AMA VICDOC SPRING 2021 - Flipbook - Page 45
CAN I HAVE THAT
THE IMPORTANCE OF WRITTEN
AGREEMENTS BETWEEN DOCTORS
REPORT NICHOLAS BLACKMORE AND ROD FELMINGHAM, KENNEDYS
tarting a new medical practice is an exciting
time. You’ve taken the leap to set up your own
practice with a small group of colleagues you
know and trust. You all get along well and you
share similar ideas about how a practice should be run.
Why would you go to the trouble of hiring a lawyer and
spending thousands of dollars to draw up an agreement
to govern your relationship with your new business
partners? Shouldn’t a simple handshake agreement
Lawyers have a saying: you don’t need an agreement
until, suddenly, you do. The truth is that a handshake
agreement probably is good enough, as long as your
practice remains in this initial state of harmony. While
everyone is getting on well and everything is going to
plan, agreements sit untouched in drawers. Minor issues
are easy to deal with while everyone is feeling generous
Unfortunately, as a medical practice grows and
encounters obstacles, aspirations and circumstances can
change and the harmony can wear thin. Sometimes
it is an unexpected event that raises questions no-one
thought about when the business began – this could
be as minor as a disagreement over how to deal with
a problematic employee, or as major as a doctor being
found guilty of professional misconduct. Sometimes
cracks appear because a practice is successful and
business partners find that amounts of money that
previously weren’t worth arguing about gradually
become contentious. All agreements come to an end
eventually, one way or another. These are the situations
in which a written agreement drafted by an experienced
lawyer becomes invaluable.
Verbal handshake agreements can be just as legally
binding as written ones. However, written agreements
have two big advantages.
Firstly, a written agreement allows the parties to
fix their agreement about how the practice should be
run while they are still feeling positive and generous
towards each other. It is relatively easy to reach
agreement about how to handle potential problems in
a business relationship in advance, when the problems
are only theoretical in nature. Written agreements allow
the parties to record their agreed position about how
issues will be managed before they know which side
of the problem they will find themselves on and
self-interest takes effect.
Secondly, a written agreement prepared by an
experienced lawyer will provide for a whole range of
‘what if ’ issues that the parties might otherwise never
consider, such as:
»What happens if a doctor decides to change their
area of practice?
»What happens if a doctor fails to meet professional
»What happens to a partner’s interest if they become
temporarily or permanently incapacitated or die?
»What happens if a partner becomes insolvent, is
guilty of misconduct, or simply begins to neglect
»What happens if a partner decides they want to
leave and set up their own competing practice
down the street?
These issues may not arise, but if they do, a written
agreement ensures that everyone understands their
rights and obligations and can avoid legal disputes
which can easily cost 10 or 20 times more than the
cost of preparing the agreement. Prevention is better –
and substantially cheaper – than a cure.
AMA Victoria has agreement templates that can be
purchased to assist members with contract negotiations.
For more information contact the Workplace Relations
team on (03) 9280 8722.
Level 9 360 Elizabeth Street Melbourne VIC 3000 Australia T (03) 9498 6699