Made 'partner' but no contract after 5 months

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financial.freedom
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Made 'partner' but no contract after 5 months

Post by financial.freedom »

I'm a physician and was voted in as partner (technically shareholder as part of C corp) five months ago but never received a buy-sell agreement as part of the partner contract. I brought it up several times and was first told I'd have a contract in January... then February... then March... now it's mid April and still haven't received an agreement.

On the positive side, my job is with a great group of people overall and they have been splitting profits equally with me and showing me the accounts receivable each month. But now, the head of the group is asking me to work at another location an hour and a half away. None of the other partners travel to that location. He says it will be infrequent, but even if it's only 2-3 times a month I feel that 3 hour commute will make it difficult to juggle with my family's schedule.

I've thought about refusing to do the new work, but at the same time I don't have a written partnership agreement so I feel uneasy about rocking the boat. And the job market has really taken a turn south due to the recent economic changes. So I don't think finding another job is an option. As an aside, the quote I was originally given as an associate was much lower than what is being asked verbally for me to buy in from the head of the group. Originally, buy-in was quoted as <50k now I'm told buy-in is over 300k.

Questions:

1. Since partners are splitting profits with me, should I just continue the current situation and not say anything?

2. What should I say regarding the new work at a location farther away?

3. Should I bring up the discrepancy about buy-in now or wait until I receive an actual contract and then negotiate?

Thank you in advance!
Chris K Jones
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Re: Made 'partner' but no contract after 5 months

Post by Chris K Jones »

I am an older physician and have been around a bit. Take this with a grain of salt because you will get better advice from others here, but my take is:

1. I would occasionally remind them about the written buy-sell agreement. I would not press it too hard because these are not normal times. Because of the pandemic, their attorneys' offices may not even be open. Earlier this week I went to an attorney's office in a large city and it was almost completely deserted. I would be patient with them, but not infinitely patient.
2. I have no idea. As I have gotten older and have seen things, I have learned that the most security is available for those who are the most necessary. If you are the only one that does something, it might make your position there more stable. I once quit a job because things were not quite as promised when I went to work. 28 years later, it is obvious that that was a far better job than the place I am in now. I'd keep an open mind about this. I'd probably bite my lips and try to make the best of it.
3. I'd gently inquire about the discrepancy. See if you can figure out if there is a legitimate reason why. It could be that there collections are much higher. It could also be that they are "cheating the new guy/gal" :) Best wishes to you.
Last edited by Chris K Jones on Fri Apr 17, 2020 10:08 am, edited 2 times in total.
EFF_fan81
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Re: Made 'partner' but no contract after 5 months

Post by EFF_fan81 »

There is a dynamic of the junior partner still needing to earn his or her stripes somewhat. If they are sharing profits, I wouldn't worry about the contract delay, I would just chalk it up to them being busy and/or lazy unless you've seen unethical behavior from them in the past. I'd give it a rest for a month or so and assume everyone is dealing with the pandemic, and then in late May or June I'd ask again (in an e-mail so you have a written record) and say that you know things have been crazy but want to make sure it gets wrapped up and signed this year for tax / accounting purposes.

If it's the fall and still no contract I would start to get agitated.

My strategy is to mix being patient with being persistent. There's no way I would let it drop, but you need to manage relationships here too.

For the new site, I'd say I was willing to do it [x] times a month, then stick to it. I don't think I'd say "no, never." But I wouldn't do it more than once a week.
Jack FFR1846
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Re: Made 'partner' but no contract after 5 months

Post by Jack FFR1846 »

Why do they have a site that's 3 hours away?

Perhaps it makes sense because somehow they're making a boatload of money on it with little input from doctors. Or is there some other reason (partner's cousin Billy Bob wanted to open a location but has no doctors to fill it). If the location isn't being serviced for a really good reason, point that out and ask that they consider dropping it.
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hicabob
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Re: Made 'partner' but no contract after 5 months

Post by hicabob »

It seems strange that they are giving you distributions (share of profits) yet you are not an official stockholder? When I owned part of a corp we always had a "meeting of the board" (shareholders) prior to distributions and there was a written record of the minutes which our lawyer insisted upon. Distributions are allocated by percentage of stock owned. I'd press for your stock certificate, it's not much work for the corporation's lawyer whom you should meet with.

