By MATTHEW ROSENTHAL and JUSTIN MEYER
It is easy to get contract fatigue and sign anything placed in front of you, especially when you may be excited about a potential opportunity. This scenario is especially true in two situations: when you are working with a friend; and when you are starting a new job. However, it is in these times that you have to be even more vigilant – after all, deals that began with a handshake can end up in a courtroom, and handshakes are not admissible.
If you are joining a practice as a partner or starting a new partnership, you need some form of an agreement – the name of the agreement may be different based upon the type of entity. For example, a PLLC might have an operating agreement, while a PA would have a shareholder or partnership agreement, but the essential points are still the same. A good agreement will lay out the roles and responsibilities of each partner and will talk about what happens when one partner wants to or has to leave, either through death, disability, or retirement. Some examples that may be addressed in the agreement to avoid future conflict are:
- Can that partner pass her share of the practice on to her children or sell it to another doctor?
- Do the remaining partners have to buy her out?
- What happens if one partner is ready to quit and move to another area?
The best time to negotiate a partnership agreement is when you are first getting started. Putting this off can lead to issues later, as it frequently means that you are trying to negotiate buyouts as things turn acrimonious. Business divorces can be even more difficult and stressful than a personal one – even for married spouses, the best course of action is to have a partnership agreement.
As an employer, you may also want to have your employees sign employment agreements. The first thing that you need to be careful about is Florida’s at-will rule. This rule states that an employee can be fired for any or no reason (other than discriminatory ones) and can quit at any time with no notice. You want to draft employment agreements carefully to ensure they do not violate this rule without a good reason. It would be best to have a clear understanding of why you want an employee to be guaranteed employment for a set term, before giving him one.
A lot of employers both in medicine and in other industries like to look at restrictive covenants – non-compete agreements, non-solicitation agreements, and non-disclosure agreements. While these are reliable tools for employers to protect their business interests, knowing when and how to use each one is important. The most commonly misused agreement is a non-compete agreement. While it can be a powerful agreement and very useful to protect your business interests, including patients, it is also the most difficult agreement to enforce. Florida law is very clear on what makes a non-compete enforceable, and it is not automatic. A big mistake that many employers make is giving every employee in the office, including receptionists and clerks, a non-compete agreement. The best strategy is to provide non-compete agreements only to key employees.
Non-solicitation agreements, which prevent the employee from reaching out to patients or other employees and trying to get them to leave your practice, are one very effective tool to protect yourself from people who are leaving. Non-disclosure agreements are, for a medical practice, essential. They prevent your employees from sharing confidential information. This agreement not only includes information about your practice, such as patient lists and financial information, but confidential patient information as well. Every employee, from doctors to receptionists, billing clerks to janitors, should be signing a non-disclosure agreement. If you bring in outside contractors to clean your office, a non-disclosure agreement should be part of the contract. One common question is whether you can ask current employees to sign these agreements. The answer is: yes. There are several ways that you can have current employees sign these restrictive covenants when it is appropriate.
As a doctor who is joining a practice as an employee, it is important that you read everything you are asked to sign. If you are given an employment agreement, you should make sure that you understand your rights and obligations, including whether you have the freedom to leave and join another practice. You should also know how salary is paid and calculated, and the other terms of the contract, including when you are expected to be on call. Another important term to look for is what you are responsible for paying – employers should be covering your malpractice insurance, but some will require that you pay for it yourself. Best practices include taking time to review the contract, instead of immediately signing it when they give it to you. It is not an unexpected request to ask that your trusted advisor(s) review the contract before final signing.
Managing contracts is not why you went into medicine. However, in today’s business world – and medicine is a business – you cannot escape them. You must take the time to read what you’re being asked to sign or to ensure that you have contracts in place to protect yourself and your business. It is important that you have trusted advisers who can help you to negotiate and draft these agreements to protect yourself. No one gets into medicine to deal with contracts, but ignoring them can significantly impact your ability to stay in medicine.
Rosenthal Meyer, PLLC was founded by attorneys Matthew Rosenthal and Justin Meyer, who share the same commitment to providing client-centric legal services, with a concentration in business law, wills & trusts, probate, and real estate. The multi-state community law firm prides itself on its experience, approachability, caring about the outcome of the situation, and providing legal solutions that work. Their focus is on legally protecting clients through the evolution of their business, and through all stages of life. They take pride in getting involved with the communities they serve and building long-term relationships. For more information, visit https://rosenthalmeyer.com.