Dental Partnership Agreements

Dental Partnership Agreements

We help dentists form successful partnerships.  

 

Our philosophy is simple: keep the doors of communication open between business partners. As a result, our dentist partnership agreements focus on documenting every potential conflict so that walls are not built up between the partners of the dental practice(s). 

We have found during our three decades of representing dentists that partnerships are like a marriage and must be treated like one. They require constant work, communication and openness to survive. 

Some of our most successful and happiest clients are involved in partnerships; however, most of the partnership dispute litigation brought to our law firm is a result of a partnership’s failure to have a written, comprehensive partnership agreement in place. As a result and as time goes by, anger, frustration and, ultimately, a desire for revenge begins to consume the partners.

Our experienced dental attorneys at Wood and Delgado can help you form a dental partnership agreement that addresses all of your needs, present and future.  

What is a Dentist Partnership Agreement?

Dentist Partnerships or Dental Partnerships refer to dental practices owned or managed by two or more dentists. As opposed to a professional corporation, a dental partnership can be formed unintentionally. The mere fact of sharing expenses and profits can be construed as a partnership.

A major disadvantage of entering into a dental partnership is that general partnerships have unlimited liability to each partner. If you are found to be a partner and your partner incurs a debt or judgment for malpractice or breach of contract with a vendor, you could be responsible for repaying that debt or judgment. Dental partnership agreements should be drafted in a clear manner to overcome this major drawback.

What Are the Benefits of a Dentist Partnership Agreement?

Partnerships with other dentists have several advantages:

  • One partner may be stronger in areas where the other is weak and vice versa;
  • Partners can motivate each other to generate new ideas and grow the business;
  • If one partner goes on vacation, the other partner can cover the vacationing partner’s schedule and manage the business;
  • In the early stages of a dentist's career, it can be valuable to have a more experienced dental partner as a mentor;
  • A young, energetic dental partner who can introduce new energy and technology is also valuable to more experienced dentists;
  • When dealing with unfamiliar patient needs, partners can turn to each other for advice; and
  • With two or more sources of funding, the practice can grow faster.

These are only a few reasons why dentists benefit from finding a partner.

How Our Attorneys Can Help You Form a Dentist Partnership Agreement

At Wood and Delgado, our representation goes well beyond the formation, drafting and finalization of the partnership agreement in that our representation focuses on the unique individual members of the partnership and meeting with all the interested parties to develop a common set of goals, beliefs and desires in attempting to create a partnership that is as unique as the individuals themselves. Some of the important areas that our partnership agreements cover are:

  1. Buy-sell rights;
  2. Disability - what happens in the event of a partners disability;
  3. Death - what happens in the event of a partner's death. How do we protect the estate of the deceased dentist and how do we protect the surviving dentist from financial hardship?
  4. Compensation scenarios - unequal production numbers, unequal treatment days, cost control for procedures, etc.
  5. Majority/minority rights;
  6. Financing issues;
  7. Proper entity formation and structure for the partnership; and
  8. Competing business activities - how to protect the dental practice from the individual partners’ competing business interests

 

Are There Any Downsides to Dentist Partnership Agreements?

Dental practices can be structured in a variety of ways, so how do you know if a partnership agreement is right for your practice? Here are some things you should consider.

Division of Management Rights 

An equality of management rights may not be desirable, especially when junior dentists join practices with more senior dentists. A partnership agreement should specify who is authorized to make which decisions and who can delegate such authority to avoid the default rule of equal management rights.  

Admission of New Partners

It is important to have a clear policy for admitting new partners and expanding the practice in the partnership agreement. A prospective partner may be required to make a minimum capital contribution to become a partner and meet certain qualifications related to licensure and malpractice history.

Restrictions on Competition and Solicitation

Many dentists are cautious about partnering with other practitioners out of concern that they will simply use the partnership to launch their own professional careers. For this reason, many dental partnership agreements include non-competition and non-solicitation restrictions. A partner's ability to join or start a competitor practice or poach staff from within the partnership is restricted by these clauses. It is important to draft these provisions carefully, including the scope and duration of the restrictions.

Exit Conditions

Partner agreements should cover both the admission of new partners and the exit of existing partners. An agreement should define the time period in which a partner can dissociate and may require a partner to pay liquidated damages to the partnership when he or she dissociates in violation of the agreement.

Are Dentists Required to Have a Dentist Partnership Agreement?

While oral or implied dental partnership agreements are technically legal, they are a terrible idea. Without a written dental partnership agreement, the law looks to the words and conduct of the parties to determine the intentions of the partners. As you can imagine, there are usually misunderstandings that can lead to litigation.

In light of this, we consider a comprehensive written partnership agreement to be imperative. In the event of a dispute, a well-crafted dental partnership agreement can mean the difference between closing the practice, fighting an expensive legal battle, or continuing to prosper.

The Benefits of Hiring an Experienced Dental Partnership Attorney

You should consult a dental lawyer when you decide to partner with another dentist. A dental partnership lawyer can help you select a potential partner and thoroughly vet them. In addition, your future partner and an experienced dental attorney may be able to have difficult conversations that would otherwise be difficult or awkward for you to have with the partner.

Those are usually the most important discussions, and both parties should have clear expectations of each other. If you agree to terms before speaking to an attorney, they may need to be reconsidered and renegotiated, which usually upsets one or more partners.

Our Dental Attorneys Can Help You Form a Dentist Partnership Agreement 

The last thing you want to do is rush into drafting your dental partnership agreement without covering all of your bases. We are happy to help you get things done the right way. These are important documents that should be custom-crafted for your needs.

Wood and Delgado has represented over 8,000 dentists since 1980 and focuses its efforts on supporting the dental community with their business needs. If you have questions about forming a dentist partnership agreement, don’t hesitate to contact us at 800-499-1474.