10 Things Your Optometry Lawyer Wants You to Know About
Editor’s Note: This is a guest post written by Ali Oromchian, J.D., LL.M. who is one of the nation’s leading lawyers on matters related to Optometrists. Aaron and Dat are extremely strict about guest requirements in that they must be educational and informative to our readers. Every guest post is vetted, read and upheld to the highest standards of ODsonFinance. Your trust is the most valuable factor to us. We like having experts in their field write on our website, enjoy and give us feedback!
KEY POINTS:
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(1) Purchasing an Optometry Practice Vs. A Cold Start Optometry Practice
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(2) Employment Agreements: What to Look for
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(3) Practice Buy-In/Buy-Out Agreements
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(4) Partnership Agreements: How to Avoid Surprises
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(5) The Types of Leases Optometry Practices Face
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(6) What to Know About Demand Letters
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(7) Estate Planning: Why You Need One
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(8) The Right Corporate Entity to Form
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(9) Protect Your Intellectual Property with a Trademark
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(10) The Importance of Having an Employment Manual
You have spent years studying everything you need to know to become the best optometrist possible while taking care of your patients. You might be thinking about starting your own optometry practice, or you might be considering purchasing an existing one. Putting yourself in the best position possible to be successful involves getting professional help, and an optometry attorney can be a vital part of your team of professionals.
There are many important things that an optometric lawyer wants you to know about because they are critical to the success of your practice. You want to spend all of your time taking care of your patients, but you cannot overlook contracts, business agreements, and the very foundation of your future optometry practice. What are some of the most important areas you need to think about?
(1) Purchasing an Optometry Practice Vs. A Cold Start Optometry Practice
First, you must consider whether you want to purchase an existing optometry practice or start your own. Each option has its benefits and drawbacks. Some of the biggest benefits of purchasing an optometry practice include:
- You will have the ability to work with an experienced staff.
- You have a greater chance of turning a profit in your first year.
- You will already have existing billing and payroll systems.
The downside of purchasing an existing optometry practice is that you will also purchase the reputation of the previous practice owner. This doesn't necessarily give you an advantage. Furthermore, you may have a difficult time fitting in with the staff.
If you decide to start from scratch, there are a few benefits you will enjoy. They include:
- You get to develop your own business system and your own way of doing things.
- You will get to make all the decisions, including your business name, location, and the equipment you use.
- You also get to decide who to hire. You can hire staff members that you believe line up well with your line of thinking.
On the other hand, starting your own optometry practice also means that you might not turn a profit in your first year. Regardless of the path you choose, you need to work with an optometry attorney who can help you do your due diligence, fill out the paperwork, and ensure your business is formed properly.
Financial Pearl
"Regardless if you are starting cold or buying into a practice, you need to work with an optometry attorney who can help you do your due diligence, fill out the paperwork, and ensure your business is formed properly"
(2) Employment Agreements: What to Look for
You might also decide to join an existing optometry practice. Regardless of whether you are becoming a salaried employee or are placed on a partner track, there are several important elements you need to watch out for. They include:
- Always pay close attention to your salary and benefits package. Is your salary dependent on your production? Or, is it the same regardless of the number of patients you see?
- Do not forget to consider retirement benefits, paid time off, and sick days as well. You must make sure you carefully consider all of the benefits included in the package.
- There is a lot of fine print in the employment contract, and you might be tempted to overlook some of the terms and conditions. Make sure you pay close attention to non-compete clauses, as they could limit your employment opportunities in the future.
- You should also consider possible conditions for the separation of employment. This includes potential termination.
There are a lot of important issues to think about with your employment agreement, so you should always have your contract reviewed by an optometry lawyer before you sign it. You may also want to consider putting forth a counteroffer that puts you in a better position not only today but also in the future.
(3) Practice Buy-In/Buy-Out Agreements
If you decide to become a partner in an existing practice, you have probably heard about buy-in and buy-out agreements. Sometimes, these can sound like horror stories. Particularly when you have just graduated from optometry school, taking out another loan to buy into a practice can sound incredibly intimidating.
If you do not prepare yourself appropriately, this process could become lengthy. You must make sure you understand the intricacies of the agreement, potential obstacles you might have to overcome, and legal issues you might face.
