A client recently came to us with what sounded like a simple request: “Can you draft me a form engagement letter that I can send to each new customer?”
It was a reasonable ask. The client is a freelance software developer who constantly takes on new work. He was tired of every engagement starting inconsistently or without clear relationship boundaries established at the outset. The client wanted something clean and repeatable.
We could have handed the client exactly that. Instead, we suggested that we step back and restructure how he contracts with his customers altogether. Rather than a standalone engagement letter for every job, we recommended a Master Services Agreement (MSA) paired with short, project specific Statements of Work (SOWs). The client wasn’t sold at first, but once we walked through it, he became the plan’s biggest advocate.
The problem with a new engagement letter every time
An engagement letter works well for an individual job. However, that approach breaks down when the same client repeatedly returns for additional work, which is exactly what every small business hopes to achieve and what was happening with our client.
Under the client’s original plan, each new project for an existing customer would require a separate engagement letter. Each letter would restate the payment terms, liability limits, confidentiality obligations, IP ownership, and termination rights. This creates a practical problem:
- Repeat negotiation. Every new letter is an invitation for the client’s procurement or legal team to reopen the terms you already agreed on.
- Drift and inconsistency. Small edits can add up. A year in, you may have five clients on five slightly different versions of your “standard” terms, making it increasingly difficult to determine which terms govern which client relationship.
- Friction that slows the work. The business wants to start the next project. Instead, it waits on another round of signatures for terms that may not have actually changed.
How an MSA works
An MSA splits the relationship into two layers: the terms that stay the same, and the details that change from project to project.
The MSA is signed once, at the start of the relationship, and holds the terms that rarely change: payment and invoicing, confidentiality, IP ownership, warranties, limitation of liability, indemnification, insurance, dispute resolution and termination. Each Statement of Work is signed per project and covers only what is specific to that job, such as the scope, deliverables, timeline, fees and key contacts, along with any project specific terms.
The MSA does the heavy legal lifting once. Each SOW is a short business document that plugs into it.
Why the MSA was the better fit
The MSA structure gave our client everything he wanted from a form engagement letter, plus several things he didn’t know to ask for.
- Negotiate once, not every time. The hard conversations about liability caps, indemnities and IP happen at the start. After that, new work moves onto a one- or two-page SOW.
- Faster starts on new projects. When a client asks for more work, the business can send an SOW the same day instead of a full contract.
- Consistent risk protection. Every project with that client sits under the same liability limits, confidentiality terms, and IP provisions. For a developer, that matters most around code: who owns what is built, what can be reused across clients, and who carries the risk if a production system goes down.
- A cleaner record. One master agreement plus a stack of SOWs is far easier to track than a pile of standalone letters with slightly different terms.
- Lower legal spend over time. The upfront drafting is a bit more involved, but the business stops paying for the same terms to be reviewed again and again.
- A more professional posture. Larger customers, especially those with procurement teams, are used to working under MSAs. Showing up with one signals that the business is built for an ongoing relationship.
- Room to grow. As the client relationship expands into new services, the MSA already provides the framework, only the SOW changes.
Gig work makes all this more pronounced. Projects are short, often scoped for quick turnaround times, and clients expect the work to be done fast. A software developer who has to renegotiate a full contract before every sprint can lose the work to someone who just sends an SOW.
Is an MSA Right for your business?
If you work with the same clients on a recurring basis, whether you are a developer, consultant, agency, or other service provider, an MSA can save time, reduce risk, and give every new project a stronger starting point.
Our client’s first reaction was skepticism. He came to us asking for one document and we were proposing two. To the client, that sounded like more paperwork, not less.
What changed the client’s mind was seeing what each option actually protected. A form engagement letter would have handled what they could see: getting terms in place before each job. An MSA handled what they couldn’t see yet, like terms shifting from one project to the next, the same repeating negotiations, and protections that depended on how carefully the latest letter was drafted.
Our firm helps businesses review their existing client agreements, draft MSAs and SOW templates, and negotiate contracts with larger customers. Importantly, we also drive our clients to adopt industry best-practices.
To talk through how we can help your business, contact our office to schedule a consultation.