Understanding and Evaluating Associateship Opportunities
Contracts Matter!

Course Author(s): David G. Dunning, MA, PhD; Robert D. Madden, DDS, MBA

Contracts Matter!

We have all heard the phrase, “Get it in writing,” and the reason is simple: If parties fail to document their business and or employment agreement in writing, then there always exists room for possible future disagreements. More often than not, failure to get good legal counsel on such matters can lead to serious and expensive disputes. Contracts provide guidance for each of the parties involved in the contact. When disputes arise, and they frequently do, courts and jurors seek some form of guidance upon which they can decide the case. Contracts provide that road map. Without such guidance, courts and jurors are forced to make tough decisions. The toughest decisions are in those circumstances where the parties at dispute have provided no clear rule for the court and jury to apply to the facts before it. For this reason, professional legal counsel is strongly advised in the construction of any business agreement. It is essential to say what you mean and mean what you say, and to do what you say you will do. The person with the training and experience to construct such an agreement is a labor law attorney. Successful and wise people know what they do not know. Be very weary of any professional arrangement in which one member of the party says, “We don’t need a written agreement; we don’t need to get the lawyers involved. Our word and handshake should be good enough.” As former President Ronald Reagan asserted: “Trust, but verify.”

The objective of a written agreement or contract is to provide a legal agreement between the dental associate and the dental practice and/or owner. It should be in written form and binds both parties to the mutual covenants defined in the written agreement. It should serve to protect both the associate and the dental practice and/or owner by defining the terms of their relationship.

An associate agreement or contract may consist of two parts. The first part of the business contract is the employment contract for the prospective associate. If the possibility exists for a buy-in or buy-out of the practice, then if there is an intent to purchase or a purchase agreement then a second part can be drawn up and become part of the associate agreement or contract or as separate documents. If a practice buy-in/buy-out is a possibility, then the practice needs to have a valuation performed. Valuation issues will be addressed in a later section.

While there may be many components that can go into an employment agreement, the following are considered to be critical components in any dental associate employment contract.

Contracts Matter