Goodwill Protection from a practice owner’s perspective – practice restraints and non-solicitation of patients/clients and employees

A major asset of a practice is the practice owner’s valuable Goodwill. Owners need to ensure their Goodwill is protected.  Owners are entitled to reasonable protection to preserve their Goodwill. The key questions Whitehead Legal ask our practice owner clients are:

  • Are your assistant dentists contractors or employees?”

  • Are there signed agreements in place? Are appropriate practice restraints and non-solicitation clauses defined in the contractor/employee agreements?

  • How long has the contractor/employee been engaged at your practice?

  • Does the contractor/employee have a significant patient/client base which may seek to follow the contractor/employee if they decided to leave your practice?

An appropriately drafted and signed contractor/employee agreement means a practice owner has documented appropriate practice restraints and has made every endeavor to protect his/her Goodwill in the event that a contractor/employee was to leave the practice and join a rival practice.  With appropriate drafting, the departing contractor/employee agrees to be contractually restrained from practising within the restraint period/distance defined in their contractor/employee agreement AND not to actively solicit practice patients/clients or employees. This is good.

Practice restraints and non-solicitation of patients and employees provisions in agreements need to be reasonable and they need to be appropriately drafted to be enforceable by a practice owner.  Without appropriately drafted and signed contractor/employee agreements, a practice owner may unfortunately be wide open to sabotage and weakening/diminution of his/her valuable Goodwill in the event that the contractor/employee moved to another practice close by.

It is in every practice owner’s best interest for contractors/employees to have proper and enforceable restraint clauses in their agreements. There are certain protections based on implied restraints or restraints based on equitable principles but, for clarity, reasonable practice restraints and non-solicitation clauses are a must in your written contractor/employee agreements. Note the drafting of these clauses and their enforceability may differ from state to state – best discuss the next steps with your lawyer. 

Watch our Blogs for commentary on  Proper Due Diligence – What a practice owner needs to provide their lawyer.