Employment & Partnership Agreements
What is a Letter of Agreement?
- In short, it’s a handshake. A Letter of Agreement is a letter that allows both parties to know the intentions of the other. A Letter of Agreement is:
- Commitment to the financial details for both parties
- Overall acceptance by both parties to move forward with a final agreement
- Contingent upon Referencing and Credentialing
Understanding Employment/Partnership Agreements
(please note that we are not providing legal advice)
- At first review, what are the most important areas to consider?
- Length of agreement
- Financial Terms (confirming that they are the same as what was described in the Letter of Agreement)
- Bonus or Incentive Plan (confirming that this is the same as what was described in the Letter of Agreement)
- Benefits and Vacation
- Partnership/Buy-ins
- Covenant not-to-Compete Clause
When should I have an attorney review the contract?
If candidates desire to have an agreement reviewed by an attorney, we would recommend that they do so. That said, some agreements are written in very easy to understand language. We have reviewed the agreement/contract for every opportunity we represent and can provide you with advice on the areas where we might seek legal counsel, if we were in a candidate’s shoes.
PLEASE NOTE: The intent of this section is not to provide legal counsel or legal advice. We have just reviewed thousands of agreements and can provide you advice as if you were a friend of ours!
Understanding Partnership Agreements
- A partnership agreement is offered when a private practice has the intent to invite someone on a journey to become a partner. While the partnership agreement generally contains the same items as noted in the “Understanding Employment Contracts” section above, it is important to note some additional items. These items include:
- Length of time before offered partnership
- This is an important period for both the owners of the practice as well as the candidate signing this agreement. This timeframe is intended to:
- Protect the candidate from having to immediately buy-in to a practice that is not a long-term fit and
- Protect the practice from hiring a candidate who is not a fit for the practice
- In our experience, it is a rare occurrence that a candidate/group does not follow through on the partnership arrangements following this length of time
- This is an important period for both the owners of the practice as well as the candidate signing this agreement. This timeframe is intended to:
- Buy-in to become a partner
- Once this timeframe has expired, the agreement will note that the employee (candidate) will be offered partnership in the practice based on:
- A valuation of the practice made at a certain time (outlined in the agreement) or
- An extended period of time (sweat equity).
- Buy-out provisions
- What happens should a partner choose to leave the practice or retire and desire to be bought out of his or her shares of the practice.
- Once this timeframe has expired, the agreement will note that the employee (candidate) will be offered partnership in the practice based on:
- Length of time before offered partnership