(Or is my attorney just trying to run up my bill?)
By Erica Pero
Lawyers often get a bad rap for drafting long, wordy contracts. While I love using the words “herein” and “notwithstanding the foregoing” as much as my peers, I really do try to draft concise legal documents for my clients. And as a corporate healthcare attorney, I’m often called upon to help start a business between two or more people.
I fancy myself both the wedding planner and the funeral director in such an instance. It’s a bit morbid, but I’m responsible for getting the business off to a successful start AND I also have to think ahead in case things don’t go well in the future – because, let’s face it, stuff happens sometimes. When it does, it’s helpful to have a contract drafted while everyone is getting along – then later, when everyone is angry with one another, they can look to the legal document that everyone signed and figure out what comes next.
Most of y’all are familiar with Bylaws – that’s the guiding document for a corporation and a contract between the company and the shareholder. It often lays out when annual meetings will occur and who the corporation’s officers will be. But what about the nitty-gritty stuff? For example, “What will happen if one of the shareholders (doctors) dies suddenly?”
For the agreements between shareholders, your attorney can draft a Shareholder Agreement in addition to the corporate Bylaws. The Shareholder Agreement may contain more personal agreements: including the non-compete provisions, the permission to own a car in the company name, the crazy-sounding (but often very helpful) terms that dictate how much production each doctor must commit to producing each month. This stuff doesn’t belong in Bylaws because it’s not an agreement with the company but rather an agreement among the shareholders themselves.
It typically costs a bit more to draft both documents, but having a well-drafted Shareholder Agreement on the front end comes in handy if there is ever a question down the road!
Erica Pero, an attorney with Pero Law, focuses her practice on health law. She helps healthcare professionals navigate the complexities of running a business in today’s healthcare industry. Pero Law is a lean law firm committed to excellent customer service and exceptional legal representation. perolaw.com