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December 26, 2008

(MSA Series #3) Work Provisions

This is the third entry in a long-running series of blog posts about the Hashrocket Master Services Agreement (MSA). Parts one and two are also available.


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Section 4, Work Provisions

This section of the MSA establishes rules concerning the nature of the relationship between you and your client. In particular, you want to make sure that you are not entangled with them in a way that negatively impacts your own business or your ability to service other clients.

The first sub-section, entitled "Independent Contractor" is pretty straightforward in specifying that you are not an employee of your client, nor do you have the right to act as an agent for each other.

4.1  Independent Contractor
For all purposes hereof and in the performance of its obligations under this Agreement, Hashrocket is and shall remain an independent contractor and nothing in this Agreement or in a Statement of Work shall be deemed or construed to create an employer/employee, joint venture or partnership relationship between Hashrocket and Client.  Nothing herein shall be deemed or construed to create an employment relationship between Client and any employee, agent or independent contractor of Hashrocket.  Neither party shall have any authority to insure any obligations on behalf of the other party or to make any promise, representation or contract of any nature on behalf of the other party.

The definition of the term "independent contractor" is important. Clients do not have to withhold or pay any taxes on payments to independent contractors. More importantly, independent contractors ultimately have the right to perform the work in the manner that they see fit. Consider the way that the IRS defines independent contractor: "The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result."

The means and the method of accomplishing results for us involves Agile software development techniques and everything else setting us apart from competitors and companies that provide staff augmentation. Preserving our right to work as we see fit is very important to our value proposition.

Note: An independent contractor clause is definitely something you want in your contract regardless of whether you use an MSA or not. I started using this clause in my contracts when I left ThoughtWorks to work as an independent consultant.

The next section deals with the identity of the people that we assign to the client. It also makes assertions to the effect that our personnel are all suitably qualified and experienced to do the work. Use of the word "suitably" might be unnecessarily subjective, but since Hashrocket doesn't hire entry-level resources, so it's not a big deal for us.

4.2  Hashrocket’s Personnel
Unless otherwise stated in the applicable Statement of Work, Hashrocket shall have sole discretion over the identity of its personnel used to provide the Services, provided that Hashrocket shall ensure that the personnel are in all cases suitably qualified and experienced.  Where specific personnel are specified in an applicable Statement of Work, Hashrocket shall use reasonable efforts to provide the Services through those personnel, provided that Hashrocket shall be entitled to replace such personnel with personnel of equivalent qualification and experience on no more than 15 days notice to Client.  Without limiting the foregoing, Client acknowledges that it is Hashrocket’s standard policy not to allocate the same personnel to any one client or project for periods exceeding six (6) months.

Most of the time we do name a particular person in our statement of work contracts, as the lead for that project. Other resources rotate in and out of the project as needed. The lead provides continuity and functions as a liason to the client, the un-named others provide labor and support while giving us flexibility to staff other projects, as needed.

It's also worth noting that I included language in this section which indicates our intention to limit the amount of time that one of our people is forced to be on a particular client, to six months maximum. "Endless" assignments are counter-productive to morale and productivity. (A lesson I learned at other consulting organizations.) Everyone has limits related to boredom and desire for change, so might as well deal with that reality upfront.

The following section ensures that the relationship between Hashrocket and its client is non-exclusive. We can use our people to do similar things for other clients, and they have the right to use other consultants.

4.3  Non-Exclusivity
Client recognizes that Hashrocket’s personnel providing services to Client under this Agreement may perform similar services from time to time for other persons, and this Agreement shall not prevent Hashrocket from using such personnel for the performance of such similar services for such other persons. Hashrocket recognizes that Client may engage other consultants to perform similar services from time to time, and this Agreement shall not prevent Client from using such consultants.

You could argue that this section is needlessly mutual, that you don't need to explicitly give permission to your client to use other consultants. That's true, but I can't think of a situation where you would be able to prevent them from using other consultants anyway. In general, "mutual-ness" clauses seem to soften the adversarial impact of contract terms, so you should use that tactic wisely and to your advantage whenever possible.

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