Even the most conscientious business owners usually don’t spend a lot of time reviewing contracts. You might focus on a new sales contract when you land a client or look over the terms of a vendor agreement if you’re making a large purchase. But most people spend their time actually running their business. Veterinary practices are no different: even though many veterinarians technically own their business they spend most of their time taking care of their patients, not reviewing documents. But it is critical to review certain agreements from time to time, especially as individual circumstances can change, as can general market conditions. Over the last few years, the veterinary industry has seen significant change (like just about everyone else). And a few key contracts could be impacted in ways most people don’t think about.
Own a veterinary practice? Here are key agreements you should review.
Employment agreements. As we discussed in a recent article, most veterinarians who own their practice employ staff, which means they must think like employers, not just practitioners. Since the pandemic, there have been a lot of shifts in how and why people work. For veterinarians, now could be a good time to reassess employment agreements with associate veterinarians. Although veterinary telehealth has surged in recent years, much of veterinary care still requires on-site employees. At the same time, more and more employees want to work from home. Some veterinarians now need to offer more flexible schedules or anticipate part time workers. However, that could mean you need to modify vacation or other benefits that reflect that arrangement. If possible, proactively update your employment agreements with current employees or at least review key provisions for new joiners.
Independent contractor agreements. The gig economy has exploded in the last few years and veterinarians may find that they are working with an individual instead of a company in any area of their business: marketing, custodial services, a specialist veterinarian, or any other vendor or partner. However, be sure to have a contract. With a large business, you rarely need to worry that they will get sick and not deliver as planned, or question if they are insured. But working with an individual means you should be particularly vigilant about making sure you have these kinds of situations resolved and documented. Also a 1099 status (an independent contractor) is legally defined. If someone is working solely for you, under your direction, they may legally be an employee. (And no, you can’t just agree to treat them as a 1099 anyway.) It is important to get legal advice if you think this situation applies to you.
Leases. We mentioned how veterinarians are often employers, not just practitioners. Many are also tenants. While you might not think about your lease often, especially if you have been there for years, that doesn’t mean it isn’t worth reviewing. For example, if you are nearing retirement, or considering selling your practice, you might not have noticed a “change of control” provision in your lease. Basically, this can require you give notice to – or even get permission from – your landlord before someone else can take over your lease. Landlords can do anything from increase the rent to demand a payout in exchange for allowing a change of tenancy (we have seen landlords ask for a six-figure payout). As any veterinarian knows, the cost of building out a space for a practice is a huge investment and not being able to transfer the actual physical set up to a new owner could be critical to the ability to sell. Review these provisions now and try to negotiate while it is still a theoretical situation.
If you own a veterinary practice, then you run a business. Review your agreements to protect it.
Just because now is a good time to review contracts doesn’t mean that you need to make major changes or renegotiate terms. Sometimes it just helps to refresh yourself on your legal obligations, as well as know the protections you have. If you’re considering retirement or selling your business (to another individual or a corporate entity) it’s especially important to know the current state of your contracts. If you uncover any significant issues, getting legal advice sooner rather than later can prevent small problems from becoming big ones. Veterinarian owners spend years training and building their practice, you owe it to yourself to make sure your business is protected.