Common Types of Contracts Young Dentists See After Dental School

In Business by Dental Entrepreneur

Graduating from dental school is an exciting time. After years of hard work, young doctors are finally ready to begin practicing. During this pivotal period of their careers, there are several contracts the new doctor may encounter. These contracts typically have far-reaching implications and can play a prominent role during their dental careers.

Below is a summary of common legal contracts and a few tips to ensure that they are successfully navigated.

Associateship Agreements

For dental school graduates looking to enhance their clinical skills and earn income without the financial risks, an associateship is a great option.

A written associate agreement defines the terms of the relationship between associate and host doctor(s), and ensures that both parties begin on the same page while laying the groundwork for a successful relationship.
When presented with an associate agreement, these are a few elements that should be present:

  • Term – The agreement should have a stated term or duration and attention should be paid to if and how the agreement can be renewed.
  • Compensation – The agreement should provide the basis for the associate’s compensation and the frequency of pay. Compensation can be structured a number of different ways, including: a flat daily rate, annual salary, or a percentage of adjusted gross production or collections. The structure and amount can vary greatly depending on several factors such as practice location and specialty.
  • Restrictive Covenant – Most associateship agreements will include restrictive covenant and non-solicitation provisions. These provisions are enforceable in most states. The terms of these provisions should be reasonable in scope and duration. Reasonableness of scope will vary depending on practice location and specialty. The duration of the restrictive covenant for an associateship agreement is typically 12 to 24 months, but should not exceed 24 months. If the practice has more than one office location, the agreement should specify to which location(s) the restrictive covenant provisions apply. Typically, the restrictive covenant should apply only to the locations in which the associate primarily provides services.
  • Termination – The agreement should address how it may be terminated, the procedure for doing so, and the length of notice that is required.

Offers to Purchase/Letters of Intent

An offer to purchase, or letter of intent, is a non-binding document that should highlight the important negotiation points of a transaction.

At a minimum, the offer should detail the structure of the transaction, purchase price, how the practice real estate will be handled, and contingencies that must be met prior to closing.

Partnership Agreements

It is increasingly common to share ownership of a practice through a partnership. Partnership agreements should include the following provisions:

  • Division of Expenses and Income – The agreement should specify how the income and expenses of the partnership will be allocated among the partners.
  • Duties – The agreement should set forth the duties of the partners to the partnership, and delineate any management responsibilities.
  • Termination or Withdrawal – The agreement should address how the partners may be terminated or withdraw, and how their share of the partnership is handled should this occur. The agreement should also include the appraisal method to be used in valuing the partner’s share upon departure.
  • Non-Compete and Non-Solicitation – The agreement should include non-compete and non-solicitation provisions that will become effective if and when a partner withdraws or is terminated from the partnership.

Asset Purchase Agreements

These agreements are used for dental practice purchases or buy-in transactions, and should address the following issues:

  • Included and Excluded Assets – The agreement should identify all included and excluded assets of the transaction. Examples of assets that would be included are: supplies and instruments, clinical equipment, patient files and records, office furniture, and goodwill. Excluded assets would be any personal effects of the seller and any cash on hand.
  • Transaction Structure – The most common structure is an asset sale, but may be a stock sale or hybrid approach. The agreement should also include an allocation of the purchase price among the tangible assets and the goodwill of the practice.
  • Buyer and Seller Representations – The parties will make certain representations and warranties to each other relating to items such as, ownership of the assets and their authority to enter into the transaction.
  • Treatment of Accounts Receivable and Credit Balances – The parties should address the issues surrounding the collection of outstanding accounts receivable. Generally, there are three options: the buyer purchases the accounts receivable, the buyer collects the outstanding accounts receivable on the seller’s behalf and typically receives a nominal fee for doing so, or the seller retains the accounts receivable and collects them outside of the transaction. Warranties should also be included stating that all creditors have been paid by the seller.
  • Work in Progress and Prepaid Fees – If the seller is planning to remain with the practice after the sale for a period of time, work in progress is typically not an issue. However, if the seller is retiring or otherwise leaving the practice after the sale, then determination of any unfinished cases and prepaid fees should be addressed.
  • Restrictive Covenant and Non-Solicitation Provision for the Seller – These post sale covenants restrict the seller from competing with the practice within a certain area for a period of time, typically three to five years, and prohibits the seller from soliciting patients and employees of the practice for the same duration.
  • Bill of Sale – This is typically a one-page document produced with the Asset Purchase Agreement that serves to legally transfer the assets from the seller to the purchaser.

Of course, knowing the types of contracts that may be encountered is only half the battle. Here are a few general tips to successfully navigating them:


When negotiating these types of agreements, always negotiate in writing. Dinner table negotiations are not binding and ineffective. It is always best to use qualified advisors. The use of advisors helps side step the issues that often arise when emotions run high. Lastly, one should keep in mind the bigger picture; a deal should not be lost over a minor issue. 


The costs of each type of agreement varies widely. Young students should expect to spend less during the associateship process than a buyer would when purchasing a practice. Most advisors in the industry charge a flat fee which helps to facilitate open communication between themselves and their clients. Save money by using an advisor that is specific to the industry. Doctors do not want to find themselves in a situation where their advisor is learning the industry on their dime. Young doctors will find that surrounding themselves with a team of experienced advisors, such as dental attorneys, dental CPAs, insurance advisors, and wealth management advisors will save them time and money, and help them navigate through the early years of their careers.

The first few years after dental school are not only important from a clinical perspective, they are also some of the most important years for building the foundation of a dental career. As young dentists navigate these years, it is imperative that they arm themselves with the knowledge of contracts that will be encountered and how to navigate them.

Megan Weber, JD
Megan is an attorney with Jordan Law Group, and focuses her practice on assisting associates, buyers and sellers in dental practice transitions. She can be reached at 704.461.8711 or at