When GP Partnerships Break Down: Navigating Disputes Between Medical Partners
Disputes between GP partners can be particularly difficult to resolve. What may begin as a disagreement about the management of a practice can quickly develop into a wider dispute concerning finances, decision-making, access to information, property, contractual rights and professional reputation.
At IKP, we have experience of dealing with disputes involving professionals whose relationships with their business partners have deteriorated. A recent matter dealt with by our Imran Khan KC involving a GP partnership demonstrated just how quickly difficulties within a medical practice can become both legally and professionally significant.
The identities and circumstances have been anonymised, but the issues provide useful lessons for doctors and other healthcare professionals operating in partnership.
When Professional Relationships Deteriorate
The case involved a long-serving medical professional who had spent many years working within and contributing to the development of a GP practice.
Over time, disagreements arose concerning the management and direction of the practice. Those disagreements developed into more fundamental concerns about governance, decision-making, financial and operational information, and the extent to which the doctor was able to participate properly in the management of the partnership.
These situations can be particularly difficult because the individuals involved are not simply business partners. They are medical professionals who may have worked alongside one another for many years while collectively assuming responsibility for staff, premises and the delivery of patient services.
Once trust breaks down, apparently routine decisions can become contentious.
The Partnership Agreement Is Often the Starting Point
One of the first documents that must be considered in any partnership dispute is the partnership agreement.
Its precise terms can be critical.
Among other matters, it may determine:
how decisions are made;
the voting rights of individual partners;
how profits and liabilities are allocated;
partners' entitlement to financial and management information;
retirement arrangements;
procedures for dealing with absence or incapacity;
whether, and in what circumstances, a partner can be expelled;
what happens to a partner's capital on departure;
ownership or occupation of practice premises;
restrictive covenants; and
the mechanism for resolving disputes.
Where an agreement is silent or ineffective, it may also be necessary to consider the application of the Partnership Act 1890 and the general law governing the relationship between partners.
Excluding a Partner Can Have Serious Consequences
One of the most significant issues that can arise is the actual or effective exclusion of a partner from the management of the practice.
This may take many forms. A partner might cease to be invited to important meetings, discover that significant decisions are being taken without consultation, experience difficulties obtaining financial or other records, or find that their involvement in the operation of the practice has progressively diminished.
Whether such conduct is lawful depends upon the partnership agreement and the particular circumstances.
It is therefore important to examine what decisions have actually been made, who had authority to make them, whether the prescribed procedure was followed and what rights the affected partner retained.
GP Partnerships Are Not Ordinary Commercial Partnerships
A dispute between doctors cannot always be treated simply as a conventional business disagreement.
A GP practice operates within a wider healthcare and regulatory environment. Depending upon the circumstances, the parties may need to consider the practice's NHS contractual arrangements, regulatory responsibilities, employees, patient services and premises alongside the ordinary principles of partnership and contract law.
This can create difficult strategic questions.
A course of action that appears attractive from a purely litigation perspective may create unnecessary difficulties for the continued operation of the practice. Conversely, concerns about disruption should not result in a partner surrendering important legal or financial rights.
The aim should be to understand the client's objectives at an early stage and develop a strategy that considers the dispute as a whole.
Professional Reputation Matters
For a doctor, the consequences of a partnership dispute may extend well beyond money.
Allegations about conduct, competence, governance or the management of a practice can potentially affect professional relationships and reputation. Particular care is therefore required when allegations are being formulated or answered.
This is one reason why early legal advice can be important. Correspondence written during the early stages of a dispute may subsequently assume considerable significance if the matter escalates.
Litigation Should Not Automatically Be the First Step
Partnership disputes can become expensive very quickly. They can also consume an enormous amount of professional time.
Court proceedings will sometimes be necessary, particularly where urgent protection is required or the parties' positions are irreconcilable. But litigation should not be treated as inevitable.
Depending on the circumstances, the appropriate strategy may include:
detailed correspondence setting out the client's legal position;
requests for accounts and other partnership records;
obtaining and analysing financial information;
without-prejudice negotiations;
mediation;
independent valuation or accountancy evidence;
negotiating the retirement or departure of a partner; or
agreeing a wider restructuring of the partnership.
A negotiated outcome may resolve issues that a court judgment cannot, particularly where the remaining partners must continue operating a medical practice afterwards.
The Value of Acting Early
Perhaps the clearest lesson from partnership disputes is the importance of seeking advice before positions become entrenched.
A relatively contained disagreement about management can become substantially more complicated once communication has broken down, allegations have been made and each side has instructed lawyers.
Early intervention provides an opportunity to establish precisely what the partnership agreement provides, preserve relevant documents, clarify the financial position and identify whether a commercial resolution remains possible.
For GP partners, that can also help minimise disruption to the practice and, ultimately, to patients.
How We Can Help
GP partnership disputes sit at the intersection of commercial relationships, contractual obligations, professional reputation and, frequently, significant personal investment.
They require a strategy that recognises all of those interests.
We can advise medical professionals on the interpretation of partnership agreements, exclusion from management, partnership accounts and information, retirement or expulsion disputes, negotiations between partners and, where a negotiated solution cannot be achieved, litigation.
If difficulties are beginning to emerge within a medical partnership, obtaining advice at an early stage can often provide considerably more options than waiting until the relationship has completely broken down.
This article provides general information only and is not intended to constitute legal advice. The circumstances of the case referred to have been anonymised and certain details altered or omitted to protect confidentiality.
