The EntreMD Podcast

5 Documents to Never Sign Without Due Diligence

September 07, 2023 Dr. Una Episode 358
The EntreMD Podcast
5 Documents to Never Sign Without Due Diligence
Show Notes Transcript Chapter Markers

Ready to level up your understanding of professional medical documents? I'm your host, Dr. Una, and I'll be taking you on an enlightening journey as we examine the five key documents that physicians should never sign without thorough scrutiny. We're digging deep into the complexities of employment agreements, non-compete clauses, and IP clauses, exploring the potential pitfalls and how you can steer clear of them. I'll be sharing my experiences and offering vital advice to help you safeguard your interests and comprehend the terms of any agreement you enter into. 

Navigating the world of large financial commitments requires not just understanding but also a keen eye. Tune in as we delve into the risks associated with hasty investments without proper research. We'll discuss the art of making informed business decisions that ensure every contract you sign isn't just a piece of paper, but a win-win situation. Join me as I share insights into the importance of consulting a lawyer and seeking advice from those who've walked this path before. This is not just about reading documents but about signing agreements with intelligence and intentionality. So, listen in, fellow physicians, and empower yourselves with the knowledge needed to make smart decisions in your professional journey.

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Speaker 1:

Hi dogs, welcome to the EntremD podcast, where it's all about helping amazing physicians just like you embrace entrepreneurship so you can have the freedom to live life and practice medicine on your terms. I'm your host, dr Ibnah. Hello. Hello, my friend, welcome back to another episode of the EntremD podcast. This is going to be a lot of fun. I am going to start off by saying I'm not a lawyer, but we're going to talk about these documents and like really, five documents to never sign without due diligence. Okay, and this is something that I've seen burn so many physicians over the last five or six years, and I want you to be aware, I want you to help your colleagues be aware, I want you to think about this carefully before you do this. And I want to really start off by saying when it comes to an agreement, there are a lot of things that can be said verbally, okay, but we do not live in the handshake era, and if there are things that are said verbally that don't make it into a contract or an agreement, it's not written. I want you to think of it the same way. You think about your documentation, your chart right. If it is not documented, it never happened and if it's not documented in the agreement, it means there was no agreement on those things, right. And so I really want us to start thinking that way. Most physicians were really nice and we're like, oh, I'm sure it will be okay, we're just in the contract, it's a formality. But I want you to understand that I know a lot of physicians think that way, but the person you're doing the agreement with may not think that way at all, and when push comes to shove, you need to have something in writing that also protects you, not just whoever you're doing the agreement with. And so let's look at a few of these things. And when I talk about due diligence, there's the part of having the lawyer review it. You want to make sure it's a lawyer where. That's what they do. If it's an employment contract, you want an employment lawyer. If you're doing an acquisition, you want it to be a lawyer who has experience there. Yes, you do not speak lawyer, but you paid the lawyer, so you would like to understand like you speak legalese. I do not speak that language at all. That's what you tell the lawyer. And help me understand. What does this mean, right? What are my responsibilities? What if this doesn't work? What does that mean you want to have an understanding of that? Then you also want to talk to people who've been there, done that. I have a few t-shirts and they can also point you to mistakes. They made things, they're happy, they did things, they wish they did things that maybe colleagues of theirs who have gone through the same experience mistyled on. So you want to get the legal counsel, but you also want to get counsel from people not people who just have opinions, but people who've done this right. Okay, so five documents, number one. Number one is an employment agreement or an employment contract. Right, I remember the first one I signed, wow 2008. I don't really, really, I don't remember paying it that much. Mind, I didn't get a lawyer to look at it and don't tell anybody, but I didn't do that. I was a doctor and I was going to be working for another doctor and this is going to be great. We're just doing this because we have to. That was my interpretation. Fortunately, I worked for a very great doctor and we never had any problems with the contract or anything like that, but I can see how that could have been a disaster, depending on who I ended up working with. It's really great to work with someone who is great, but you also want to make sure you have this in place just in case, just in case they're not. You want that looked at. You might say, dr Una, everybody knows that and it is not true. It is not true. The best of us have done things where either you didn't have a lawyer review it or you had a lawyer review it and