Dental and Medical Counsel Blog

What To Do If Your Dental Partnership Fails?

July 3, 2024
dental lawyer, dental attorney, dentist, dental practice

When dental partnerships falter, the consequences can ripple through every aspect of the practice. At Dental & Medical Counsel, we understand the complexities involved in these relationships and the challenges that arise when they do not go as planned. Addressing issues promptly and effectively can prevent further disruption and financial loss. 

You need to know the essential steps and considerations to follow if you have a failing dental partnership. What are a few key tips you need to follow? Take a look at some important points below, and do not hesitate to reach out to an expert who can help you.

What Does it Mean When a Partnership Fails?

A failed partnership in the dental industry often means that mutual goals and collaborative efforts are no longer viable. You were once aligned with other partners, but now, you feel your goals are no longer lined up with one another. Misalignments might stem from differing visions for the practice, discrepancies in workload, or financial disagreements. These core differences can impede the practice’s operations and growth, necessitating a strategic reevaluation of the partnership’s terms and future. 

In a failing partnership, the initial trust and shared objectives that once fueled the collaboration might erode, leading to a tense environment that seems filled with conflict and inefficiency. This breakdown affects the partners and can also impact staff morale and patient care, which are crucial for a practice’s success and reputation. Spotting the signs early and understanding the implications can help in taking timely actions to mitigate negative outcomes.

dental lawyer, dental attorney, dentist, dental office

Signs of a Failing Dental Partnership:

  • Persistent Disagreements: Frequent conflicts over clinical decisions, business strategy, or financial management indicate fundamental disagreements that compromise decision-making efficiency.
  • Lack of Communication: When partners no longer discuss plans, problems, or progress openly, misunderstandings flourish, and collaborative solutions become unattainable.
  • Imbalanced Workloads: If one partner feels they are carrying a disproportionate share of the workload, whether in patient care or administrative responsibilities, it can lead to resentment and burnout.
  • Divergent Goals: Partners whose professional ambitions or visions for the practice diverge may find it increasingly difficult to agree on strategic decisions, which can impact the practice’s direction and growth.
  • Financial Strain: Disputes over the distribution of earnings, reinvestment in the practice, or handling of financial obligations can severely strain the partnership.

Quick Steps to Take When Conflict Begins

  1. Recognize the Conflict Early: Do not ignore the initial signs of discord. Addressing issues early can prevent escalation.
  2. Open Communication Lines: Ensure that all partners have a chance to express their concerns and perspectives without judgment.
  3. Consult the Partnership Agreement: Review your partnership agreement for any clauses that pertain to dispute resolution.
  4. Seek Neutral Mediation: Consider bringing in a neutral third party to mediate discussions and help clarify issues.
  5. Evaluate Partnership Goals: Reassess the partnership’s objectives to determine if they align with all partners' current visions.
  6. Consider Professional Counseling: Professional relationship counseling can sometimes help partners find common ground and improve communication.
  7. Prepare for Difficult Decisions: The resolution might include restructuring or dissolving the partnership.

Legal Issues in a Partnership Dissolution

Dissolving a dental partnership legally can be complex, involving multiple legal considerations that must be handled carefully to avoid further complications. The partnership agreement typically outlines the process for dissolution, but if it’s not correctly laid out, state laws will govern the proceedings. Partners should understand their legal rights and obligations, including asset distribution, liability assignments, and patient care responsibilities. 

Another major concern in legal dissolution is ensuring compliance with all contractual and regulatory requirements to protect each partner’s professional interests. This might include negotiating non-compete clauses and other restrictive covenants. A smooth dissolution assisted by legal counsel can reduce the potential for costly legal battles and ensure that all parties’ contributions and stakes are respected.

How To Negotiate a Fair Exit Strategy

  • Valuation of Practice: Obtain an impartial valuation of the practice to ensure a fair division of assets and liabilities.
  • Clear Terms: Specify all terms in writing, including timelines, responsibilities, and financial arrangements to avoid future disputes.
  • Consider Future Employment: Negotiate terms that might allow the departing partner to continue working in the practice under new conditions.
  • Protect Patient Interests: Ensure that the exit strategy includes provisions for patient care continuity, maintaining patient trust and practice reputation.
  • Legal Review: Have all agreements reviewed by a lawyer specialized in dental practice transitions to ensure that all legal aspects are appropriately addressed.

dental lawyer, dental attorney, dentist, dental office

Financial Implications of Ending a Partnership

The financial impact of a partnership dissolution can be significant and requires careful planning to manage effectively. Understanding the financial standing of the practice, including assets, liabilities, and cash flow, is crucial. Partners must agree on handling ongoing financial obligations, such as loans or leases, which may necessitate refinancing or renegotiation.

