Practice get sold? Don’t be pressured to ‘scan and sign’

Practice get sold? Don’t be pressured to ‘scan and sign’

If you’re an associate veterinarian, your new employment contract is worth a careful read—so don’t let the new corporate team pressure you into a quick turnaround.
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Sep 29, 2017

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You’ve been working at a wonderful multidoctor veterinary practice for several years and you couldn’t be happier. Then one day it happens—the practice owner assembles the staff in the break room and makes a succinct announcement: The hospital has been sold to a large Wall Street investment group. He assures everyone that the culture will not change, and though he’ll only be around for a brief transition period, he’s sure the practice will thrive and everyone’s job is secure.

The following Monday some corporate types show up to facilitate the “transition” from the clinic’s existing systems to those of the new owner. Some IT folks are there, a training supervisor and a few others. One neatly dressed member of the corporate team takes each of the doctors aside to discuss a slight adjustment in the schedule, perhaps a new 401(k) plan and, oh yes, “We’ll need you to sign a new employment contract that’s essentially the same as the one you had with the former clinic owner.” You’re handed a copy of the new agreement and you plan to read it over the weekend.

Wednesday morning, the dapper transition team fellow again takes you aside, this time to ask if you have the signed contract for him to send to headquarters. You tell him you haven’t had a chance to read through it yet. He assures you there isn’t anything “new” that’s of any real importance and he would like to have it returned by tomorrow. The following day he asks again, and by Friday he’s noticeably perturbed that the contract has not been signed and returned. You feel pressured, and right then and there you’re faced with an important decision.

Do you rebuff the “transition” guy and risk getting off on the wrong foot with the new corporate owner? Or do you stand your ground and insist that you be allowed a reasonable amount of time to go through the new document—perhaps having it reviewed by a professional who’s familiar with such contracts?

The correct decision: Take your time

Unlike 20 or 30 years ago, today a great deal of thought and sophistication goes into the preparation of most practice transfer documents. Whether the buyer is a single doctor or a large non-DVM corporation, the acquisition of a solid veterinary practice involves millions of dollars. Neither the buyer nor the seller has gone into the deal without scrupulously evaluating every angle and, indeed, every word of the legal documents that will form the structure of the deal. That includes the contracts to which the employed DVMs are parties.

So what’s the hurry, Mr. Clinic Purchaser Transition Guy? Why do you have to get that new signed associate contract back so quickly? After all, none of the employed doctors were at the conference table when the deal was being hammered out.

The rush might be mere happenstance   

If we’re being completely honest here, veterinarians do tend to procrastinate mightily when it comes to paperwork. They’re attentive to patients and responsive to clients but will leave important forms sitting under their coffee mugs for months waiting for the right moment to “get to them.”

Corporate types are the opposite. They have mental and digital checklists that they’re anxious to check things off of. If they get annoyed waiting for you to execute a contract, you may find it obnoxious—but it’s not necessarily disingenuous.

So how do you know if the pressure to sign quickly is a switchover to a speedier corporate environment or a tip-off that something more duplicitous is going on? The answer is simple—it doesn’t matter. There’s no reason to rush into signing an important document, and there’s no excuse for sitting on it for a protracted period either. I recommend that when you receive that new contract, you make it clear—then and there—that you’ll require a reasonable time period to read it, digest it and perhaps have it reviewed by an attorney or other consultant.

Set an approximate timetable. I suggest 10 to 14 days. Tell the new bosses you expect to have the contract back to them in that time frame, but if you find issues, you’ll need to address those points. Explain that your contract professional may not be available immediately to go over the document but that you’ll tend to it with due diligence.

Trust me, the new management doesn’t need your signed contract back in a day or two. It took the new owners months to negotiate the practice purchase; the least they can do is give the doctors—the little engines that make the clinic generate cash—a fair opportunity to see what they’re being asked to agree to.

Subtle changes to look out for

When selling a veterinary practice, the owner doesn’t ordinarily sell the legal entity that has owned the practice. Instead, what used to be “Smith Veterinary Clinic PC” sells all of its assets to the purchasing entity—for example, “Jones Clinic Holdings, LLC.” Included among the assets sold are the microscopes, the operating tables, the Q-tips and, yes, the employment contracts of the associate DVMs.

This means that the rights Smith PC had under the employed doctors’ contracts transfer over to the new buyer, Jones LLC. Jones basically steps into the shoes of Smith. Thus, Jones can most likely enforce the terms of any existing Smith contracts against the practice’s doctors.

Therefore it’s important to compare the new employment contract against the existing one. Often the new contract doesn’t exempt the doctors from the terms of the old. The employed DVM is being asked to agree to a second set of rules, not a replacement set of rules. Furthermore, the employed doctors must have ample time to make certain the new agreement doesn’t alter any existing rights they have against the selling clinic entity. And those doctors also need sufficient time to decide if there are any “twists” in the new owner’s agreement that they need to negotiate or simply cannot live with.

Consider this brief (and far from exhaustive) list of questions you’ll want to consider when reviewing your “replacement” contract—things you might miss in a hurried reading:

  • Does the new agreement retain your right to vacation or sick time earned under the prior agreement or does it provide the new clinic entity with a “fresh start”?

  • Does the new contract renew automatically each year without the opportunity to negotiate added pay and benefits? Is that a change from the old document?

  • Does your noncompete begin to run at the expiration of the new contract or when you actually quit working at the practice?

  • Are you committing to follow a newly introduced employee manual that you haven’t seen or had time to review?

  • Does the new contract give you “the right to participate in our 401(k) plan, which we may amend from time to time,” or does it “guarantee a 2 percent employer match” as the old one did?

Employment contracts are important documents that need to be scrutinized carefully before signing, especially if they represent a change in the legal identity of the employing party. The contract may actually be better than the old one, or it may be less desirable. But there is no question that the terms will not be identical. So go through the new document slowly and methodically and obtain professional assistance if you have any uncertainty about what you’re reading.

Dr. Christopher Allen is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at [email protected].