they told you these are the terms and you're like, yeah, but that will never happen Because you want to make sure remember, you work for you. You want to make sure that whatever contract you're signing is a win-win situation. It's a win for both parties. And so what are the terms? How long would you work there? How long is the contract for? Is there a non-compete? If there's a non-compete, what's the radius? Because I cannot tell you how many people decide they can't do this job anymore and they want to quit and then, for the first time, they're noticing that there is a non-compete one and they're noticing the radius of the non-compete. So there are people who have contracts with their non-compete. They practically cannot work in that state. That's how ridiculous it is. And you may say it's not enforceable, but in this case it's the hospital system, right, like, even if it's not enforceable, if they choose that, they want to keep you in court. You don't have the pockets to stay with them in court, even if they're not going to win, so you lose because you just don't have pockets deep enough, right? So, anyway, what is the non-compete? Is there an IP clause? I have seen everything. To anything you do outside of here, we own forever. I've seen all kinds of crazy stuff. Now, you can't do that in this day and age. I mean, you may be working there, you may have a podcast, you may work there, you do the speaking, you write a book, you do all of these other things. Like, you can't just take a look, take a look, don't just sign it. Remember, you work for you now, right, you work for you. You work for a company Doctor, you incorporate it, right? Okay, so you want to look at those things? Right, what happens to the tale? Don't ask after Ask before what happens. You might say, oh, but this is my forever job. You don't know that. I hope it is, but the agreement is there. So if there are disagreements, people can go and say, okay, this is what we agreed to, right, and so you want to check. What is that? What is that? You want to know what exactly you're getting into. Right, if there is, oh, there's an opportunity to buy in, to be a partner in all of those things, okay, great. But what are the terms? Right, like, they have to be there, okay, all right. So that's the first thing. That's the first one is the employment contract. Like, don't treat it like, this is my forever job and nothing's going to go wrong. And I hope nothing goes wrong, and a lot of times nothing goes wrong. But we don't wear seatbelts because we plan to get into accidents. We wear them because we might and we want to be ready. Okay, all right. So that's number one, number two. Number two is your partnership agreement, right, so you're in a practice, you're going to buy in all of that stuff. You want to look at all the things, right, what is the buy in? What is my responsibility as a partner? If I decide to leave this partnership? How does that work? Right, how will I be paid? If they're bringing in new partners? What happens to what I have? If we have disagreements, how do we resolve them? Like, you want it all spelled out there and you may say, oh, but we've been friends since high school. There's you know, nothing could go wrong here. You don't know that people have been friends since they're high school. They got married, they got divorced, okay. So what are the terms? Don't read it by yourself and say I got this. No, you don't understand legalese. Like, the contract has English words but they're not really English. It's a separate language that uses English words. It's called legalese, and let that be explained. Play out every scenario that could be a problem. Talk to people who've been in partnerships. What have the issues been Right? And you want to make sure that you've thought through the scenarios. We don't think about it because that's what we expect, but that's what. That's a smart thing to do. That's the wise thing to do, right, okay? The third one would be your acquisition agreement. So maybe you're in private practice and you decided I want to buy a practice, or maybe you're not private practice. Maybe you're a coach and you wanted to buy an app company or another coaching company. Or you wanted to buy a company because they have a great sales team and you wanted to acquire their sales team, whatever. And so you're getting the documents. Oh, my goodness, this is not a joke. This is a big deal. You want to get a lawyer. You want to get a lawyer who knows what they're doing, like this is their bread and butter. You want to find people who have done acquisitions, especially in that industry. You want to get the skinny on it, right, what needs to be in there? Okay, is the owner going to stay on? If they're going to stay on, for how long? What are they going to do as they stay on? Right, is the other team? If there's real estate, is that included in the deal? If it's not included in the deal, because the person wants to keep their real estate, what are the lease terms and how long is it for? And do you have an opportunity to renew? Right? Okay, if you're taking over AR, what does that mean? If it, like all of it, needs to be there and you need to do the due diligence If you're going to be acquiring businesses, you have up-leveled your game. Okay, you've up-leveled your game, which also means you need to up-level your skill. You need to up-level your understanding. You need to up your game. So you may say it shouldn't take all that, but it does. You are