Partnerships Agreements: when should you review yours?
This short guidance document looks at the key times you should review your partnership agreement.
A Partnership Agreement is a vital document for GP Partners. Without one, your partnership may be governed by a piece of legislation written in 1890.
Once you have a solid Partnership Agreement in place, it’s equally as important to keep it updated, so it continues to protect you and your practice.
There are several potential events in your practice’s lifetime which should trigger a review of your agreement. Here are our top six:
1) New partners
The biggest reason to update your partnership agreement is, of course, when a new partner joins. When this happens, you should ensure that:
- The new partner signs up to the terms of your partnership agreement. Failure to do so could give rise to disputes over the applicability of the terms, and suggestions that you are operating as Partnership at Will
- The partnership agreement is reviewed to ensure that it reflects the terms on which the new partner is set to join.
2) Partners leaving
While your partnership agreement may already cover the mechanics for handling a retiring partner, very few are robust enough to cover the potential uncertainly that can occur after a partner leaves. The retirement of one partner can trigger a ‘domino effect’ resulting in other partners leaving, and a ‘last man standing’ situation.
Although there is no way to avoid this, you can write your partnership in a way that mitigates the possibility and its impact. For example, you may include a clause which limits the number of partners who can retire in any one accounting period, or remove any automatic obligation for the remaining partners to continue with the practice.
3) Changes in premises ownership
If there are changes in the way your practice premises are held, it’s important to revisit your partnership agreement and the title document for the premises in question. Two of the most common premises-related issues are:
- The practice lease or freehold title remain in the name of former partners
- Partnership agreements do not clearly identify how to value and pay out an outgoing partner’s share in a premises.
Often, disputes between current or former partners could have been avoided with clearer terms within the partnership agreement. If you have experienced disputes with partners in the past, you should consider changing your agreement in order to avoid the same problem arising again in future.
5) Involvement in GP networks / federations
If you have joined a GP network, you should check your partnership agreement to check:
- How decisions concerning the practice’s involvement in the network are to be taken
- The trust arrangement that applies in connection with any individual partner holding an interest (such as shares) in the network.
6) Your agreement was written before 2013
Given the changes in the NHS landscape which were brought about by the Health and Social Care Act (including the abolition of PCTs), we recommend that agreements drafted before 2013 are reviewed. It is likely that they will need to be updated to reflect legislative changes, and the operational impact such changes have had.
BMA Law’s Partnership Drafting service
Our partnership drafting service is long-established, meaning we have a wealth of experience in drawing up and completing practical, sector-specific and bespoke agreements. Our fixed fee service means that you are guided through the potentially tricky process, without worrying about spiralling fees.
For more information on our partnership services, contact us:
phone: 0300 123 2014
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