Negotiating A Service Agreement
Negotiating The Employment Or Personal Service Agreement
“Turn it off, like a light switch. Just go click...Treat those pesky feelings like a reading light and turn ‘em off like a light switch, just go bap!”
–The Book of Mormon
The lyrics to “Turn It Off” from the musical The Book of Mormon offer insight into human nature. The song pokes fun at the way human beings should try to manage insecure feelings by turning them off like a light switch. The song is funny because everyone knows that it is ridiculous to think that it is simple to just “switch off” old behaviors. A better approach is to recognize that everyone naturally has insecurities, embrace them and implement coping mechanisms to use them to your advantage.
During employment or other types of personal service contract negotiations, insecurities can raise their ugly heads and sabotage a lucrative outcome. Too often, physicians feel they do not deserve to or are afraid to try to negotiate a better deal than what is initially presented, even if they are fully aware that the deal is unfavorable and/or under market value. The reality is that with the right guidance very few contracts are signed as initially presented. Negotiation is not only common but is crucial to vetting a proposed agreement before signature.
With the start of the New Year and new decade, you may change jobs or renegotiate your current contract. The purpose of this article is to help you recognize common anxieties about contract negotiation and provide practical suggestions to help succeed in spite of them. The moral of story? Before you jump on-line, it is best to check your employment agreement to ensure you are not violating a restrictive covenant.
Remember that You Are a Brand
“Starting today, you are a brand. You are every bit as much a brand as Nike, Coke, Pepsi, or the Body Shop. If you are to succeed, your most
important job is to be head marketer for the Brand called YOU.” - Tom Peters from The Future of Success by Robert Reich
Realize that you are a brand. What makes you unique? Even when you are employed, it is important to know what makes you stand out in a positive way. You may have a skill or interest that makes you marketable to a particular type of patient base. For example, a physician with a musical background may use that skill as part of marketing to musicians. A physician with a law enforcement background may use that training to market to law enforcement. Think about how you can use your content expertise when you speak with potential employers about how you can be marketed which will help grow the employer’s business.
Your Contract is Your Asset. Contract Wisely!
Your negotiated contract is an asset and it may be your only asset so you must contract wisely. The contract represents how you will be paid and how secure your job may be from a legal standpoint. In order to best protect your asset, the following are suggestions to help you succeed:
A contract provides something for you to legally enforce. Therefore, it should not be ambiguous or silent on important points.
Have your contract reviewed by a healthcare attorney whose practice concentrates in physician representation and routinely reviews physician employment or personal service agreements. Look for a flat rate. The cost will be small compared to the value of your total compensation and employment security.
Read the contract carefully and note what you think is incorrect or unclear according to your expectation or understanding.
Discuss the contract with your attorney to understand and identify the issues that need to be discussed with the other party.
Understand the difference between an employment and independent contractor agreements. Both employment and independent contractor agreements have advantages and disadvantages. Some key advantages of employment agreements are predictable salaries and benefits, relative job security, and possible future ownership; whereas, some disadvantages of employment agreement include loss of control of your time. The advantages of independent contractor agreements are the ability to control your time, work in more than one place, and own your own business; whereas, the disadvantages may include paying your own taxes, not having any benefits, and providing your own malpractice insurance. You should weigh the advantages and disadvantages when deciding whether to become an employee or an independent contractor. Your accountant and attorney can help you evaluate this.
Understand the length of the contract or the “term” provisions. The term provisions are important because they state how long the contract will last and may include automatic renewal as well as early termination provisions. For example, if your agreement has a termination without cause provision that allows either party to terminate the agreement at any time and for any reason upon 30 days written notice, this essentially makes your agreement the equivalent of a 30-day contract. That may not be what you need from a business or career perspective.
Understand malpractice and tail coverage. Tail coverage is crucial if the insurance is “claims made” because it provides protection for medical malpractice claims that are reported after the policy is expired or cancelled. It is preferable that the employer provide tail coverage when you leave their practice. If the employer does not provide tail insurance post-termination of the contract, then this must be carefully reviewed to understand the cost and other possible options.
Understand restrictive covenants. Almost all employment agreements contain covenants, which protect the business interests of the employer. While the laws surrounding the enforceability of non-compete provisions vary from state to state, the non-compete provisions must generally be reasonable in scope and duration. You must also ensure the provisions are predictable. For instance, stating that a physician shall not practice medicine within a 20-mile radius of all the employer’s locations is not predictable because at the time of signing, you do not know the exact restricted territory.
Some Common Pitfalls
While there are many things you can do to help ensure your success, there are also certain things you can do to hinder your success. Some common pitfalls include:
Devaluing your worth, being overly anxious and taking whatever is offered without asking for what you want. Women are generally more anxious about this than men.
Not obtaining legal advice.
Not reading a contract thoroughly and asking for clarification.
Agreeing to a restrictive covenant that is overly burdensome and then regretting it later.
Not vetting insurance coverage options.
Thinking that a contract is only a formality and will never really be challenged.
Relying on verbal promises made by the employer that are not in the contract.
Thinking that you might not get caught and risking the violation of a covenant.
If you have any additional questions or need assistance, please Contact Us if we may be of assistance.
This article first appeared in the January 2020 issue of Chicago Medicine Magazine.
Articles distributed by Malecki & Brooks Law Group, LLC are advertisements and summaries for general information and discussion purposes only. They are not full analyses of the matters presented, legal, or otherwise, and may not be relied upon as legal advice.
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