5 Documents to Never Sign Without Due Diligence

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 .