Legal Agreements with Co-Owners / LEGAL EASE


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Who determines the value of the practice if someone is buying in or is being bought out? How is that party chosen?


What happens if an owner loses his or her license to practice, becomes addicted or is convicted of a crime?


How will the owners be paid for their services?


Who can borrow money in the practice’s name? Are there dollar limits on how much practice debt one owner can incur without getting agreement from the others?


Should the owners’ spouses sign the agreement to indicate that they know of its existence and the provisions it includes? What is the procedure for future modifications of the agreement?


What are the dispute resolution procedures?


What happens when an owner retires or dies?


Should each owner own a life insurance policy on the other owners’ life? Should the practice purchase and own the policies instead? What are the tax ramifications of each?


Revisit, and allow it to evolve “Common values, practice philosophy,


respect and communication” are what William Griffin, VMD, and Christopher Lindquist, VMD, of Regional Veterinary Emergency and Specialty Center, Turner- sville, N.J., find helps glue their business relationship together. They were class- mates, interned together and worked together for another practice when the idea of owning a business together evolved as a need and opportunity. “We both recognized the fact that we


needed to make sure our business rela- tionship was legally documented just in case something were to go awry,” says Griffin. “We handle it as a business but interact as friends.” He first purchased an existing practice


and then invited Lindquist to join as a full partner. Griffin said they wanted the


Trends magazine, November 2012


business legally structured so that respon- sibility and benefits were equally shared. “That was relatively easy as far as


how it was going to be,” said Griffin. “What’s fair, what’s balanced, that was never an issue.” The challenge for a new partnership,


he says, is the day-to-day issues: who is responsible for what, individual attitudes and skill sets, and areas in which each partner is weak or strong. “Over time, you get to know what you and the other person are good at and not good at.” For that reason, says Lindquist, avoid assumptions in setting up documents regarding roles and responsibilities. In their case, things evolved with Griffin tak- ing on a larger managerial role, including software, practice protocols and market- ing, which allowed Lindquist to handle the human relations portion of the busi- ness. That change led the pair to review and adjust their compensation decision. “Neither of us knew what we were


doing in the beginning, not knowing what to expect,” says Griffin. Because of that, Griffin and Lindquist


suggest that potential co-owners entering a new venture paint their legal agreement in broad strokes to allow it to evolve. Include specific areas, such as how to handle disputes, they say, but allow it to be a bit more organic, as theirs is. If a person were to join an existing


practice, however, they would suggest that the documents be more specific. They also recommend that co-owners carve out time to meet each week to dis- cuss the business. Otherwise, the lack of communication can lead to problems. Once matters are handled in the organi-


zational documents, Wilson suggests that they be reviewed regularly. For operating agreements, he suggests a review every 3 to 5 years. Some segments can become so outdated that if a practice had to rely on them 10 to 15 years later, they would not be applicable, practical or acceptable. 


Maureen Blaney Flietner is a freelance writer, photographer and design specialist based in Wisconsin.


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