Why you need a robust GP Partnership Agreement
Read time : 4 mins Added: 23/02/2023
With the primary care landscape changing rapidly, it’s vital for GP partnerships to have a written partnership agreement drawn up by a specialist solicitor – and to keep it up to date. We’ve asked Oliver Pool, Partner, VWV, to explain why.
There are around 8,000 GP partnerships in the country – it’s not known how many have a written partnership agreement. Although there’s no legal requirement for practices to have this document, the lack of a well-drawn up agreement could cause a GP partnership significant future problems.
Partnerships at will
If GPs have no written agreement to work together they are what is called a ‘partnership at will’. These sorts of partnerships last only for as long as all the partners involved commit to it, and can be dissolved at any time by any of the partners – making it the least stable business structure available.
The result of having a structure like this means that problems can arise when there are disputes between partners. In particular if the partnership does dissolve, there can be arguments over who gets to continue the GMS contract, and the GMS contract can even end up being put out to tender; winning it back can be time-consuming and expensive.
A written partnership agreement, or partnership deed, works like a constitution by setting out who must do what, when and how. If a partnership has a clear agreement, which outlines all the relevant processes and is regularly updated, there should be much less scope for future disagreement or misunderstanding. Just as importantly, if partners do fall out, having an agreement ensures they have remedies rather than being left in limbo.
A partnership agreement should be drawn up by a specialist solicitor. Some GP practices seek to avoid the £2,000 – £3,000 cost of having it done properly, by drawing up their own partnership agreement. However, this creates a risk as this will often not address all the issues that need to be covered and this approach could prove a major false economy. Legal fees for advice on disputes that have arisen from an inadequate Partnership Agreement tend to dwarf the cost of having an agreement drawn up by a specialist solicitor in the first place.
Leavers and joiners
A properly drawn-up partnership agreement should not be affected by a partner retiring. However, an inadequate partnership agreement carries the very real risk of dissolution when a partner dies or retires, so it is important to make sure agreements cover this eventuality.
When a new partner joins, they should either sign an updated version of the partnership agreement, or they should sign a deed of adherence setting out the fact they agree to comply with the terms of the existing agreement. If nothing is signed, the old deed can fall away, leaving the practice as a ‘partnership at will’ again.
A very common mistake is to wait until a new partner gets through their probation before signing the deed. The risk with this approach is that if anything goes wrong during probation, there is no deed in place to regulate matters meaning there is no contractual power to ask the probationer to leave – which can itself be the cause of a dispute or a difficult negotiation. Partnerships should always have the new deed in place on or before the date the new partner joins.
One area a partnership agreement needs to be very clear on is ownership of the building in which the practice operates. It should specify whether new partners have to buy into the building and whether retiring partners have to sell up – and, importantly, how the building is valued. It should also outline responsibilities for meeting the premises costs.
Given the pace of change in primary care, a partnership agreement should be updated every three or four years to make sure it covers contemporary issues or changed circumstances. An agreement that is currently five years old, for example, won’t mention:
- The new to partnership scheme (which can make new partners ineligible to claim their golden hello)
- Primary care networks
- The state-backed indemnity scheme
- Shared parental leave – which is now reimbursed
- Reimbursement for sick leave, which may have affected the practice’s sick leave policy and locum reimbursement arrangements.
- The onus is on the practice to contact their solicitor and get the changes made.
Other reasons to have a partnership agreement
- CQC advise that partnerships should have a written partnership agreement.
- GMS contracts require that partnerships have a written partnership agreement.
- It’s a basic feature of good governance for GP practices.
Oliver Pool is a Partner at VWV, a full-service law firm with a specialist healthcare team with offices in Bristol, London, Birmingham and Watford. For more information visit VWV.