Six MSP Non-Payment Patterns We Resolve
MRR drift
Client pays 30–60 days late every month, then churns with 6 months outstanding. Recoverable as open book account under CCP §337a from last entry.
License pass-through dispute
New controller demands rebate on MSRP-marked M365 or Azure billing. Defended by account-stated and pass-through clause enforcement.
Project balance withheld
Fixed-fee migration complete, final 40% withheld on vague "configuration concerns." Acceptance-procedure and deemed-acceptance clauses carry the day.
Uncapped SLA-credit offset
One SLA miss becomes three months of 50% credits. Capped exclusive-remedy drafting defeats offset attempts.
Termination for convenience
Client exits after 3 months, refuses onboarding amortization. Termination-acceleration clause plus quantum meruit secure recovery.
Data-hostage allegation after suspension
Client sues claiming conversion or CCPA breach. Defended with suspension notice, preserved data, and offboarding-on-paid-basis record.
California Legal Framework for MSP Claims
| Claim | Authority | Typical use |
|---|---|---|
| Breach of written contract | CCP §337 | Primary MRR, project balance, onboarding claims |
| Open book account | CCP §337a | Rolling invoicing; 4-yr clock runs from last item |
| Account stated | CCP §337(a)(2) | License pass-through; invoice rendered and unobjected |
| Quantum meruit | Common law | Onboarding investment recovery when drafting is weak |
| Prejudgment interest | Civ. Code §§3287, 3289 | 10% default; contractual rate if higher |
| Attorney's fees | Civ. Code §1717 | Reciprocal when MSA includes fee clause |
| Unfair competition | B&P §17200 | Pattern of bad-faith SLA disputes or chargeback fraud |
| UCC-1 security interest | Com. Code §§9103, 9502 | On-prem hardware financed through MSA |
| Commercial reasonableness (leases) | Com. Code §§2A-527/528 | When MSA is structured as hardware lease |
Interactive Savings Calculator
Fee Schedule — Scaled to MSP Claim Sizes
| Claim size | Traditional (33%) | LegalCollects (15%) | Savings | Your net recovery |
|---|---|---|---|---|
| $15,000 | $4,950 | $2,250 | $2,700 | $12,750 |
| $50,000 | $16,500 | $7,500 | $9,000 | $42,500 |
| $100,000 | $33,000 | $15,000 | $18,000 | $85,000 |
| $250,000 | $82,500 | $37,500 | $45,000 | $212,500 |
| $500,000 | $165,000 | $75,000 | $90,000 | $425,000 |
Anonymized MSP Case Studies
$100,600 — Orange County 14-person MSP (MRR + M365 pass-through)
Client 11 months delinquent. MSA contained pass-through no-audit and capped-SLA clauses. Resolved Day 11 at 100% with 60-day Stripe-enforced payment plan. Fee $15,090. Traditional cost would have been $33,198. Net savings: $18,108.
$94,600 — Bay Area Azure migration balance
Client withheld final 40% alleging SLA offset. MSA capped credits at 20% of MRR. Draft complaint sent Day 16. Resolved Day 18 at $89,100 (94%). Fee $13,365. Traditional cost would have been $29,403. Net savings: $16,038.
$52,500 — Inland Empire onboarding recovery after convenience termination
Client terminated 90 days in; refused onboarding amortization. MSA contained termination-acceleration clause. Resolved Day 23 at 100% + $3,800 §1717 fees. Total recovered $56,300. Fee $8,445. Net savings vs. 33%: $10,134.
Intake Checklist for MSP Clients
- Executed MSA with SOW and schedules (especially pass-through, SLA, and termination schedules)
- Invoice ledger showing charges, payments applied, aging
- Payment history and any partial-payment correspondence
- SLA monitoring logs and downtime reports
- Change orders, acceptance sign-offs, go-live emails
- Suspension notice and data-preservation confirmation (if suspended)
- Onboarding amortization schedule (if applicable)
- UCC-1 filing record (if hardware-financed)
The 30-Day Recovery Sequence for MSP Claims
- Day 0: Formal demand letter attaching ledger, MSA late-fee clause, interest accrual, reservation of suspension right.
- Day 3: AI call to AP contact confirming demand; offer payment plan.
- Day 5: Payment-plan email with Stripe-enforced installments.
- Day 10: Suspension notice (client-coordinated) under MSA clause if past-due threshold met.
- Day 14: Attorney review; draft complaint — breach, open book, account stated, §17200 where pattern present.
- Day 16: Pre-filing email with draft complaint attached.
- Day 25: Filing plus §484 prejudgment attachment when appropriate.
Frequently Asked Questions
What do we do about SLA-dispute offsets?
We enforce capped SLA-credit exclusive-remedy clauses and rebut uncapped offset arguments with monitoring logs and MSA language. Where drafting is weak, we still recover via breach of contract and open-book claims under CCP §§337/337a.
Can we recover license pass-through balances?
Yes. Pass-through charges are account-stated once rendered and unobjected-to within the dispute window; they are also recoverable as breach of contract.
What happens if the client claims we held data hostage?
Suspension is defensible when contractually authorized, preceded by notice, data preserved, and offboarding offered on paid basis.
Do onboarding balances survive termination for convenience?
Yes when the MSA contains a termination-acceleration clause. Without it, quantum meruit provides a floor.
What does the 30-day sequence look like?
Day 0 demand → Day 3 AI call → Day 5 payment plan → Day 10 suspension notice → Day 14 attorney review → Day 16 pre-filing → Day 25 filing.
MSP with a past-due client? Don't write it off — recover it.
Submit the MSA, invoice ledger, and SLA logs. We'll plead breach, open book, and §17200 where it fits — 15% contingency, attorney-supervised.
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