Furthermore, you need to think about your buy-out agreements as well. You have spent a lot of time and effort becoming a valuable partner in the practice, and now you are ready to retire or go off on your own. You want to sell your stake in the practice, and that means you need to have a firm buy-out agreement as well.
If you are a new optometrist, you might not be thinking about buyout agreements right now, but it is something that you need to think about ahead of time. That way, you can avoid surprises down the road. In a lot of cases, potential sale conditions are mentioned in the initial buy-in agreement. You need to understand how it might impact you in the future and how you can put yourself in a position to be successful. You may ask for a buy-out sooner than you think, particularly if you are interested in starting your own practice down the road.
Financial Pearl
"If you are a new optometrist, you might not be thinking about buyout agreements right now, but it is something that you need to think about ahead of time. That way, you can avoid surprises down the road. In a lot of cases, potential sale conditions are mentioned in the initial buy-in agreement"
(4) Partnership Agreements: How to Avoid Surprises
Along with your buy-in agreement, you need to take a closer look at your partnership agreement. Even for practices that have the best of intentions, it is common for disputes to arise from time to time. If you have a shareholder and partnership agreement in place, you can address these important issues before they become obstacles. That way, you can focus on what matters most to you: taking care of patients.
When you drop your partnership agreement, you must anticipate potential concerns ahead of time. Some of the most important topics that you need to cover include:
- Any financing issues related to a potential buyout
- Compensation scenarios, including base salary, pay per patient seen, potential insurance issues, payor mix, and the distribution of practice overhead expenses
- What might happen to you or another partner in the event of death or disability
- How the money that comes into the practice is going to be distributed among the partners
- Issues with vacation time and treatment days, particularly as they relate to Christmas, Thanksgiving, Spring Break (for those with children), and other holidays where most partners may want time off at the same time
Without a strong partnership agreement in place, issues that may appear relatively minor can balloon out of control quickly. If you can address these obstacles ahead of time, you can reduce friction in the practice, focus on taking care of your patients, and generate more revenue.
(5) The Types of Leases Optometry Practices Face
If you want to run a successful practice, you need to have a place to see patients. That means you must have office space. That includes space for your front desk staff, exam rooms, your own office, an optical and storage space for your equipment. Purchasing property can be expensive, so you might be thinking about leasing property instead. You need to be familiar with the different types of leases you will face. They include:
NNN Lease
One of the most common types of leases is called a triple-net lease, or NNN lease. This means that all of the expenses are going to be passed down to you. This includes property taxes, property insurance, maintenance, and utilities. This means you will also be in charge of upgrades, larger repairs, daily maintenance, and renovations. This can be a lot of work, particularly since you have to run your own business.
Modified Gross Lease
This type of lease means that the expenses are going to be divided between the landlord and the renter. The landlord will probably be responsible for property taxes, property insurance, interior maintenance, and exterior repairs. On the other hand, you will probably be responsible for smaller repairs, utilities, and some maintenance costs.
Full-Service Lease
If you are in a high-rise building, you will probably encounter a full-service lease. This means that the owner is responsible for taking care of just about everything. This includes property taxes, janitorial services, regular maintenance, and major repairs. You will probably have a portion of the operating expenses built into your lease, so you need to understand exactly what is covered and what is not.
The nature of your lease is important not only for your overhead expenses but also for your potential responsibilities. Remember that time is just as valuable as money, so you need to figure out how much time you will have to spend taking care of the building in addition to any money you will have to pay in rent.
(6) What to Know About Demand Letters
Even though you have the best intentions, there is a chance that you may still find yourself facing an impending lawsuit from an employee, patient or landlord. Typically, you will receive a demand letter before a lawsuit is filed. The demand letter will be an attempt to resolve the issue before it heads to court, where it could become public knowledge.
Even though a demand letter can be scary, not all of them will result in legal action. The issue might not be as serious as the letter sounds. Even if a lawsuit is filed, only a small percentage go to trial.
Regardless, a demand letter should always be taken seriously, and that is why you should work with an experienced attorney. That way, your lawyer can work with you to evaluate the merits of the demand, review your records, decide how to respond, and represent your best interests as you work toward a favorable resolution.
