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DENTAL PRACTICE


Michael Royden of Torntons Law offers some advice on dental partnership disputes – avoid them where you can, resolve them where you can’t


Together for better or worse


P


RIOR to the introduction of the Dental Body Corporate in 2006, the vast majority of dental practices were


operated as a partnership, and that is still the case today. One of the fundamental aspects of a


successful partnership is trust, and many dentists whom I act for recognise that the relationship with their partners is an incredibly close one – perhaps second only to the relationship with their spouse (and some spouses might disagree). However, like any relationship, partnerships


can be tested and some will survive the difficult times whilst others won’t be so lucky. Whilst you cannot predict complications that may arise during a partnership, there are ways in which practitioners can try to avoid disputes, or at least minimise their impact when they do appear.


Put it writing One of the first things we say to any partnership is that they should have an appropriately worded partnership agreement in place, which is a contract governing their relationship. In the absence of an agreement, the partnership legislation implies certain arrangements between the partners, many of which will be entirely unsuitable and unacceptable to the partnership as a whole. Having once become embroiled in a


partnership dispute, clients oſten say it was 18


never felt necessary to have a partnership agreement, as each of the partners trusted the others. Unfortunately, if there is no agreement, the outcome of a fallout can oſten be unexpected and undesirable. Te other benefit of doing an agreement at the outset is that it will allow the partners to consider a range of issues which may never have occurred to them previously. Tere are different styles of partnership


agreements and it’s important that, whatever style is chosen, it reflects the circumstances of the individual practice. We oſten see agreements which are adapted from a particular source or template and which have not been adequately draſted. For example, they might have provisions in them which are relevant to property ownership, when in fact the practice premises have been leased. I would recommend that you seek both your lawyer’s and your accountant’s advice when producing a partnership agreement to ensure that it fits your specific requirements. Te agreement should cover a range of


issues including the decision-making process – how are decisions reached regarding the management of the practice and how they are implemented. It should also set out in very clear terms exactly how the profits of the practice are shared. Another important area to cover is


retirement. Whilst it might seem odd to be recording provisions for this at the outset,


just like death and taxes, the end of a partnership is inevitable and unless all of the partners choose to sell out at the same time, there is likely to be the need to address the departure of one or more partners at some stage. Some of the issues to consider in relation to retiral include how much notice needs to be given before a partner retires. How will the patient list be dealt with? If the premises are jointly owned, how will they be dealt with and what value will be placed on them? Another important factor to discuss is


restrictive covenants – this will prevent the departed partner from setting up a practice nearby, thus devaluing the continuing practice. Restrictive covenants are oſten felt to be unnecessary and unenforceable, however if one is not in place it can cause a great deal of anxiety to the continuing partners, particularly if a partner leaves the practice following a fallout. Another key area is ownership of the


practice premises. In some cases the partners and the owners of the property differ. In this scenario, the property owning partners will be the landlord and the partners as a whole are the tenant. In theory this should not necessarily cause any significant difficulties, however this does create two camps within the practice – property owning and non property owning – and there is the potential for this to cause tension.


SUMMONS


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