Determining how to divide the practice’s assets or handle buyout payments involves clear financial agreements to prevent disputes. This financial disentanglement can affect each partner’s financial stability, so it's vital to approach with thorough financial forecasts and professional advice.

How to Handle Shared Assets and Liabilities

In a dental partnership dissolution, dividing shared assets and liabilities must be handled precisely and fairly. The process begins with a comprehensive audit of the practice’s assets, including equipment, real estate, intellectual property, and liabilities, like loans and accounts payable. 

Partners should negotiate the division based on their contribution, investment, and future needs. Legal documents should clearly articulate each partner’s responsibilities towards liabilities to prevent future legal complications. Sometimes, selling shared assets and dividing the proceeds is a practical solution, especially when partners cannot agree on asset distribution.

The Role of Mediation in Resolving Partnership Disputes

Mediation can effectively resolve disputes within a failing dental partnership, offering a less adversarial and often more cost-effective alternative to litigation. A neutral mediator can help clarify the underlying issues, foster mutual understanding, and facilitate an acceptable negotiated agreement for all parties. 

This process emphasizes collaborative problem-solving and preserves a professional relationship more effectively than court battles. Mediation also allows partners to maintain control over the outcome, which can lead to more practical and personalized solutions, which is particularly important in tightly-knit dental practices.

How To Reorganize Practice Management After a Partnership Ends

  1. Assess Current Operations: Completely examine how the practice is currently managed and identify areas that require change or improvement.
  2. Update Legal Documents: Revise any legal documents, including service contracts and leases, to reflect the new management structure.
  3. Communicate with Staff: Ensure all staff members are informed about the changes and understand their new roles or operational shifts.
  4. Adjust Financial Management: Overhaul the financial management strategies to suit the new practice structure, possibly with new banking arrangements or budgeting plans.
  5. Rebrand the Practice (if necessary): If the partnership dissolution affects the practice’s brand, consider rebranding to reflect the new management.
  6. Implement New Technologies: Use this time of transition to upgrade technologies and practice management software to improve efficiency.
  7. Monitor Performance: Regularly review the practice’s performance post-reorganization to ensure the business remains on track.

Communicating Changes to Staff and Patients

Communicating the changes effectively to staff and patients when a partnership dissolves is crucial for maintaining trust and stability. Start by informing your team through a meeting where you explain the reasons for the dissolution and how it will affect the practice’s operation. Provide clear information on changes in roles, processes, or contact points. 

Consider a thoughtful communication strategy for patients that reassures them of continued quality care. Transparency helps prevent rumors and anxiety, ensuring the practice retains its staff and patient base during the transition.

dental lawyer, dental attorney, dentist, dental office

Lessons Learned: How to Avoid Future Partnership Failures

  • Comprehensive Agreements: Ensure all partnership agreements are comprehensive and clear, covering all potential areas of dispute.
  • Regular Reviews: Periodically review and update the partnership agreement to reflect any changes in goals or circumstances.
  • Open Communication: Maintain open lines of communication between partners to discuss issues before they escalate.
  • Professional Involvement: Regularly involve legal and financial professionals to advise on partnership matters, ensuring compliance and alignment with best practices.
  • Clear Role Definitions: Clearly define each partner’s roles and responsibilities to prevent overlap and ensure balanced workload distribution.

Seeking Professional Advice: Always Consult Experts

Handling the dissolution of a dental partnership or reorganizing after one ends can be complex and fraught with potential legal and financial pitfalls. Consulting with professionals specializing in dental practices, such as Dental & Medical Counsel, ensures that you approach these transitions informed and prepared. Experts can offer guidance tailored to your specific situation, helping to safeguard your professional interests and the well-being of your practice. That is where our team can help you.

Contact Dental & Medical Counsel for Help With Your Dental Partnerships

At Dental & Medical Counsel, we specialize in supporting dental professionals through all phases of their practice's lifecycle, including the delicate partnership dissolution process. If your dental partnership faces challenges, don’t wait for the situation to worsen. Contact us for specialized legal guidance to address your partnership issues effectively and set your practice on a course for success.


Schedule a Complimentary Consultation 


Frequently Asked Questions

Q: What does it mean when a partnership fails?
A: A failed partnership in the dental industry often means that mutual goals and collaborative efforts are no longer viable. Differences in visions for the practice, discrepancies in workload, or financial disagreements can lead to a breakdown in trust and shared objectives, negatively impacting the practice’s operations and growth.

Q: What are the signs of a failing dental partnership?
A: Signs include persistent disagreements over clinical decisions or financial management, lack of communication, imbalanced workloads, divergent goals, and financial strain. These issues can lead to a tense environment, affecting staff morale and patient care.

