The most consequential legal mistakes in dental practice ownership rarely come from carelessness. They come from moving forward on decisions that looked uncomplicated but carried hidden exposure, or from relying on standard templates and general counsel for matters that required dental-specific knowledge and experience.
Mandelbaum Barrett PC attorneys William Barrett and Justin Wade addressed this directly in an interactive presentation for dental professionals, walking through the most significant legal errors the firm sees in dental practice transactions and operations and how to avoid them.
Signing a Letter of Intent Without Legal Review
One of the most consistent errors in dental practice transactions is treating the letter of intent as a preliminary, non-binding document that does not require legal involvement. While many LOI provisions are expressly non-binding, some are not: exclusivity clauses, confidentiality obligations, and breakup fees can carry real consequences before a transaction closes. Having counsel review the LOI before signing adds a layer of protection that is far less costly than unwinding a provision that was not fully understood at the time of signing.
Inadequate Due Diligence Before Acquisition
A thorough legal review of a practice being acquired should examine existing employment and associate agreements, outstanding liabilities including any pending claims or disputes, the terms and remaining duration of the practice lease, equipment loans and financing arrangements, and any regulatory or compliance issues. Problems missed in due diligence often surface after closing, when the buyer’s leverage to address them has largely disappeared.
The American Dental Association’s practice management resources consistently underscore thorough due diligence as one of the most valuable steps in any dental practice purchase.
Associate Agreement Pitfalls
Employment and associate agreements for dental professionals involve compensation structures, non-compete provisions, and buyout arrangements that are specific to the profession and carry significant long-term implications. Vague or poorly structured agreements frequently become sources of dispute when circumstances change. A production-based compensation calculation that seemed clear at signing becomes contested when collections patterns shift. A non-compete that was not carefully scoped leads to litigation when an associate leaves to open a nearby practice.
Well-drafted agreements set clear expectations and provide workable frameworks for the resolution of issues that may arise. The cost of a properly structured agreement is small relative to the cost of litigating a poorly drafted one.
Working Proactively Rather Than Reactively
The interactive format of the presentation surfaced a consistent theme from the dental professionals in attendance: the advantage of legal counsel engaged before problems arise rather than after. Practices with established legal relationships can structure transactions correctly from the outset, get timely answers to questions before they become disputes, and move through transitions with more confidence and less exposure than those who seek counsel only when something has already gone wrong.
Contact Mandelbaum Barrett PC
If you have questions about dental practice acquisitions, associate agreements, or legal issues in your practice, Mandelbaum Barrett PC is ready to assist. Contact us through our contact form today.