Whether you are starting your own private practice, considering a position as an employee, or taking a corporate lease, it’s important to know the basics of contracts and negotiations. A good contract attorney can help you review the specifics of any contract to ensure legalities and protect you, but every OD should know the basics in order to protect themselves.
Three common types of contracts
If you are going into business with someone, or buying a portion of a practice, you will need a partnership agreement. A business partnership is like a marriage, but with set rules in advance.
Sales or purchase Agreement
If you are buying out an established practice, you and the selling doctor will sign a Purchase Agreement. A practice sales agreement should specify purchase price, payment terms, practice assets and liabilities.
Lease or sublease contracts
If you are taking a corporate lease, you will sign a lease or sublease contract with the corporate entity.
Three common elements of a contract
How can you tell if you are being compensated or paid fairly? Are their any incentive compensations or bonuses under the terms of the contract?
Covenant Not To Compete aka Non-Compete Clause
If you leave this practice, will you still be able to work in this area?
A typical non-compete clause will specify three things:
- Scope of Business – An employee will agree not to practice optometry or become a shareholder, consultant, member, owner or manager of a competing organization that provides optometric services.
- Geographic Area – After leaving a practice, an employee will agree not to practice optometry within a certain distance from their former practice. In urban or suburban areas, a non-compete clause can specify just a few miles. In rural areas where there is less competition, a non-compete could specify a longer distance, 50 or more miles.
- Duration – This is the timeframe you agree not to compete with your former practice after you leave. It’s not uncommon for the terms of a non-compete to be from 1-5 years.
How and when can you leave or end the contract?
Now that you know some types of contracts and common elements of contracts, how do you negotiate for the best deal?
Again, a good contract attorney can help ensure that everything is done legally and in your best interest, but an attorney can’t tell you what you want.
Rules for negotiation
Rule #1 – If you don’t ASK, you don’t GET
If you have children who can talk, you may not realize it, but you are negotiating every day. This is because children ask for what they want. If they don’t like what you are offering, they ask for something else instead.
Some contracts are offered as a “take it or leave it” deal. All that means is that the negotiation will be short or non-existent. However if you don’t ask, you’ll never know if you could have gotten a better deal.
Rule #2 – Everything is a negotiation
Many new grads are afraid of negotiating because they are afraid of hearing “No.” A negotiation does not have to be an argument. If done correctly, both parties involved can be happy with the deal.
When considering an important or long-term contract, every point should be negotiated. You may loose on some points, but you will win on others.
Rule #3 – Negotiating is COMPROMISING
If done correctly, both parties will give up something in order to get something else that they want. To prepare yourself for a negotiation, know certain things you want, and certain things you are willing to compromise on.
Think about 4 things in advance:
- Know your ideal situation – this is your best case scenario. Make it something you really want, but make sure it’s not impossible to achieve.
- Know your realistic situation – this is what you would be willing to agree to, and this is probably close to what will happen if the negotiation is done correctly.
- Know your “walk away” situation– these are your deal breakers. Thinking about this in advance will prevent you from taking a deal and regretting it afterward.
- Know your back up situation – this is your “or else.” If you have a good alternative, you will want to negotiate more aggressively. If you don’t have a good alternative lined up, then you may need compromise more.
Understanding the basics of contracts and negotiations will take the fear out of the process. But just like any skill, negotiating can take preparation and practice. So if you are still scared of negotiating an important deal, start by talking to any kid.
If you can get an 8-year-old to eat their vegetables, do their homework, brush their teeth and go to bed on time, you are already an expert negotiator!
Oh, by the way, comment below and I will be happy to respond!