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There are many ways to 'formalize' business, work relationship
There are many ways to 'formalize' business, work relationship
What exactly does it mean when two parties decide that they will formalize their relationship? "Formalize" is, of course, a euphemism.
When a person formalizes something, he is taking steps to make a commitment and simultaneously obligate someone else to see through a commitment. A better word for such a step might be "force-alize" because when a deal or relationship is formalized, it really means that parties are giving each other the power to force them to do what they promised. A business relationship can be formalized in a number of different fashions, though many people think of formalization as signing papers of some kind. There are many other ways a deal can be sealed; many other ways that parties allow themselves to be "forced" into seeing through a commitment or promise.
For example, when teenagers "go steady," they are promising that they will not go out with anyone other than their current boyfriend or girlfriend. The understanding is a formalization of a relationship and a commitment that the parties will do certain things and not do certain things until the parties mutually agree otherwise. The commitment is quite informal, (ring, maybe; contract, no), and the force formalizing it is guilt.
The same basic commitment is made when an associate veterinarian takes a job in an animal hospital without the benefit of an employment contract.
The boss is promising to pay an agreed to amount every week or so, and if the associate gets fired or decides to quit suddenly, there will probably be a little guilt and/or resentment spread around, but little more.
Now, when a famous television star begins filming a hit television show, everyone signs a foot-thick stack of paperwork covering everything from the celebrity's outsized paycheck to the color and dimensions of her dressing room. Millions of dollars are at stake; virtually nothing is left to chance or interpretation. This is a business relationship that is in some ways bigger than marriage. Courts never order couples to love each other, but they do force actors to show up for filming.
I have described this continuum for purposes of illustration and as an exercise for veterinarians and other animal health professionals who are thinking of entering into a new work or business relationship. The most important consideration that should be entertained by such parties falls fairly neatly into the formalization continuum discussed previously.
Food for thought
Therefore, I suggest that every doctor considering partnership, every LVT considering a new position, every associate deciding whether to renew an employment agreement should take the following thoughts into account before taking the plunge:
- How long am I willing to commit to this enterprise, and how long do I feel comfortable asking the other party to commit to it?
If you are an independent contractor veterinary technician taking a new one-day position, no one is asking much commitment out of anybody; it's a short deal, limited scope, relatively clear parameters. Think date, not going steady. On the other hand, if you use a handout describing items you would prefer not to be asked to do (kennels, unanesthetized abscess lancings, small ruminant duty), the date might go better and you might be asked out again since you and your client started out understanding one another.
If you are a board certified surgeon entering into a partnership in a specialty practice 2,000 miles from where you and your spouse grew up and where your parents still live, think Seinfeld; potential decades-long obligation, personalities galore and lots of money for lawyers if there's a disagreement.
- What would I do, specifically, if this job/buy-in/partnership/purchase went completely sour?
Does the degree of formality being considered (shareholder agreement, non-compete, building sale) seriously jeopardize your future ability to see through a realistic alternative plan for your life? If so, the terms that so limit you should be identified, carefully considered and if unacceptable, modified or eliminated. If the terms of the deal and your fall-back plan are completely at odds, the deal may not be right for you, no matter how carefully formalized.
- What do I know, specifically, about the person(s) with whom I am entering into this commitment?
If you are an associate being asked to sign an employment agreement with a 30-day notice requirement and no non-compete, it probably doesn't matter that much if the new boss turns out to be a rat. You're just going steady.
If you are a practice owner preparing to hire a new veterinary technician who has secretly spent the majority of her career on someone else's unemployment insurance or worker's comp policy, don't think date or even marriage. Think potential life sentence. If a world where labor laws dramatically limit the questions you can ask a job applicant, there is still a place for carefully filtered rumor, scuttlebutt and the thoughts of intuitive and ubiquitous drug salesmen.
- Am I in a position to ask for more of a commitment (or more specific details of the commitment) from the other party than has already been discussed?
Consider your own personal status in deciding how much "formalizing" you should demand of the other party. If you are getting a great deal on the practice of your dreams, you probably shouldn't ask the seller to inventory the 5-milligram prednisolone tablets in each already-opened bottle. If you are the owner of a busy practice five miles from a veterinary school, your associate positions are probably pretty hot properties. You can probably insist on certain standards from a new associate, and in writing. If your rural practice has been looking for a warm DVM body for the last 22 months, you probably need to keep your contracts shorter and sweeter.
- Can I step back and be completely objective as to how large a role I am allowing emotion to play in this decision? (Emotion may have a very legitimate place in the decision-making process, but it must be recognized for what role it plays.)
Are you taking a 25 percent hit on salary because you just love the Smokey Mountains and absolutely have to practice there? If so, then so be it, but go into the deal with your eyes open and don't cry to the practice manager about your salary two months after taking the job.
n How complicated is the deal, really? Are you qualified to say for certain whether it is complicated or not? Have you ignored the complexity by failing to get good advice or are you in the process of allowing your advisors to "lawyer the deal to death"?
In the final analysis, formalizing a long-term or hid-dollar commitment probably means signing documents. The fact that paperwork is involved, though, doesn't necessarily mean that the transaction needs to be all that detailed. On the other hand, what may seem fairly simple to the veterinarians involved may actually be a minefield of complexity. Think of it this way: Would you think that your lawyer was a fool to dismiss a lump under his dog's neck and not have it checked? What does that make a doctor who signs a contract some other doctor threw together?
Regarding advice, though, be advised: Attorneys and consultants sometimes behave so "lawyerly" that they actually put perfectly good deals in peril. It can be forgotten that zealous representation doesn't have to mean beating the other side with a stick until that last prednisolone pill is documented.
In the workplace, and in business relationships, the atmosphere is filled with emotion, ego and subsurface agendas. A good advisor and a good legal document don't attempt to purge a contract or transaction of those elements. Good representation, and good formalization, embrace the motivators involved on both sides in order to allow the best possible set of mutual commitments to coalesce.