getting or buying a job! the basics of associate agreements and practice purchase agreements
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Getting or Buying a Job! The Basics of Associate Agreements and Practice Purchase Agreements. Gary Baumwoll, Esq. Baumwoll Law 390 Route 10 West Randolph, NJ 07869 973-723-6115 [email protected] www.LawyerForDentists.com University of Florida January 11, 2014. About Me. - PowerPoint PPT PresentationTRANSCRIPT
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Getting or Buying a Job!Getting or Buying a Job!The Basics of Associate Agreements and The Basics of Associate Agreements and
Practice Purchase AgreementsPractice Purchase Agreements
Gary Baumwoll, Esq.Gary Baumwoll, Esq.Baumwoll LawBaumwoll Law
390 Route 10 West390 Route 10 WestRandolph, NJ 07869Randolph, NJ 07869
www.LawyerForDentists.com
University of FloridaUniversity of FloridaJanuary 11, 2014January 11, 2014
About MeAbout Me
Princeton University, A.B., 2002Princeton University, A.B., 2002 Rutgers School of Law, J.D., 2007Rutgers School of Law, J.D., 2007 Attorney specializing in legal issues Attorney specializing in legal issues
in the practice of dentistry, including in the practice of dentistry, including practice transitions, employment practice transitions, employment contracts, partnership agreements, contracts, partnership agreements, leasing issuesleasing issues
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Understanding Employment Contracts Understanding Employment Contracts and Purchasing a Practiceand Purchasing a Practice
This presentation is designed to This presentation is designed to highlight some of the legal issues in highlight some of the legal issues in employment and purchase employment and purchase contracts. We will explore the issues contracts. We will explore the issues from the perspective of both the from the perspective of both the employer and employee and the employer and employee and the owner and purchaser.owner and purchaser.
Why Hire an Associate?Why Hire an Associate?
Excessive patient loadExcessive patient load
Desire to reduce workload Desire to reduce workload
Transition imminent Transition imminent
Why Why NOTNOT to Hire an Associate to Hire an Associate
Professional companionshipProfessional companionship Expectation of growthExpectation of growth Desire to keep all procedures Desire to keep all procedures ““in in
househouse”” Locked-in buyerLocked-in buyer Better utilization of overhead Better utilization of overhead
Employing an AssociateEmploying an Associate
When hiring or becoming an When hiring or becoming an associate, a written employment associate, a written employment agreement is strongly suggested.agreement is strongly suggested.
If a post-association transition is If a post-association transition is planned, the agreement should planned, the agreement should address the basic terms.address the basic terms.
Elements of anElements of anEmployment AgreementEmployment Agreement
services and dutiesservices and duties term and terminationterm and termination compensationcompensation employee expensesemployee expenses days offdays off
RepresentationsRepresentations malpractice malpractice
insuranceinsurance restrictive restrictive
covenantscovenants ownership potentialownership potential legal remedieslegal remedies
Services and Duties of EmployeeServices and Duties of Employee
hours and dayshours and days call schedulecall schedule administrative dutiesadministrative duties professional and promotional activitiesprofessional and promotional activities study groupsstudy groups outside employmentoutside employment
Term of AgreementTerm of Agreement
length of employment (usually one year)length of employment (usually one year) employment at willemployment at will renewal statusrenewal status
self-renewingself-renewing self-extinguishingself-extinguishing
Termination of AgreementTermination of Agreement
deathdeath disability, full/partialdisability, full/partial for causefor cause without causewithout cause at discretion of employerat discretion of employer
Compensation of EmployeeCompensation of Employee
salary vs. hourly vs. per diemsalary vs. hourly vs. per diem bonus systembonus system percent of production or collectionpercent of production or collection percent vs. base per diempercent vs. base per diem pension, health, fringe benefitspension, health, fringe benefits auto auto call schedulecall schedule promotional activitiespromotional activities
