Partnership Advice

As an LMC we advise that all Practice should have a partnership agreement. The LMC library below holds information developed by both Glasgow LMC and the BMA to assist you with partnership decisions and the development of a Partnership agreement. Many GP partnership practices do not have a written partnership agreement and for those practices the default provisions of the Partnership Act 1980 (the “Act”) will apply. Of those practices that do have written partnership agreements, many will be out dated, ambiguousor poorly drafted, which leaves room for provisions of the Act to apply. Relying on the Act has a number of pitfalls and in allowing its provisions to apply; practices are putting themselves at risk.

What are the pitfalls of relying on the Partnership Act?

  • The default position if a partner dies is that the partnership will be dissolved, which may result in the forced sale of partnership assets and premises, practice staff being made redundant and termination of the NHS contract held by the partnership;
  • Any partner can dissolve the entire partnership with immediate effect simply by giving notice to the other partners;
  • There are no circumstances in which the partners can expel a partner, so if a partner’s conduct or performance causes difficulties there would be no way of removing him or her other than by dissolving the partnership; and
  • Profits of the business are divided equally, which can be an issue if, for example, the Partners work different hours.

How can a Partnership agreement protect Partners

A written partnership agreement can prevent the above from becoming the default position by:

  • Specifying a procedure to be followed if a partner dies, retires or otherwise ceases to be a partner; this allows the partnership to continue
  • Allowing for dissolution of the partnership only if all partners agree or if ordered by a competent court, tribunal or arbitrator
  • Defining circumstances under which the partners can expel a partner (the partnership may wish to include a “green socks clause” stating that any partner can be expelled if all of the other partners vote to expel them)
  • Clearly stating an individual GP’s interests and how profits are to be shared.

How can the agreement process strengthen Practices?

The preparation of a partnership agreement allows GP partners to consider and agree on arrangements concerning issues such as locum cover, right to a share of profits when a Partner is absent from the Practice, and general rights and responsibilities and decision making processes. Having a partnership agreement can make the practice much more stable and robust , and dramatically reduce the likelihood of partnership disputes arising, which can be very costly in terms of time, good will and money. It is, therefore, a very worth while investment. For further information please contact one of the Medical secretaries.

Partnership Advice library