Is a Gentlemen's Agreement Enough?
Question sent to HCPE...
"I am a new graduate who is in the process of taking a non-equity associate position with a well respected professional practice in an area I really like. I am pleased with the starting compensation package and the practice has promised to make me a partner within three to five years if ‘things go well’. My question is: everything to this point has been done on a handshake basis but my wife is telling me I need to get something in writing. What’s the norm in this situation?"
Congratulations on your new opportunity and especially for having a savvy wife. The norm in many situations is to work off of a verbal agreement which leaves most of the leverage with the practice owner. Realistically, a new associate is not generally in a position to make demands on the practice owner. However, I think it is very reasonable to ask for, if not a contract, a simple letter of agreement that outlines a few basic terms such as;
- How will your compensation be determined during your term of employment?
- Is there a non compete or non solicit agreement?
- What do you need to do to become a partner? How long is that track?
- How will be the practice value be determined?
- When, at the beginning of your employment or when you become a partner.
- How will your compensation as a partner be determined?
This of course is just a basic primer as there are many other items to cover in a partnership agreement. Unless you go into a situation with a large employer who has well established terms and policies, I strongly suggest that you hire a consultant or attorney familiar with optometry to guide you through the process and make sure you get a fair deal.
This question is open for discussion.