Employee ExpensesEmployee Expenses
Auto (?)Auto (?) cell phonecell phone continuing educationcontinuing education practice promotionpractice promotion professional association duesprofessional association dues
Malpractice InsuranceMalpractice Insurance
occurrence vs. claims made occurrence vs. claims made tail coveragetail coverage prorated premium for part-time workprorated premium for part-time work same carrier as employer if possiblesame carrier as employer if possible
Restrictive CovenantsRestrictive Covenants
access to and return of confidential access to and return of confidential information (patient list)information (patient list)
non-compete clausenon-compete clause non-solicitation clausenon-solicitation clause reasonable time and distancereasonable time and distance
Restrictive CovenantsRestrictive Covenants
DamagesDamages actualactual liquidatedliquidated
Remedies Remedies injunctioninjunction financial paymentfinancial payment
Ownership Interest or PotentialOwnership Interest or Potential
No interest or potential for any interestNo interest or potential for any interest ““sweatsweat”” equity equity gradual buy-ingradual buy-in
BoilerplateBoilerplate Provisions Provisions
noticenotice governing Lawgoverning Law assignmentassignment entire agreemententire agreement headingsheadings severabilityseverability third-party beneficiariesthird-party beneficiaries pronounspronouns
Independent Contractor vs. Independent Contractor vs. EmployeeEmployee
The IRS Rule:The IRS Rule:
The Owner has the right to control or The Owner has the right to control or direct only the result of the work direct only the result of the work
done by an independent contractor, done by an independent contractor, and the not the means and methods and the not the means and methods
of accomplishing the result.of accomplishing the result.
Independent Contractor vs. Independent Contractor vs. EmployeeEmployee
Taxes without current payroll tax cutTaxes without current payroll tax cut
Independent Contractor: Worker has to Independent Contractor: Worker has to pay the matching payroll tax = 7.5%pay the matching payroll tax = 7.5%
Employee: Owner has to pay the Employee: Owner has to pay the matching payroll tax = 7.5%matching payroll tax = 7.5%
Independent Contractor vs. Independent Contractor vs. EmployeeEmployee
When in doubt…When in doubt…
The Worker = EmployeeThe Worker = Employee
Types of Dental Practice Transitions
100% Purchase of Practice With or without prior associations with the practice
Partial Buy-In of Practice With or Without prior associations with the Practice
Documents for 100% Purchase of Dental Practice
Asset Purchase Agreement
Bill of Sale
Lease
Employment Agreement
Corporate Formation
Documents for Partial Buy-In Purchase of Dental Practice
Asset Purchase Agreement Bill of Sale Operating Agreement Lease Employment Agreements Loan Documents Corporate Formation
Some Important Dental Issues to be Addressed by an Attorney
Seller’s warranties Assets being sold/Allocation Prepaid Accounts/Fee Schedule Accounts receivable Lease Indemnification Adjustments Closing contingencies
Seller’s WarrantiesSeller’s Warranties
Practice is in compliance with all laws, Practice is in compliance with all laws, rules and regulationsrules and regulations
There will be at least 30 days worth of There will be at least 30 days worth of supplies in the office on the Closing supplies in the office on the Closing DateDate
All equipment and fixture are in good All equipment and fixture are in good working order on the Closing Dateworking order on the Closing Date
Asset Being Sold/AllocationAsset Being Sold/Allocation
Furniture, Fixture and EquipmentFurniture, Fixture and Equipment Good for Purchaser – Good for Purchaser – VeryVery bad for Seller bad for Seller
Supplies and InventorySupplies and Inventory Good for Purchaser – Good for Purchaser – VeryVery bad for Seller bad for Seller
GoodwillGoodwill Bad for Purchaser – Bad for Purchaser – VeryVery Good for Seller Good for Seller
Restrictive CovenantRestrictive Covenant Bad for Purchaser – Bad for Purchaser – VeryVery bad for Seller bad for Seller
Prepaid Accounts/Fee SchedulePrepaid Accounts/Fee Schedule
Crowns, Bridge and Prosthetics Preparation 25%Impression 25%Try-in 25%Insertion 25%
Orthodontic Prepaids are very Orthodontic Prepaids are very important numbers to know.important numbers to know.
