at the beginning of any business relationship is for expediting future opportunities. There is a true advantage to this approach, especially if the signing parties to the agreement are working together on more than one project at a time or plan to engage in multiple projects in the future. In many instances, the original MSA requires little or no revision of its basic contract provisions — saving time and overhead dollars. Subsequent agreements generally only call for a new scope of work, perhaps a revised purchase order, or some other change order that complements the original MSA.   

This happened to be the recent case with one of my life sciences clients, a Clinical Research Organization providing support for drug trial testing for the Food and Drug Administration. My client was hired to monitor the drug administering protocol and patient results for one particular drug at various health clinics. The MSA spelled out the business relationship for that particular project. When another drug is to be tested through clinical trials — next week, next month, or next year — a new scope of work will be issued for this second project, which will just basically outline what the new drug is and its planned use or purpose. However, the terms of the original MSA will still apply to this new project.

I’ve also observed long-term applications of MSAs in installation contracting: cell phone towers, cable systems, and communications infrastructure. Some of these agreements have been in effect for more than 10 years, and the process is simple. The parent company just forwards a revised purchase order or directive to the contracting interest, stating, “Pursuant to our master services agreement, please install . . . .” Revisions to the location, cost, and completion time are specified on the MSA as usual, but the minor terms of the contract remain intact from earlier versions.

As you can see, building a foundation for business longevity is a key benefit of MSAs. If you let your client know going forward that you can add to the MSA by tacking on an addendum or a scope of work change order, then you won’t have to negotiate the basic terms all over again.

In our next discussion, I’ll address some of the key sections of a MSA and where to begin in developing a document that has flexibility for long-term use.

Fault-Finding to Success

Consumers are always seeking a quality product – no matter what industry the product is intended for. However, the complexities of most products today bring about an inherent problem: one industry does not necessarily control production up and down the chain. Thus, it is generally difficult to ensure quality control beyond one’s own company. This lack of control could be unnerving, if not for an unexpected, guiding principle: fault.

This principle of accountability holds true within the realm of Clinical Research Organizations (CROs). Liability drives companies to create better products, and fault is an ever-present motivator. In the case of CROs, these organizations find themselves in a delicate position of having to be cautious about whom they are dealing with in both upward and downward directions: medical sites, clinical research assistants, sponsors and subcontractors.

Every step of the way, your contracts must stipulate that the quality of work is guaranteed, and allocating fault and responsibility is a key element to that.  No matter who is involved in the process, though, there must be assurance that quality is assured, starting at the top and running straight to the bottom. 

My yard, like many yards, is inhabited by a number of squirrels who assume they belong on my property. My dog will bark, informing them that this is, in fact, not their yard. While an audible yap is not necessarily a powerful deterrent to the squirrels and their trespasses, the constant threat and physical presence of the dog keeps them on their toes. People in contracting relationships can think of the dog’s bark as “fault.” While the persistent threat looms, there is always the possibility of greater danger – such as a loose dog that can chase you.

The liability associated with a bad drug reaction – or even worse, introducing a dangerous or deadly drug to market – is huge. To prevent this from happening, CROs must have clearly defined guidelines and expectations for all the organizations and individuals involved. This runs deeper than being a blueprint for the “blame game.” This means establishing a method to ensure data integrity, which, in the realm of CROs, ultimately translates to public safety and health. CROs are not just trying to indemnify themselves, but they are making sure that every step along the way preserves the highest quality work.

The world of life science is a challenging and competitive ecosystem of tests and trials. Fortunately, there are some governing principles that help ensure the safety of those within it. For CROs, they can feel assured that the threat of fault will ensure that the best product possible can come from the system, and the greatest good can be done so that the consumer can have the maximum benefit.

Life Sciences, in Lieu of Chocolate

Science and technology fascinate me. Perhaps this isn’t the first sentiment you imagine hearing from an attorney, but it occurs to me daily. My enthusiasm for the life sciences industry and the intelligent people who make up its moving parts is one reason why I look forward to coming to work every day.

I was tempted to surprise the whole industry with a box of chocolates, but for today I’ll simply share a few pieces of what I value most.

I entered life sciences law with a strong desire to help companies start from scratch. As I mention on the website, my first client in this field was a Clinical Research Organization (CRO). The four individuals behind it have backgrounds in different areas of the field: pediatric oncology, managing FDA compliance issues and pharmacy. These clients fill the room with brain power, but as good as they are at what they do, they’re not attorneys. Companies in this industry have so many moving parts; they need someone on their side who understands contracts and licensing. For example, they need an operating agreement to explain how the business will run and how decisions will be made. This particular company has taken off in leaps and bounds in the four years since we started working together.

Always Changing

Due to fluctuations in venture capital and government funding, life sciences is a continuously changing environment. As soon as someone gets funding, everyone in the industry knows who they are and wants to start a new business with them or buy their existing operation. This is why new companies should involve an attorney from day one. Clients come to me knowing as much about indemnity, choice of entity and portion of liability as I know about biostatistics. This doesn’t prevent me from handling their agreements and licensing. We teach each other, and it’s in those learning experiences that I find my job so much fun!

Always Innovating

The intellectual abilities of my clients keep me on my toes. Every innovation brings a new set of issues to address on the legal side. I’m good at dealing with these issues. When you have smart people from varied backgrounds coming together and creating something new that’s financially viable, it’s an exciting thing to be a part of. These companies have a bright future not only in Seattle and San Francisco, but nationwide.

Always Building

The ultimate reward of working with life sciences companies from the very beginning is watching their rapid growth. Legally secure, my clients have a strong foundation to build on. The potential is huge because nothing can come up and bite them from behind. As their business grows, my business grows. Once the legal corners are squared, my role is to make sure the company is moving in the right direction.

The life sciences draw all kinds of curious people. Working with sponsors and vendors, or negotiating biotechnology agreements and software licenses allows me to hear about advancements directly from the source. In an industry that’s always changing, innovating and building, I get to learn something new about the world every day.