3 perils of associate veterinarian contracts


3 perils of associate veterinarian contracts

These three stumbling blocks must be fully understood before practice owner and associate sign on
Apr 01, 2012

I always enjoy those commercials and TV shows where all the family members of the recently deceased millionaire are gathered around the attorney's desk for the "reading of the will." There's usually a former spouse as well as a gold-digging recent spouse who is about one-third the dead guy's age. The director sometimes throws in a deadbeat kid or two just to add to the climate of shock and horror when the lawyer announces that the entire estate is being left to the decedent's 20-something bride.

Although I deal much more extensively with contracts than with wills, I do get my share of shocked and horrified clients who discover that they won't get what they expected under the terms of a document they have presented to us for review. A common case is the associate whose contract doesn't provide for an anticipated increase in salary or a buy-in or partnership opportunity that was brought up at the time of hiring. And what do you do when those oral discussions aren't reflected in the employment documents?

Veterinarians seem to experience these rude awakenings fairly regularly because so many share an inexplicable penchant for signing papers they don't fully understand. Veterinarians also love to sign papers that appear to be brief and clear but leave out essential language protecting their interests. They wait until there's a problem they believed was covered by a document they signed years earlier, only to discover that the matter was mentioned superficially, covered incompletely or not addressed at all.

Sadly for me, it's often my job to reveal this disappointing news.

Most commonly, the worried party is an associate who is beginning to sour on his developing relationship with his employer. There are three common problems I see when he or she asks me to interpret employment-related paperwork, a corporate document or other binding legal agreement:

1. Partnership offer

It's perfectly normal for an employer to discuss the possibility of eventual partnership or a buy-in with a newly employed veterinarian. From time to time, the two parties will agree that the topic should be raised in the employment document specifically. Then the situation usually unfolds this way:

After a year or two—or five—the associate gets tired of the boss not "getting around" to discussing the prospect of an equity position in the practice. Hesitant to seem pushy, the associate looks to get a legal opinion on the employment agreement that controls the employment relationship since its inception.

Upon close inspection, I sometimes find that the contract does indeed mention the possibility of a buy-in for the associate. Yet it speaks of the possibility as nothing more than that—a possibility.

In the absence of a commitment and/or a time frame for the practice owner to make a buy-in offer to the associate, nothing legally has to happen. The practice is entitled to ignore the topic ad infinitum as long as the associate isn't willing to put his or her foot down and insist. Associates are often afraid to do this for fear that future pay increases may be adversely affected and that the partnership offer still will not be tendered.

What makes associates think they're entitled to these offers? Oftentimes, language in the employment agreement is confusing or intentionally misleading. The contract might say, "The employer will consider the associate for partnership within a reasonable period of time." Or, "A 20 percent partnership shall be offered to the associate during the period of employment at the discretion of the employer."

The agreement might as well say that the associate can have the whole practice for a nickel as soon as the owner decides to give it to him. With no time limitation or language binding the employer, this sort of clause is worthless—except possibly for purposes of leading associates into thinking they have some type of exercisable right to a buy-in offer.