Accounts ReceivableAccounts Receivable
Accounts receivable are the fees owed to the Accounts receivable are the fees owed to the Seller for work completed before ClosingSeller for work completed before Closing
Seller usually keeps accounts receivableSeller usually keeps accounts receivable
Accounts receivable can be offset by prepaidsAccounts receivable can be offset by prepaids
An average amount is 60 to 90 days of An average amount is 60 to 90 days of collectioncollection
HUDSON CAREER COUNSELINGHUDSON CAREER COUNSELING
How to Choose and How to Choose and Work with an AttorneyWork with an Attorney
Choosing an AttorneyChoosing an Attorney
Attorney is your advocate and can Attorney is your advocate and can represent only you.represent only you.
Probe for possible conflicts of interest.Probe for possible conflicts of interest. Attorney can be hired by both parties Attorney can be hired by both parties
to mediate and draft a mutually-to mediate and draft a mutually-agreeable contract, but . . . agreeable contract, but . . .
Each party must then hire a personal Each party must then hire a personal attorney to review contracts.attorney to review contracts.
Attorney must . . .Attorney must . . .
be familiar with dental practice be familiar with dental practice employment issuesemployment issues
be knowledgeable about dental be knowledgeable about dental issuesissues
have excellent referenceshave excellent references
Working with an AttorneyWorking with an Attorney
Do your homework--be preparedDo your homework--be prepared Plan earlyPlan early Be your own best advocateBe your own best advocate Be reasonableBe reasonable Be the client you would want as a Be the client you would want as a
patientpatient Avoid false economiesAvoid false economies Pay your billPay your bill
Working with an Attorney:Working with an Attorney:
Your attorney is your ally but not your Your attorney is your ally but not your friend.friend.
You have a business relationship.You have a business relationship. You are are paying for attorneyYou are are paying for attorney’’s time.s time. Each phone call costs you money.Each phone call costs you money. Stay on point (make small talk off-the-Stay on point (make small talk off-the-
clock).clock). Even a Even a ““bustedbusted”” deal costs you money. deal costs you money. There is no such thing as a There is no such thing as a ““quick peek.quick peek.””
Working with an Attorney: Working with an Attorney: Legal CostsLegal Costs
Written agreement outlining fees:Written agreement outlining fees:
initial retainer (refundable if initial retainer (refundable if unearned)unearned)
hourly: $300 - $425/hrhourly: $300 - $425/hr flat fee: $1,000 - $1,500flat fee: $1,000 - $1,500
Terminating the Attorney/Client Terminating the Attorney/Client RelationshipRelationship
successful completion of transactionsuccessful completion of transaction unsuccessful transition unsuccessful transition conflict with attorneyconflict with attorney
DisclaimerDisclaimer
This information is not intended as a This information is not intended as a substitute for legal advice. You substitute for legal advice. You should familiarize yourself with the should familiarize yourself with the laws of your local jurisdiction and laws of your local jurisdiction and seek legal advice from a local seek legal advice from a local attorney who specializes in such attorney who specializes in such matters.matters.
If you have a question or need a copy If you have a question or need a copy of the handout contact me at:of the handout contact me at:
Gary Baumwoll, Esq.Gary Baumwoll, Esq.390 Route 10 West390 Route 10 WestRandolph, NJ 07869Randolph, NJ 07869
973-723-6115973-723-6115
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Get a Job!Get a Job!
Gary Baumwoll, Esq.Gary Baumwoll, Esq.
[email protected]@gmail.com
www.LawyerForDentists.com www.LawyerForDentists.com