GP or Dental Practice Disputes: The importance of partnership agreements

GP or dental practice disputes can be challenging, especially when there’s no clear framework for resolving them. Without a written partnership agreement, practices default to the outdated provisions of the Partnership Act 1890, which often fail to meet the needs of modern businesses. Worse still, the absence of an agreement leaves no formal record of how the partnership is meant to operate.

Why You Need a Written Partnership Agreement

A partnership agreement helps practices establish clear expectations and procedures. It’s far easier to draft such an agreement when relationships are amicable rather than strained. At Nelsons, we provide practices with a detailed checklist to guide these discussions, covering critical areas such as:

• Length of permitted sick leave for partners.
• Suspension rights for misconduct.
• Maternity leave policies.
• Retirement age for partners.
• Financial arrangements for new partners joining the practice.
• Payout timelines upon resignation or retirement.

This process often reveals considerations partners may not have addressed before, enabling them to pre-empt potential issues.

Understanding Liabilities

Partnership disputes aren’t just about relationships—they often involve complex financial and legal liabilities. Before making major decisions like handing back a contract or resigning, it’s vital to fully understand your obligations. These could include practice debts, lease agreements, or funding liabilities, which may differ between partners depending on individual circumstances.

Tackling GP or Dental Practice Disputes: Key Considerations

When disputes arise, the presence—or absence—of a partnership agreement significantly influences how matters can be resolved:

• With an Agreement: We examine whether the issue constitutes a breach and explore available dispute resolution mechanisms (e.g., mediation or arbitration). Some agreements include provisions for partner expulsion or suspension under specific circumstances.
• Without an Agreement: The partnership may be governed by the Partnership Act 1890, making disputes far trickier to handle. Under this law, expelling a partner or dissolving the partnership requires unanimous agreement, which can escalate tensions.

Practical Solutions for Common Challenges

Some of the issues we frequently help resolve include:

• Expulsion Rights: Does the agreement allow for removing a partner, and under what grounds? Beyond fault-based grounds, some agreements include “green socks” clauses to address irreparable relationship breakdowns.
• Suspensions: Are there provisions for suspending a partner under investigation? This might include limiting access to the premises, emails, or staff.
• Outgoing Partners: Does the agreement clarify payment terms for departing partners or compel them to sign necessary documentation?

Proactive Steps to Safeguard Your Practice

The best time to address these issues is before they arise. By proactively establishing a comprehensive partnership agreement, you can protect your practice and ensure smoother operations even in challenging times.

If your practice is facing disputes or considering drafting or reviewing an agreement, our team at Nelsons can help.