Stuck in the middle

WE would all like to live in a perfect world where people don’t fall out, where differences are a rare occurrence and confrontational situations don’t arise. Unfortunately the world is not perfect and fallouts among business partners are all too common.

Disputes within a practice can range from very minor differences to major conflicts threatening the on-going existence of a partnership. What is most important to remember is that when a disagreement does arise every effort should be made to resolve the situation in a constructive manner.

As specialist dental and medical lawyers, we at Thorntons have seen many forms of partnership dispute over the years, and it is often the case that the practice manager becomes involved in trying to resolve the conflict. This might involve simply acting as a middleman to ensure that the partners reach an agreement – although it may seem more like acting as a UN peacekeeper at times. The key is to act in a way which will bring a resolution for the benefit of the practice as a whole.

Avoiding problems

It goes without saying that it would be far better if disputes didn’t happen in the first place. Regular discussions between the partners can help, and we often find that the occurrence of disputes is greatly reduced if there are monthly or quarterly meetings.

I would also stress the importance of having in place a carefully worded partnership agreement which sets out the relationship between the partners and their rights and responsibilities. An agreement itself will not absolutely prevent disputes arising but by working through the details of a partnership agreement, often issues which wouldn’t otherwise have been considered will be discussed and mapped out at an early stage of the partnership. This will mean that the partners are more likely to have considered a number of eventualities within the life of the partnership, some of which may otherwise be a source of potential dispute.

Common flash points

It is impossible to envisage all the various forms of dispute which might arise in a practice, or the impact a dispute will have. However, it is possible to categorise the types of dispute which we have seen over the years.

Disputes which relate to administrative matters. This could include questions regarding responsibility for locum cover in the event of the absence of a partner.

Differences which arise at key points in the life of a partnership, such as retiral. This is a common source of disagreement within a partnership and can involve differences of opinion regarding, for example, property valuations, which are often controversial, with a number of different views being expressed within the partnership.

A breach of certain obligations, either to fellow partners or professionally. We have seen extreme situations like fraudulent activity on the part of one partner, such as submitting fraudulent claims to the NHS, and situations where one partner had shown inappropriate behaviour towards a member of staff.

Armageddon. This is the worst-case scenario where the relationship between the partners breaks down completely, resulting in a total separation of the partners and, potentially, the dissolution of the practice as a whole.

The nature of any dispute will have a significant impact on how best to resolve it, however there are key pieces of advice which I would give to a practice manager in order to assist with its resolution.

If there is a partnership agreement in place, it will govern the relationship between the parties, and a good agreement should hopefully give an answer to the majority of disputes.

Appropriate professional advice should also be sought where necessary. Thorntons is often consulted by practice managers who ask us to assist with differences of opinion between the partners, and on occasion there is also a need for accountancy advice. In many disputes, it may also be necessary for individual partners to seek independent advice of their own, rather than advice being given to the partnership as a whole.

Taking sides

It can be difficult not to take sides in a dispute, but the practice manager should act as impartially as possible. Having said that, if it appears that one partner is clearly at fault, you may find that you need to represent the majority position, in which case it may be appropriate for the individual partner to seek independent advice. This may appear counterintuitive, in that it may feel like you are drawing lines within the partnership, but the benefit of independent professional advice can help the partners to appreciate both perspectives.

Wherever possible, the potential for staff to be drawn into the dispute and/or take sides should be avoided. The more people involved in the dispute, the more likely there will be an impact on the day-to-day working of the practice. Where it is impossible to avoid an individual staff member becoming involved, ideally they should be asked to maintain the details of the discussions as confidential in order to avoid a ripple effect within the practice.

It is important to keep dialogue going, and all-party meetings can be very helpful in that they can allow the partners to express their opinions in what is hopefully a less formal setting. Where that doesn’t happen, we tend to find that the partners resort to exchanging emails, and often these are typed at the end of a long day. Even when the intention is to try to seek a resolution, exchanging views in this way can often be counterproductive, leading to the situation escalating rather than improving

Even if the individual partners are represented separately, a constructive approach to finding a resolution should still be pursued. Stressing the need to reach a resolution which is for the benefit of the practice as a whole and will allow a high level of continuing care to the patients is a very good way of trying to avoid an entrenched position developing.

Arbitration and mediation

A partnership agreement may also set out ways in which disputes should be resolved. For example, it may refer to arbitration, with an independent expert being appointed to resolve the dispute. However, I feel that arbitration is often not a particularly helpful method of resolution, in that it can be time consuming and costly without the guarantee of an outcome which will suit all of the partners.

An alternative is mediation and there are situations in which this can be very useful. In particular, this form of discussion can allow disputes to be handled in a way that is much more conducive to agreement being reached. It tends to be conducted in a setting that is far removed from a formal court process and it also allows the partners to express their opinion and to debate the issues without undue confrontation.

In the midst of any partnership dispute, ultimately there is still a practice to run and the impact on the business as a whole should be kept to a minimum. Essentially, patient care should never be prejudiced by a practice dispute, and whilst this isn’t always possible, it is important that the partners do not lose sight of any impact on the delivery of that service.

Hopefully in the majority of cases, by following a constructive approach, you can assist the partners to reach a resolution without needing to draw battle lines.

Michael Royden is a partner with the Scottish legal firm, Thorntons