Financial Pearl
"Even though a demand letter can be scary, not all of them will result in legal action. The issue might not be as serious as the letter sounds. Even if a lawsuit is filed, only a small percentage go to trial. Work with your lawyer can work with you to evaluate the merits of the demand, review your records, decide how to respond, and represent your best interests as you work toward a favorable resolution."
(7) Estate Planning: Why You Need One
Even though you are probably thinking about what you must do to keep your practice running appropriately, you also have to think about what will happen when you retire. You should also think about what might happen if you suffer from a serious disability. How much is your practice worth? Succession planning is important, and it is not something you should put off until your later years.
At the very least, you need to have a will. That way, your assets will be passed down to your errors in accordance with your wishes while also minimizing the assets that are lost due to taxes.
Some of the issues that an optometry lawyer can help you with include:
- Establishing a living trust
- Giving you guidance related to probate laws
- Reviewing the implications related to the estate tax
- Ensuring all of your legal documents are maintained appropriately
- Helping you choose the right people to act as your representatives in certain situations
You need to make sure that your family is provided with the maximum benefits possible. If you work with an optometry attorney, you can get the estate planning process started, making sure you preserve as much of your assets as possible.
Want to get a full blueprint on How to start? Check out 10 Estate Planning Mistakes to Avoid
(8) The Right Corporate Entity to Form
You need to make sure that your business assets are separate from your personal ones. That way, your personal assets are protected if something goes wrong with your optometry practice. One of the ways to do so is to form a corporate entity. Depending on the State you are in, there are several different types of corporate entities available. They include:
- Sole proprietorship
- Professional Corporation
- Professional limited liability company, also known as a PLLC
Each option has its benefits and drawbacks, and you need to make these decisions based on your personal needs. For example, a sole proprietorship might be easy to form, but it may not offer you any protection from personal liability. A corporation might be more difficult for you to form, but it could provide you with more protection.
You need to work with an expert team that can help you compare the pros and cons of each choice, helping you decide which one is best for your practice. That way, you can protect yourself accordingly while ensuring your practice runs smoothly.
Financial Pearl
"A sole proprietorship might be easy to form, but it may not offer you any protection from personal liability. A corporation might be more difficult for you to form, but it could provide you with more protection."
(9) Protect Your Intellectual Property with a Trademark
When you start an optometry practice, you must make sure you have a proper name and trademark for your business. If you do not have a trademark, you could receive a demand letter from another practice that has a similar name to yours. Therefore, you must make sure that your business name and intellectual property are protected.
There are several examples of intellectual property that you may want to trademark. They include:
- The name of your business
- Potential symbols used in your logo
- Any designs or color schemes that are closely tied to your optometry practice
- Language that sets you apart from the competitor
An experienced optometry lawyer can help you make sure you do not overlook anything regarding your trademark. You would probably want to trademark your practice name, and your trademark should be good for at least 10 years. Just because you have incorporated a business, doesn't necessarily give you a trademark for that name. You need to work with an optometry attorney who can help you make sure your practice name is protected.
Financial Pearl
"You need to trademark your business to avoid demand letter for another practice with a similar name to yours. Remember because you have incorporated a business, doesn't necessarily give you a trademark for that name."
(10) The Importance of Having an Employment Manual
Even though you might be the leader of your practice, you cannot do everything on your own. Your practice is a business, and you will have to hire employees who can act as strong ambassadors of your optometry practice while also providing the quality services you expect.
You also need to have an employment manual. Unfortunately, lawsuits are not unusual, and some lawsuits can be difficult to defend. Some of the most common causes of a lawsuit include discrimination, favoritism, wage theft, harassment, and wrongful termination.
It is better to be proactive about these issues, and that means having an employment manual. You need to include information about anti-discrimination policies, wage and hour guidelines, and basic employee standards of performance. An optometry lawyer can help you draft your employment manual.
Summary
These are just a few of the many issues you need to think about if you are considering forming an optometry practice. We are Dental and Medical Counsel, and we are here to help you work through all of these issues. We will make sure that your rights and interests are protected, so contact us today to speak to a member of our team. It would be our honor to assist you.
Need Legal Help? Check out Recommended Legal Services
Want to get a full blueprint on on business financing? Check out The Optometrist's Guide to Business Financing
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