Partnership disputes - minimising risks and costs20/07/16
Partners in general practice tend to have close working relationships but the pressures of general practice and different agendas, as to management or direction, can place a strain on the most amicable of relationships. Even relationships which have worked successfully for many years can break down and disputes escalate into formal legal proceedings, which are expensive and time consuming, as well as hurtful and stressful for all involved – including staff employed at the practice.
Minimising risks and costs
So, can this be avoided? Or, if not, how can working relationships be set up so that any parting of the ways can be managed efficiently, avoiding or at least minimising costs, time and stress.
The simple answer is to build on a secure foundation. Two key elements are relationships and putting in place the essential legal documentation.
Key questions to ask
Trust your instincts. Only enter into partnership if you feel you can work effectively together in tackling the myriad of challenges that general practice presents. Key questions to ask yourself are how do you think your fellow partners will behave when dealing with difficult financial staffing premises or patient issues? It’s not unusual for warring partners to say: “we knew that we would end up in dispute, we didn’t get on from the start”. It seems obvious - but if that’s the feeling then think twice!
Give your partnership a secure legal foundation. This includes having a written partnership agreement which is robust and well drafted. Check your agreement – does it actually say what you thought it did? Is it crystal clear – remember ambiguity results in expensive misunderstandings. What about the key provisions – does your agreement deal with distribution of profit and loss, capital allocation, expenses, tax superannuation and property? Does the agreement set out what happens if someone’s sick, or retires or (even) is suspended and finally do you understand exactly what would happen if the partnership was dissolved? What else can you do?
Other key documents in terms of giving the partnership a secure foundation include contracts of employment, job descriptions, and policies and procedures. Most people know Vegetius’ famous quote – if you want peace prepare for war - but not everyone knows the equally true words which follow: he who aspires to victory should spare no pains to form his soldiers.
- Take time to recruit the best candidates to a post. If everyone (including partners) has a clear understanding of staff roles and responsibilities then the practice not only runs more efficiently but the possibility of disputes is reduced.
- Policies and procedures dealing with employment issues aren’t just an ‘add on’ but set standards in the practice and, if problems arise, provide a framework that helps you manage and contain issues.
We also recommend putting a separate declaration of trust in place to deal with your property arrangements as this will survive in the event that the partnership agreement lapses for any reason.
The last resort
Finally, our firm view is that litigation is the absolute last resort in any situation. Well drafted partnership agreements include a dispute resolution mechanism designed to bring partners back from the brink. Policies do the same in an employment context. And, whether it’s a partnership or an employment dispute, we’ve found that even in the most acrimonious cases there’s value in a specialist mediation and facilitation service. Carefully designed and managed this can dampen down inflammatory situations and replace adversarial confrontation with principled negotiation so saving all parties time, cost and stress, and enabling them to more quickly pick up their working lives.
How we can help you
For more information, including information on our specialist mediation service, partnership agreement drafting or review and employment advice please contact Sarah Berry, Claire Reynolds or Sam Hopkins.