contract negotiations elizabeth rocovich cline, j.d., ph.d

Contract Negotiations

Elizabeth Rocovich Cline, J.D., Ph.D.

I. Introduction

Why are we here?- imp of preventative legal medicine

-it’s a business to ER, and you should look at it as business, too

II. Common pitfalls in negotiating contracts

A. Being too polite

B. Assuming that the other party has your best interest at heart

C. Not knowing what you really want out of contract and job

D. Not asking right questions

-b/c you:

(1) don’t know what you really want/need, and

(2) don’t do your homework

III. Effective planning before negotiations

A. Homework

1. Financial questions a. Salaries of other drs in

your position and geographical area

b. Cost of living in the area

2. Working in a gp practice—it’s a

marriage

a. Observe work environment of

gp practice; ask others

b. Find out why any drs/staff

recently left the practice

c. Find out if big changes are on horizon for the gp. practice

-expansion

-downsizing in staff/space

-better benefits, etc.

3. Working in hospital—it’s a

bureaucracy

a. Talk w/drs there

-how smoothly do things

run?

-big changes on the horizon?

c. Ask family/significant other and yourself what you want out of this job

-many drs don’t do this!!

d. Call in the “troops”—tell your lawyer before you start negotiating

IV. Effective negotiation techniques

A. Be Prepared

1. Do your homework (see above)

2. Know what you want/need

3. Know your priorities

-“deal-makers” and

“deal-breakers”

-be realistic, but assume

everything is negotiable

4. Know what you are worth—in terms of:

a. Type of medicine that you practice

b. Number of drs in your area with your specialty/practice

c. The need for your specialty or

practice

d. The doctor to patient ratio in the area

5. Know what gp practice (or hosp’l)

wants/needs

B. Expect to be

“out-techniqued” by other party

-remember: it’s a business, and administrators & attys are the ones who work on the deals

• Never accept a verbal offer!

• After verbal offer, request a letter of intent before you receive a written contract

• Letter should outline basics of the offer, i.e., salary, termination provisions, job duties/obligations

C. Prepare to respond to the following approaches:

1. The “I have no authority”

approach (my favorite)

2. The “Yes, we put all of the

changes that you wanted in

this new draft” approach

3. The “We can’t change anything in this contract” approach

(“we give this form to all of the doctors”)

4. The “You don’t really need to understand this part—I don’t”

approach

5. The “Don’t use a lawyer—she’ll just want to drag it out” approach

6. The “It’s not written in the contract, but you can take my

word for it” approach

V. Practical Matters

A. Legal implications of common k clauses—what to look out for in drafts

1. Non-compete clause, a.k.a.

covenant not to compete

2. Term of employment and

renewal of term

3. Termination of employment

4. Definitions of terms like “illness and “disability”

5. Compensation

-flat salary? -income guarantee?-bonus?

-after year 1, does compensation become productivity-based?

• Does the employer pay for any of the following?

–Board fees

–Journal subscriptions

–Dues to medical groups/associations

–CME allowance

• Does the employer offer and/or pay for any of the following?

–Insurance (life/health/disability)

–Malpractice insurance**

–401k (any matching?)

–Pension plan

• Does the employer offer and/or pay for any of the following?

–Sick leave or personal leave

–Vacation time

–CME time

–Moving bonus

–Signing bonus

• Some of the items that I just mentioned are items that you can negotiate!

Other related questions to ask:

• How is income shared among the group?

• Is there a buy-in? – When is the employee eligible?

– What is she buying? (assets? vote as SH?)

– How much did the last dr. pay for a “buy-in” opportunity?

6. Job duties

What does the contract mention or fail to mention?

–call coverage?

–meeting attendance?

–hours at clinic/practice/hospital?

-**Is moonlighting allowed or specifically prohibited?

B. When to “lawyer-up”

C. When to sign the contract

D. Why you must understand what

each para. of your k means (English, not “Legal-ese”)

E. What to do if hospl/gp practice is not honoring k clause

Contact Information

Elizabeth Rocovich Cline

ecline@mossandrocovich.com

540-774-8800 (ph.)

540-774-8808 (fax)