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Coronavirus - Protecting Your Medical Partnership

on Wednesday, 02 December 2020.

Is your partnership agreement sufficient for dealing with the unforeseen effects of the coronavirus (COVID-19) pandemic?

COVID-19 has presented a number of challenges to GP practices many of which are common to all businesses during this crisis.  Having to adapt how both current and new services are delivered as well as develop and mature governance around PCNs can be a challenge and it can be easy to forget about internal governance and whether it is robust enough to deal with the challenges COVID-19 presents. 

We would always recommend reviewing your partnership deed from time to time to ensure it reflects operational and legislative changes but unforeseen events like COVID-19 provide a good reason to ensure that key areas covered in your partnership agreement are fit for purpose and up to date to put you in the best position to weather this storm.

Key Clauses to Consider in Your Partnership Agreement

  • Death or serious illness of a partner– It is important to consider the consequences of the death or long-term illness of a partner. If this occurs, do the continuing partner(s) buy out the affected partner's interest? If so, on what basis and how will the partnership share be valued? What about the liabilities in the partnership?
  • Decision making– Practices are now having to think of inventive ways to hold meetings via video conferencing and other forms of communication. It is important to have a clear decision making process and structure in place so that changes in the way you operate are dealt with efficiently.
  • Exiting partners– Your partnership agreement should stipulate how an exiting partner is paid out for their share and what valuation mechanism should be used in respect of any freehold premises.

Risks of Not Having a Partnership Agreement

If you do not already have a thought out, negotiated and well drafted agreement, the following are likely to apply:

  • Automatic dissolution – The retirement or death of a partner means that the partnership would automatically be dissolved, this may also affect your GMS contract or PMS agreement.
  • Default position is equal ownership and liability – Under the Partnership Act 1890 all profits, losses and management control are automatically shared equally, which may not be appropriate if the partners work different sessions.
  • Partnership disputes - A well-drafted partnership agreement can reduce the chance of a dispute arising or give a better chance of more quickly resolving any dispute that does arise and it will also give you a mechanism to deal with such a dispute.

Unlike a limited company or LLP, a partnership under the Partnership Act 1890 brings with it unlimited personal liability on a joint and several basis with the other partners. This means it is vital to have a well thought out and comprehensive partnership agreement in place at the beginning.  

How We Can Help

We have an expert team of partnership solicitors who are able to review and discuss your requirements.

To discuss your legal practice needs, please contact a member of our Healthcare team, or complete the form below.

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