Dental Tribune United Kingdom Edition

I t is probably true to say that all partnerships are a poten- tial minefield of personal, le- gal and financial disagreements. However well-intentioned the partners are at the outset, prob- lems can and do emerge, and despite best efforts to resolve disputes there comes a point of no return when the partner- ship has to be dissolved. Dental professionals know better than anyone that prevention is better than cure and it makes sense to follow that same advice when setting up a practice partner- ship. There are a number of legal issues that should be thorough- ly discussed and incorporated into an appropriate agreement which will serve as a legal safe- guard against future disputes over profit shares, property ownership, leave of absence and other matters. It is better by to confront such issues with clarity of mind rather than after a disa- greement has arisen and emo- tions are running high. A written agreement, drawn up with an expert in dental law, should cover potential problem areas such as expulsion and retirement, prolonged absence due to accident or ill health and even death. The roles of all par- ties must be clearly outlined to ensure that everyone under- stands their responsibilities and the mechanisms are laid out for dealing with a problem before it impacts on the practice busi- ness. Such an agreement serves not only as a vital legal asset, but also a financial one. For in- stance, in the event of a tax dis- pute with HMRC, evidence of an appropriate legal agreement gives your practice credibility. Dental practitioners should be aware that without a current up-to-date agreement, legally the partnership will fall into the category of a ‘partnership at will’, subjected to outdated statutory provisions which may not reflect the wishes and in- terests of all those involved. A ‘partnership at will’ can also be dissolved with immediate effect by any partner, which could potentially lead to the ter- mination of the PCT contract. Similarly, should a partner in a ‘partnership at will’ retire or die, this will effectively dissolve the partnership as a whole, with potentially devastating consequences for the remain- ing partner or partners. It is remarkable that under the provisions of the Partnership Act 1890 on which the im- plied terms are based, there is no provision enabling the expul- sion of a delinquent partner. Once a partnership agree- ment is in place, it is essential to keep it updated, especially when a new member joins the partner- ship, because if the agreement is not renewed , it will revert to the ‘partnership at will’ regardless of any prior agreement which will no longer be recognised as a valid legal document. A quali- fied solicitor will be able to help draft and amend partnership agreements thus avoiding the dangers of a serious dispute or expensive civil litigation. Across a whole range of partnerships, it is a sad fact that some do fail, and when that happens, partners must be aware of the proper procedures that need to be taken. Unless such provisions are included in a partnership agreement, a no- tice of dissolution can be issued by any partner without the need to state their reason for doing so and once started, that process cannot be reversed without the consent of all partners. When the worst happens and a partnership faces dissolution, it is a priority to reach a settle- ment of shared finances. Firstly, any liabilities are paid, then cap- ital, and in the event of a short- fall, debts will be payable by the partners personally according to their partnership share. Decid- ing what should happen to your business in such circumstances is inevitably fraught with diffi- culties and disagreements; how- ever, expert legal assistance will help ease the process quickly and fairly. Regardless of the strength of mutual trust, understanding and friendship on which your business partnership is based, it would be foolhardy to dismiss the many complex scenarios that may arise should there be a breakdown in the partnership relationship. To avoid difficult legal and financial consequenc- es and indeed, to safeguard your dependants, the importance of having a clear, up-to-date part- nership agreement in the dental practice cannot be emphasised enough. DT Dream partnerships and nightmare endings Ray Goodman discusses the finer details of practice partnerships Dream partnerships can turn into nightmare partnerships if legal issues aren’t thoroughly discussed 21Money MattersSeptember 5-11, 2011United Kingdom Edition www.velopex.com Call: 020 8965 2913 Email: enquiries@velopex.com www.velopex.com Call: 020 8965 2913 Email: enquiries@velopex.com Proud of our 50 Years in Quality Imaging, let Velopex Lead You into the Digital Future... DTo3da27.04.11rpc About the author Senior Partner Ray Goodman is a Member of the Association of Spe- cialist Providers for Dentists (ASPD), legal member of NASDA (National Association of Dental Accountants) and included on the BDA list of rec- ommended dental solicitors. He has a comprehensive understanding of the commercial and professional objec- tives of Dental Practices, along with l the relevant legal requirements. In his spare time, Ray has ambitions to be the next Eric Clapton. For more information please contact Ray Goodman, Good- man Legal, Lawyers for Dentists on 0151 707 0090, email rng@goodmanlegal.co.uk or visit www.goodmanlegal.co.uk