I've seen people get very sleazy when it comes to diluting their shares of a privately owned company.
Topic Author
financial.freedom
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Re: Made 'partner' but no contract after 5 months

Post by financial.freedom »

Chris K Jones wrote: Fri Apr 17, 2020 10:06 am I am an older physician and have been around a bit. Take this with a grain of salt because you will get better advice from others here, but my take is:

1. I would occasionally remind them about the written buy-sell agreement. I would not press it too hard because these are not normal times. Because of the pandemic, their attorneys' offices may not even be open. Earlier this week I went to an attorney's office in a large city and it was almost completely deserted. I would be patient with them, but not infinitely patient.
2. I have no idea. As I have gotten older and have seen things, I have learned that the most security is available for those who are the most necessary. If you are the only one that does something, it might make your position there more stable. I once quit a job because things were not quite as promised when I went to work. 28 years later, it is obvious that that was a far better job than the place I am in now. I'd keep an open mind about this. I'd probably bite my lips and try to make the best of it.
3. I'd gently inquire about the discrepancy. See if you can figure out if there is a legitimate reason why. It could be that there collections are much higher. It could also be that they are "cheating the new guy/gal" :) Best wishes to you.
Thank you for the reply, really appreciate it. Collections are much lower right now, and partners will likely earn less than I made as an associate for the next 4-5 months until non-emergent procedures can be scheduled again. I'm told the discrepancy is because the calculation occurred at the time I made partner (several months ago) and at that time collections were high. But I also have the original estimate in writing from when I first took the job, not sure how much weight that holds.
Topic Author
financial.freedom
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Re: Made 'partner' but no contract after 5 months

Post by financial.freedom »

EFF_fan81 wrote: Fri Apr 17, 2020 10:07 am There is a dynamic of the junior partner still needing to earn his or her stripes somewhat. If they are sharing profits, I wouldn't worry about the contract delay, I would just chalk it up to them being busy and/or lazy unless you've seen unethical behavior from them in the past. I'd give it a rest for a month or so and assume everyone is dealing with the pandemic, and then in late May or June I'd ask again (in an e-mail so you have a written record) and say that you know things have been crazy but want to make sure it gets wrapped up and signed this year for tax / accounting purposes.

If it's the fall and still no contract I would start to get agitated.

My strategy is to mix being patient with being persistent. There's no way I would let it drop, but you need to manage relationships here too.

For the new site, I'd say I was willing to do it [x] times a month, then stick to it. I don't think I'd say "no, never." But I wouldn't do it more than once a week.
Thank you for the reply, I like this strategy. It's true, the more senior partners seem to have more pull in terms of the overall dynamic. I think that is the main reason for the delay and discrepancy for buy-in.
HomeStretch
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Re: Made 'partner' but no contract after 5 months

Post by HomeStretch »

You had another similar thread after 2 months with no contract. Are any of the responses in that thread useful?
viewtopic.php?f=2&t=302172
Topic Author
financial.freedom
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Re: Made 'partner' but no contract after 5 months

Post by financial.freedom »

Jack FFR1846 wrote: Fri Apr 17, 2020 10:18 am Why do they have a site that's 3 hours away?

Perhaps it makes sense because somehow they're making a boatload of money on it with little input from doctors. Or is there some other reason (partner's cousin Billy Bob wanted to open a location but has no doctors to fill it). If the location isn't being serviced for a really good reason, point that out and ask that they consider dropping it.
The group is trying to pick up new business at that location by having me offer procedures there that aren't currently offered. I'm currently the only one in the group who performs the type of procedures requested. Overall, business is way down since the pandemic. Partners will likely make less than associates over the next few months. So this would bring in more revenue for partners.
Topic Author
financial.freedom
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Re: Made 'partner' but no contract after 5 months

Post by financial.freedom »

HomeStretch wrote: Fri Apr 17, 2020 10:40 am You had another similar thread after 2 months with no contract. Are any of the responses in that thread useful?
viewtopic.php?f=2&t=302172
Yes, from that thread I decided to inquire but be patient. But things have changed since then:

1. Profits are nosediving -- partners will likely make less than associates for several months (my pay will go down and I don't have a signed partner agreement).

