Two dentists shaking hands

Partnership Agreements in Dental Practice Formation: Roles, Responsibilities, and Dispute Resolution

If you flip through the dental section of a phonebook (assuming you can still find one), you’ll notice that many dental practices have names like Simons, Alvins & Theodore. This is because many dental practices are partnerships.

There are plenty of benefits to creating a partnership. However, those benefits can turn sour very quickly if you aren’t careful about what you include in your partnership agreement.

Before signing a partnership agreement, consider the following issues and how you want to approach them in your business endeavor..

Roles of Each Partner

It is simple to say that every partner is equal, but that isn’t efficient or realistic. Every partner should be assigned distinct roles that match their talents.

It is important that each partner understands their role and agrees to perform them. Your dental practice won’t do well, for example, if the partner who has a publicity role isn’t doing their job.

Responsibilities of Each Partner

Responsibilities will often be tied closely to roles. However, they aren’t identical. And unlike roles, which are somewhat vaguely defined, responsibilities should be explicitly defined.

One of the major reasons you want to define the responsibilities of each partner is to avoid having people step on each other’s toes. For example, if your responsibility is to interview potential new hires, it won’t benefit anyone if one of your partners also interviews a potential new employee.

Responsibilities differ from roles in that they are more likely to change over time. If, for example, you take some extra training and become the most proficient dental surgeon in the practice, you will probably take on the primary responsibility of communicating with the local hospital surgical unit.

Finally, your partnership agreement should include procedures for ensuring all responsibilities are fulfilled when one or more partners are away.

Dispute Resolution

Another important point to cover in a partnership agreement is dispute resolution. Unfortunately, no matter how hard you and your partners try to get along, eventually, you will have disputes about the direction or decisions of the business.

What do you do, for example, when one partner wants to refurnish the office? Even if they do all the work, they will be spending tens of thousands of dollars of revenue on that project. And that is a problem if you don’t agree with the expenditure.

There are several ways that partnership agreements may approach dispute resolution. You could determine that specific partners have veto power, for example. Alternatively, the agreement could determine that partners have authority within the scope of the roles assigned as part of the agreement.

Your goal should be to define dispute resolution processes that avoid any partner needing to take legal action. Even more importantly, you want to define dispute resolution procedures that discourage a partner from exiting the partnership.

Exiting the Partnership

The agreement also needs to account for the possibility that a partner will eventually exit the arrangement. Hopefully, it is a friendly exit. But regardless, the agreement should formalize how partners leave.

The best way to write the clause for exiting the partnership is to determine the jist of what you want from it and then explain your desires to a dental law attorney. They will attempt to write this part of the agreement to match your wishes and meet all legal requirements.

A Partnership Agreement Is a Contract

The exit clause isn’t the only place a lawyer can help. A partnership is a contract, and an attorney should be involved in the entire process if you want an agreement that protects your interests and follows all state and federal laws. 

Need help with that? A dental business lawyer from Mahan Dental Law can help create a partnership agreement anywhere in the country.