Whether signing a new contract for your next doctor job or terminating a contract with your current employer, there’s plenty to think about when changing jobs. Don’t let contract negotiation overwhelm you.
We spoke to three attorneys who regularly help doctors review and negotiate their contracts — Michael J. Salchert, shareholder at Larkin Hoffman, Jillian M. Clark, transactional associate at Byron, Carlson, Petri & Kalb, and Justin Marti, attorney and principal of Marti Law Group.
In this article, they answer questions about common contract negotiation mistakes, what areas of a contract you should or should not negotiate, and their number one tip for employment contract negotiation.
MS: The most common mistake is being rushed into executing the agreement without seeking advice and counsel from an attorney. Many times, doctors have contacted me with contracts that they have signed without advice and are now wanting to renegotiate for a reason not contemplated at the time of signing. Employers often create deadlines that benefit them, so I tell doctors to press the pause button and tell employers they need time to consult with an attorney.
The other common mistake is not having a prevailing party attorney’s fees clause in the agreement. Without a prevailing party attorney’s fees clause, bringing an action against an employer or former employer is an expensive proposition even if you do win, and large employers will string the case out depending on the claim to cause the doctor to expend considerable resources to maintain the claim.
If there is a prevailing party clause in the contract and you win your claim, the employer pays your attorney’s fees as well as their own. Of course, if you lose, you pay yours and theirs, so the clause governs against marginal claims and works to mitigate the advantage one party might have over another because of access to resources.
JC: New doctors often do not request clear termination clauses. This gives the employer additional leverage if there is an auto-renew provision in the employment agreement. This often leaves the doctor little bargain power at the end of the employment term. There is often little opportunity to seek a revised pay structure, bonuses, or partnership discussions.
JM: This may sound obvious, but rushing to sign a document without even reading it! Or, alternatively, not hiring legal counsel to assist in the review. We may be partial, but there are so many pitfalls that can be overlooked in these agreements that it is critical to get a trained set of eyes on them.
That said, by no means does the attorney have to reach out to the potential employer and engage in aggressive negotiations. Rather, the doctor should sit down with their counsel, outline what is most important to them, and then go back to the practice owner with organized notes on which points are deal breakers, which could be adjusted slightly, and which the doctor is happy with.
MS: Doctors should try to negotiate the important terms of the agreement before they are presented with a written agreement. The more doctors can discuss and communicate what they want—compensation, incentives, benefits, equity options, and time off—prior to the agreement being drafted, the less burdensome it is to negotiate the written agreement.
Although nothing is off the table, doctors should pick their battles in negotiating an agreement. Typically, doctors will be presented with a form agreement that contains terms and clauses that the employer is unlikely to negotiate.
The skill of negotiation is to identify what is and what is not in play. Likely the benefits being offered are not as much in play as whether the employer pays for the doctor’s licenses, malpractice insurance, professional association dues, and continuing education costs. Every situation is unique, so doctors should gather as much intel from the employer first, prior to negotiating terms to determine what is or not in play.
JC: If the employer’s initial offer is reasonable to the doctor, the doctor should focus on one or two items that are going to be more meaningful. These can include seeking certain benefits like continuing education reimbursement, health benefits, 401k, etc. These may seem small, but can add up when the employee has to pay for them out of their own pocket.
JM: Unsurprisingly, most folks jump immediately to the compensation section of the contract. While this is, of course, an important element of the offer, it is better to take a holistic approach. In addition to the compensation, it is important to consider the non-compete language, the length of time (the “term”) in which the employer is willing to commit to the doctor and the training and support that will be in place to help the doctor achieve success.
The compensation could be astronomical, but if the support is not there to help the provider ramp up, then it is probably illusory at best. Asking for benefits and perks is part of the negotiation and contributes to that holistic view, so really it is fair to ask for anything within reason. That said, it may be advisable to stay away from asking for the country club membership if it’s your first associate job!
MS: Never sign an agreement without first seeking counsel from an attorney who practices in the area of health law employment. The practice of law is not the practice of medicine.
JC: Know your goals. Do you ultimately want to purchase the practice or become a partner? Do you see yourself living in the area long term? Do you practice where you can expand your capabilities? Do you value independence? The doctor needs to think about all of these questions when joining a practice.
JM: In any negotiation, try not to come out swinging for the fences. In every situation, there should be a give and take. Doctors with countless demands may come off as someone who is a poor fit for the culture of the practice. Similarly, if the interviewing provider is asking for some concessions, but the practice owner refuses to budge on any points, that may be a sign that the provider will not be a valued member of the team.
In law, we often say that if both parties walk away feeling like they wanted just a bit more, maybe that is a successful negotiation. Oh, and I may have mentioned this already, but hire an attorney and don’t go at it alone.
As you prepare for your next job, it is important to have a clear plan when it comes to negotiating your employment contract. These tips provide a guide, but each situation is unique.
We recommend speaking with a contract attorney who can advise you on your specific needs and goals. If you need help finding a contract attorney, our Build Your Team program can get you connected to one for free.
Michael, Jillian and Justin answered more questions about contract negotiation. Find them here:
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