2. I'm being asked to pick up additional work now at a new location (90 minute commute away) that others in the group are not covering.

3. Because of #1 and #2 I looked for my original contract, and now know there's a large discrepancy for buy-in that I have in writing.
Chris K Jones
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Re: Made 'partner' but no contract after 5 months

Post by Chris K Jones »

It sure seems like a big change. In the old days, I remember situations where partners in various groups were setting buy ins based on something near billed amounts. This was when managed care was just becoming common. As you know with insurance contracts, you only get pennies on the dollar of what you bill. Is it possible that something like that is going on? Is it possible they are not discounting the accounts receivable properly? Or carrying huge amounts of bad debt that they haven't written down?

Do you know an accountant in your area that is not associated with your group? An accountant might be the best person to talk to. I dont think this is a minor issue. I would suggest that you gently explore it, but it needs to be answerred to your satisfaction. Going forward, you won't be happy if you feel you were cheated by people you plan to work with for the rest of your career. My 2 cents, anyway. I wish you the best. And congratulations on making partner :)
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unclescrooge
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Re: Made 'partner' but no contract after 5 months

Post by unclescrooge »

It seems fair that all locations should be served in rotation.
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WWJBDo
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Re: Made 'partner' but no contract after 5 months

Post by WWJBDo »

financial.freedom wrote: Fri Apr 17, 2020 9:57 am On the positive side, my job is with a great group of people overall and they have been splitting profits equally with me and showing me the accounts receivable each month. But now, the head of the group is asking me to work at another location an hour and a half away. None of the other partners travel to that location. He says it will be infrequent, but even if it's only 2-3 times a month I feel that 3 hour commute will make it difficult to juggle with my family's schedule.
Originally, buy-in was quoted as <50k now I'm told buy-in is over 300k.

Questions:

1. Since partners are splitting profits with me, should I just continue the current situation and not say anything?

2. What should I say regarding the new work at a location farther away?

3. Should I bring up the discrepancy about buy-in now or wait until I receive an actual contract and then negotiate?

Thank you in advance!
It's unclear what your specialty is (which is fine), but a few things come to mind. First, it is very possible that the contract has been slow to appear because a possible sale of the group is also underway. I've seen worse from what are otherwise sane, even nice physicians. On the other hand, the delay could be a low priority, a distracted or inefficient organizational structure or any number of other things. Are you going to all the partner meetings? The answer to that should be a guiding point.

On top of that, COVID has completely upended medical practices. Nearly everyone is taking pay cuts, laying off staff and trying to get PPP loans. Doubly so for primary outpatient practices.

You've gotten good advice from others to:
a. Get an accountant. Buy-ins are not necessarily intuitive if you haven't been through one or two. An expert advocate is what you need. Ask other physicians in the area who they use and find one to help you out. I cannot stress this enough.
b. Get an attorney. Can be someone on their own who is less expensive than a big law firm. Again, get a referral. But having a professional backing you is very helpful and it allows your attorney to badger the group about the contract, not you.

To your points:
1. It is far better to get the paperwork done. Having the professionals above will help achieve completed paperwork. If an attorney isn't able to get paperwork from the group, then the situation is likely worse than you know.
2. New partners frequently are expected to take on pet projects that build revenue or other value to the group. The other practice may be your contribution, but I agree it is best to set limits (ie. you can go one day each working week and if it takes more than that, others have to go too and if they other partners later refuse, maybe that location is not really in the best interests of the group, or perhaps the group hires someone to work there full time or part time). Define the limits beforehand and then stick to them.
3. Your accountant (one familiar with medical practices) can help you negotiate through this, which will almost certainly be contorted by COVID related impacts.

Good luck.
"It is difficult to get a man to understand something when his salary depends upon his not understanding it." Upton Sinclair
Katietsu
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Re: Made 'partner' but no contract after 5 months

Post by Katietsu »

I would be most bothered by a change in the buy in amount without any discussion as to the reason it occurred. I do think the situation is a bit of a mess now that we are in the middle of a crisis that is still evolving on a daily basis. I would want input from someone with a lot of experience right now.

Everyone has a right to decide what is acceptable to them. But, I would consider it well within reason to ask you to commute 90 minutes a few times a month. These types of changes are almost inevitable in a long term arrangement in my area.
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