going to sit down and you are going to learn about acquisitions. You are going to learn about the pitfalls. You are going to talk to people in the industry. You're going to sleep, eat, breathe this thing until you understand it. There is nothing you've done in medical school, there is nothing you've done as an entrepreneur that prepares you to just go into acquisitions without acquiring a new skill set, right, okay, so that's number three. Okay, so, especially in these times when people are buying private practices and they just find out they buy stuff that is almost useless, right, and it's done. Okay, number four. Now number four. Let me switch it. I'll change number four to number five and you'll see why Number four would be, you know, like a PE, a private equity sale, like that agreement. What does it mean? People have sold their practices, ended up working more, making less and are totally miserable. What does it mean? How long are they asking you to stay on? What are the terms of your employment, right? What are you going back to? Rvus or X number of patients per day or whatever? What is that? You want to think of life after the sale? What is that going to look like? You're going to play out all the scenarios. You're going to talk to people who've done this and what are the mistakes you made? What are the things you did that you did right? What if you could do this over? What would you do differently and not with one person or two people? You're going to talk to a lot of people, right? You're going to talk to a lawyer and you're not going to talk to a lawyer who has not done this right, like you don't want them to experiment with you, okay, all right. So that's number four. Like, don't just do it, don't. Doctors have been messed up so many times. Like, I see this a lot. You know, I've had a few clients who you know. Before they came to work with me, they fell into stuff like this or in Facebook groups. I would see that and I'm like, my goodness right, acquiring a business is not a joke. Selling a business is not a joke. Deciding to work for somebody for two years is not a joke. You become it, decides to become a partner. That is not a joke, right? So, yeah, you want to know. Okay, you want to know. The final one is the one that probably hurts my heart the most, and that is your equipment lease contracts. Okay, now there are these very smooth salespeople who know to target doctors because, for the most part, many of us will fall for this and I'm recording this podcast episode hoping after this nobody does, and my goodness, if people who are in plastic surgery, obgyn, dermatology, even family medicine, because they'll tell them they can do it, please share this episode with them. Everybody, please, with 17 cherries on top. Okay, so the most common one is the laser. I hear it all the time like the lasers, oh, this laser, it does this and this is how much. You won't even have to buy it, you can just rent it and it'll be this payment every month, which is usually thousands of dollars. And if you only had five people, four people, six people who would use this service, it pays for the machine. It's great. We will have our marketing people like market for you. So this is really a plug and play. They will tell you passive income. Hear me now. Okay, there's nothing passive about that. The marketing people are not going to market for you and I cannot tell you how many people have payments the size of a mortgage that they owe for five years and they have not been able to get more than five people on said machine. If it seems too good to be true a lot of times it is Okay Now to start with. Okay, if you have things in your practice, this is primarily private practice. But if you have things in your practice, that man, I need to work on these things and I know, once I do them, our revenue will be so much better, things will be so much better. But you haven't been able to bring yourself to do them. You're tired, you're overwhelmed, you're burned out, whatever. And this seems very shiny and very good. It seems like cold water on a hot Atlanta afternoon, but a lot of times that's all it is a shiny, right, a shiny. Now my same lasers are not. It's not a profitable thing. No, no, no, that's not what I'm saying. But what I am starting to say is, if there are other stuff not working and you're trying to fix them, if you don't have the volume, for instance, of patients you want to see, this is not going to fix that, because you're going to need the volume to create the people who are going to use the laser, okay. So I had a lady who walked up to me. She's, oh, dr Narm, not making any money in my practice. I've been open for a number of months, I'm not having people come in and all this stuff and I went for this conference. I was approached by this laser company. They said, if I could just do this and if I get only four patients a month, that they would. They will cover the cost of the machine and all of those things. And I'm like, how much is it? And she's well, with the payments and everything will come to a total about $450,000. I'm like you're not even making payroll, like you're not, like you don't even have patients and you want to acquire a whole mortgage so you can get these four imaginary patients from who knows where to meet the cost. Like, and so it's not your purpose to meet the cost to pay for the machine. What of the overhead? What of your profit? I'm like, what are you doing? Right? And she didn't sign up for it. So