Q: What steps should I take when conflict begins in a dental partnership?
A: Recognize the conflict early, open communication lines, consult the partnership agreement, seek neutral mediation, evaluate partnership goals, consider professional counseling, and prepare for difficult decisions, such as restructuring or dissolving the partnership.

Q: What legal issues should I consider in a partnership dissolution?
A: Legal considerations include understanding the partnership agreement, asset distribution, liability assignments, patient care responsibilities, compliance with contractual and regulatory requirements, and negotiating non-compete clauses. Legal counsel can help manage these complexities.

Q: How can I negotiate a fair exit strategy?
A: Obtain an impartial valuation of the practice, specify clear terms in writing, consider future employment options, protect patient interests, and have all agreements reviewed by a lawyer specializing in dental practice transitions.

Q: What are the financial implications of ending a partnership?
A: The financial impact includes understanding the practice’s financial standing, handling ongoing obligations like loans or leases, dividing assets, and managing buyout payments. Clear financial agreements and professional advice are crucial to prevent disputes and maintain financial stability.

Q: How should shared assets and liabilities be handled in a dissolution?
A: Begin with a comprehensive audit of the practice’s assets and liabilities, negotiate the division based on contributions and future needs, and clearly articulate each partner’s responsibilities in legal documents. Selling shared assets and dividing proceeds can be practical if disagreements arise.

Q: What role does mediation play in resolving partnership disputes?
A: Mediation offers a less adversarial and cost-effective alternative to litigation, helping clarify issues, foster mutual understanding, and facilitate an acceptable agreement. It preserves professional relationships and allows partners to maintain control over the outcome.

Q: How should practice management be reorganized after a partnership ends?
A: Assess current operations, update legal documents, communicate changes to staff, adjust financial management strategies, rebrand the practice if necessary, implement new technologies, and monitor performance to ensure the business remains on track.

Q: How should changes be communicated to staff and patients?
A: Inform staff through a meeting explaining the reasons for the dissolution and its impact on operations. Provide clear information on changes in roles and processes. Communicate with patients thoughtfully, reassuring them of continued quality care to prevent rumors and anxiety.

Q: What lessons can help avoid future partnership failures?
A: Ensure comprehensive and clear partnership agreements, periodically review and update the agreement, maintain open communication, involve legal and financial professionals regularly, define each partner’s roles and responsibilities clearly, and seek professional advice when needed.

Q: Why should I consult experts when handling a dental partnership dissolution?
A: Handling the dissolution of a dental partnership involves complex legal and financial issues. Consulting with professionals specializing in dental practices ensures you are informed and prepared, safeguarding your professional interests and the well-being of your practice. Experts can provide tailored guidance and help navigate the transition smoothly. 

Q: How can Dental & Medical Counsel help with dental partnerships?
A: At Dental & Medical Counsel, we specialize in supporting dental professionals through all phases of their practice's lifecycle, including partnership dissolution. We provide specialized legal guidance to address partnership issues effectively, ensuring your practice's success. Contact us for expert assistance.


About the Author

At Dental & Medical Counsel, we've been instrumental in realizing the practice goals of countless dentists. Whether you're looking to purchase, launch, or sell a dental practice, our expertise is your guide. Beyond the initial stages, we're committed to ensuring your dental practice remains legally compliant.

We provide comprehensive support, including employment law protections, dental contract reviews, and assistance with dental employment agreements. Additionally, we specialize in incorporating dental practices and securing trademarks. And for long-term planning, our services extend to helping dentists with succession and estate planning. Trust us to be your partner in every step of your dental practice journey.

Ali Website 1_edited (1)

About Ali Oromchian, Esq.

Your Dental Lawyer

Ali Oromchian, JD, LL.M. is the founding attorney of the Dental & Medical Counsel, PC law firm and is renowned for his expertise in legal matters

Ali Oromchian, JD, LL.M., is a leading legal authority in dental law and the founding attorney of Dental & Medical Counsel, PC, with over two decades of experience. His deep connection to dentistry comes from his wife's nearly two-decade-long career as a pediatric dentist. 

This personal insight fuels his dedication to empowering dentists to navigate their legal challenges and achieve their practice goals. In doing so, Ali has helped thousands of doctors open their practices while maintaining legal compliance. 

Ali is frequently quoted and contributes articles to dental publications, including the California Dental Society, Progressive Dentist, Progressive Orthodontists, Dentistry Today, Dentaltown, and The New Dentist magazines, further showcasing his commitment to the dental community.


Subscribe to Our Blog

Stay updated with industry news!