The Network Group Podcast

The Network Group Podcast at Pax8 Beyond - Kim Simmonds

Despite being told that nobody would trust automated contracts, Kim believed technology – and the market – would eventually catch up. That belief proved timely as AI rapidly entered the mainstream. But while generative AI has made legal information more accessible, Kim warns that relying on it without the right expertise and guardrails can create significant risks.

She shares the story of an MSP that believed it had customers tied into three-year agreements, only to discover that an AI-generated contract actually allowed those customers to terminate with just 30 days’ notice. It’s a powerful example of the difference between generating legal language and truly understanding what a contract means.

One surprisingly simple area MSPs can overlook is insurance. Kim explains that insurance policies can require specific contractual protections, such as limitations of liability and exclusions for certain losses. If those provisions aren’t present, businesses could discover that their insurer won’t protect them when something goes wrong.

AI also creates an entirely new commercial challenge: token consumption. As technology businesses move away from predictable fixed costs towards consumption-based AI services, MSPs need to establish who carries the financial risk when usage unexpectedly increases. For Kim, contracts should mirror the reality of how the business operates – and if an MSP has changed its business model without changing its contracts, it is already falling behind.

For MSP owners considering an eventual exit, Kim recommends getting the right contracts in place ideally three years beforehand. A buyer doesn’t have the same personal relationships with customers that an owner may have, so clear contractual protection can become an important part of demonstrating value and reducing risk during an acquisition.