I'm kind of super happy for us. Like, I just saved you half a million dollars. Like you owe me forever, right, thank you, but don't get sucked into that stuff. Sure, it makes sense. I'm a big fan of observing the pace of grace you just started, or you're at a point where you just, whoof, just became profitable. I'm not taking $500,000 in debt to for a thing that you're telling me. This is what I need to do to cover the cost of it. I would say and I'm a pediatrician, so nobody's come to me for this but I would say, well, if you're going to give me an out right, like if this doesn't work, if I'm not able to get the number of patients that I need, then I can give you 30 days notice and send your machine back. Well, guess what? Nobody's gonna do that. They're not doing that. They're not doing that. I am telling you I can't count. I can't count the number of people who have these things sitting in their offices doing nothing. Okay, so maybe I'm saving you $400,000. I don't know right, but just look at it, pay attention to yourself and pay attention to it and ask yourself do I already have the demand for this? No, okay, I have to create the demand for this. What is the opportunity cost of creating the demand for this? I have to stop creating the demand for the other things. I say hello, okay, if this doesn't work and I'm stuck with the $400,000 bill with no ROI, am I willing to do that? And the answer is no, then your answer is no right. They can give you a loaner and you can do a trial. They can give you an out, but they don't give them out. They don't give them out. I can't tell you how many people they just paying for it. So now they're seeing patients to pay for a machine they're not using. So am I saying, don't get a machine? Of course not. I'm sure there are people who are using it and they're making a great ROI off of it. But this is the thing. Look at the contract, look at what it says, understand what it says and decide if you want to do that or not. Okay, don't stay in La La Land. They will tell you, they will market and all of that. You can ask them. If you're so sure about that, okay, put it in writing. Put it in writing that you'll make sure I have at least four patients every month. I will do the work, but at least I'll cover the cost of the machine. They're not going to do that. You know why? Cause they're not going to do that, cause they're not going to market, cause they're not going to take responsibility for that. So the question is okay, if I know I have to take responsibility for the marketing, will I do it? And if the answer is no, then don't do it. Okay, I know I went a little bit of a rant there, but I cannot tell you how many. I am telling you send this to the doctors in your life. You'll be saving people half a million a pop, okay, but the bottom line is this we need to be smart. Okay, we are business owners. Even if you work a job, you work for a doctor you incorporate it right. If you're working in a multi-semitre figure business, I mean like you're a boss, you're a business owner, you're savvy, you do. Your signature is worth something. You don't just put your signature on any document before you do that. Understand that thing's at stake. Okay, so I'm going to have a doctor, look at it. I'm going to have conversations with people who've done it right Not people who have opinions, but people who've done it. I'm going to ask them what their mistakes, what they wish they did differently, and all of those things. I'm going to have real conversations before I put this precious signature of mine on any document, any, okay, all right, so that's what I have for you, that's what I got for you. And if you're here and you're an employer I know we talked about employment agreements you also want to make sure that all the terms, all the things you're thinking about in your head. They made it to the document, right? Like, for instance, I've had people go there upset, the doctors are working with them, don't want to do a call, but there's nothing in the document that said anything about call. There's nothing document. That's like whatever you want, put it there, put it there. This is serious stuff. Okay, this is where we interface with the legal world. This is serious stuff. Okay, so from today, we no longer just put our signature anywhere. Okay, from today, we no longer look at a document, take it at face value. We play it out. If this were to happen like this, what does that mean? Cause, when you look at the legal document, you will see all the things that say oh, if you don't keep your part, this is what's going to happen. They're clear on what they want. Are you clear on what you want? Okay, so let's do that and let's start signing agreements with more intelligence and intentionality and clarity, right, and not just throw our signature at stuff. Okay, your signatures were too much at this point, all right. Okay, so best thing you can do is share this episode with another doctor. I'll see you on the next episode of the Outstanding Podcast. Okay, so let's get started. Hey, if you love listening to the EntryMD podcast, I want to invite you to join EntryMD on demand. It is my signature subscription program that gives you access to a library of business courses designed to help you do one thing as a physician entrepreneur, and that is to thrive. Just head out to EntryMDcom, forward slash on demand, and I'd love to have you join us. See you on the inside.

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