Client Service Agreement
A client service agreement establishes the general terms governing all work between your agency and a client — signed once, applied to every project.
What is a Client Service Agreement?
A client service agreement (also called a master service agreement, agency agreement, or client contract) is the overarching legal document that governs the relationship between an agency and a client. It sets out the general commercial terms — payment, IP ownership, liability, confidentiality, termination — that apply to all work done under the agreement.
Unlike a statement of work, which is project-specific, a client service agreement is signed once and then referenced by every SOW issued to that client. This structure separates the stable commercial terms (which rarely change) from the project-specific details (which change with every engagement), making the overall contracting process more efficient.
For agencies, having a solid client service agreement in place before starting any work is essential. Without one, the terms of the engagement are governed by whatever is in email chains, verbal agreements, or implied by custom — all of which are difficult to enforce when disputes arise.
When do you need a Client Service Agreement?
- ✓Before beginning any work for a new client
- ✓When formalising an existing client relationship that has operated on informal terms
- ✓When an existing client is about to significantly increase their engagement with your agency
- ✓When entering a new type of service engagement with an existing client
- ✓As a prerequisite to issuing any statement of work
Key provisions to include
Services Framework
Defines the types of services the agency provides and how project-specific engagements are captured in SOWs.
Fees & Payment Terms
Payment schedules, late payment consequences, and the process for fee increases.
Intellectual Property
When IP transfers to the client (typically on full payment), what the agency retains, and licences for background IP.
Confidentiality
Both parties' obligations to keep each other's confidential information secret.
Liability & Indemnity
Caps on the agency's liability and mutual indemnities for third-party claims.
Warranties
Agency's representation that work will be original, will not infringe third-party IP, and will meet professional standards.
Termination
How either party can terminate the agreement, notice periods, and consequences of termination for work in progress.
Dispute Resolution
Process for resolving disputes, including escalation, mediation, and governing law.
Common mistakes to avoid
Starting work before a client service agreement is signed, operating on goodwill and email
Not including an IP retention clause until payment — this is the agency's key leverage for ensuring payment
Setting liability caps so low that clients refuse to sign, or so high that they negate the benefit of having a cap
Not including a kill fee provision for projects cancelled after significant work has been invested
Allowing the client to use their own standard terms (often much less favourable) instead of your agency terms
Frequently asked questions
Should I use my own terms or accept the client's terms?
Always try to use your own terms. Client terms are drafted to protect the client, not your agency. If a large client insists on using their own MSA, review it carefully for IP ownership provisions, liability caps, and payment terms — these are often significantly less favourable to agencies than standard commercial terms.
Can I include a kill fee in a client service agreement?
Yes. A kill fee (or cancellation fee) compensates the agency for work invested on a project that the client cancels. A typical kill fee is 20%–50% of the remaining project fee, depending on how far into the project the cancellation occurs. Kill fees should be clearly specified in either the master agreement or the statement of work.
What should the payment terms be for an agency?
Common agency payment terms include: a deposit (20%–50%) on project commencement, milestone payments tied to delivery of key components, and a final payment on project completion. For retainer clients, monthly billing in advance is standard. Payment terms of 14–30 days net are typical in the Australian agency market.
Related documents
Draft your Client Service Agreement in minutes
Try Neureson free for 3 days — no credit card required.
Start for free →