Partnership Mediation

THE ISSUE

This mediation came from one of the partners of a dental practice – they had been recommended to come to me by a professional advisor.

There were three partners in the dental practice – two had been partners from the beginning and when the practice expanded they had invited the third person to join them. They came to agreement about the percentage of drawings that would be likely to be earned in each year; the amount that would be paid out automatically each month; when the annual balance due might be paid out; the amount that the new partner had to pay to get into the practice; the hours and duty rosters were also agreed. The three dentists would pay for and share the administration staff, the premises, IT and other outgoings.

Initially the partnership worked well and the patients liked the new partner. All went well for some years but then differences started to appear between the new partners and the original partners. Complaints started to be made by the staff that the new partner was being rude, wasn’t fulfilling her roster and wasn’t keeping up with the administration of the practice which was having an effect on the finances. The partners had tried to sit down together to see if the matter could be resolved but they were not able to make any progress. Then the new partner went on sick leave due to stress. A locum was organised but it was clear that the matter had to be tackled.

PRE-MEDIATION

I was asked to mediate. I met each of the parties separately so that I could understand what was going on. The original partner said that he had run out of patience with the new partner. She was being abusive to him and wouldn’t give a civil answer to any questions. As she wasn’t doing her administration the practice was being put in a difficult situation financially. The new partners’ treatment of staff created a risk that a formal complaint would be made or that someone else would be out on stress leave and the practice couldn’t withstand that.

The second partner said that he was less involved from the day to day – he didn’t have much to do with the new partner but for the sake of the practice and the staff things had to be sorted out.

The new partner was equally unhappy. She said that the duty rosters had been misrepresented to her as had the amount of partners’ drawings. She wasn’t getting the holidays she was entitled to and she wasn’t being given the respect she deserved by the staff. She couldn’t work with the main partner – she felt that he didn’t appreciate her worth. She wasn’t coming back to work until they had thrashed things out.

I asked each of the partners to think about what each of them wanted from the mediation – what would their ideal solution be.

THE MEDIATION

On the day of the mediation I met the three partners together and each told of their issues. The exchanges were heated and people were accused of not telling the truth. From the exchanges a number of issues were raised that might form the basis for the partners coming to an agreement. That said, I didn’t get a sense that there would be a genuine meeting of minds and I wasn’t sure a mediated agreement would last given the level of animosity between them.

I asked to meet the parties separately – the new partner on the one hand the original partners on the other. I met the new partner first and discussed with them how they felt things were going and did she feel that there could be a workable arrangement with the other partners. I asked if she had considered leaving the practice. She had thought about leaving but didn’t know how it would work nor how much she would be paid to leave. I asked if she wanted me to explore this option with the other partners and she confirmed that I could.

I then talked to the original partners and asked if they had considered the buy out option. They hadn’t thought about it but were willing to do so provided that the “sums” were right.

The parties didn’t meet together again in the mediation that day but it was agreed that the parties would seek professional advice on the value of the new partner’s practice and when this was to hand the mediation would reconvene.

The mediation reconvened some weeks later and I put the parties into two separate rooms – the original partners in one and the new partner in the other.

The new partner told me the amount that she wanted to leave the practice and I put that to the others. They didn’t agree that figure but made a counter offer. The offer started to expand to include not only the amount of the buy out but also when the partner would leave; what would be said to the patients; what would be said to the staff; what equipment / items in the practice could be removed by the new partner. The agreement negotiated included precise details in relation to the buy out payment which was to be by way of staged payments. The actual negotiation to arrive at an agreement on all items took many hours but in the end I drew up a legally binding agreement which was signed all parties.

THE OUTCOME

I have no doubt that the agreement reached by the parties was the best outcome. I had no sense from either the joint meetings or the separate ones that the partners could carry on a properly functioning practice and there would be great strain on all the parties if they tried to keep going. The agreement that they came to enabled both “sides” to move on.