The Once and Future Contract

I recently saw an article on the front page of a weekly legal publication with a photograph of two law school classmates of mine. They met and married while we were in law school and are in practice together. In the photograph, between them, was their daughter who is working at their firm while she prepares to sit for the Bar Examination. While it certainly was a visible reminder of how old my classmates have become, I knew that their daughter would have access to two experienced attorneys if she needed advice about her first proferred position as an associate attorney.

I thought about this last week when speaking to a group of Residents, in part, about things they should consider and legal advice they should seek when considering their first contract positions as Associates. Because they will be anxious, in this economy, to obtain that first post-graduate job, it is even more important that they obtain competent legal and accounting advice. Not all offers will be accompanied with the option of becoming a Shareholder or Member (if a PLLC) within a, hopefully specified, time period. But many will. There are a number of things that the candidate must consider when evaluating such a position. Does the contract contain an appropriate and not burdensome non-compete provision? Is the ownership option specified in the contract as to time, amount or percentage of ownership, time period for consideration and acceptance of the option?

The time to evaluate these and many other issues is not two or three years in the future. The time to evaluate the value of such an option, with professional assistance from an attorney and qualified CPA, is before signing the initial employment contract.

For instance, it can be self-defeating if a proper financial valuation of the practice or the percentage of ownership interest available is not determined until the Associate has worked at the practice for two or three years and only then learns that the ownership "deal" being offered is just not a good deal. If the practice is unwilling to allow the potential Associate, or his advisors, to review the financial information of the practice and its Shareholder or Operating Agreement, professional advisors can discuss this with the candidate so that she or he can make an informed and reasoned decision whether to pursue other opportunities. If the Associate is merely looking for "a job" for a couple of years before striking out on her or his own, are the non-compete and confidentiality provisions in the contract too prohibitive or confining. Remember that most non-compete provisions commence when the employed professional leaves the practice and typically last for two or three years.

Before you sign that first contract which may have consequences in the future, obtain qualified professional advice as to what those consequences might be.

HIPAA and the HITECH Act

As you know, the Health Insurance Portability and Protection Act (HIPAA) established certain requirements for anyone who deals with personal health information (PHI). On February 17, 2009, as part of the omnibus recovery legislation, congress enacted the Health Information Technology for Economic and Clinical Health Act (HITECH). In addition to creating incentives for adoption of certain electronic health record technologies, HITECH includes several provisions relating to the HIPAA Privacy and Security Rules. There are increased penalties and new enforcement procedures, higher requirements for HIPAA "Business Associates", and security breach notification requirements. There will also be requirements for providers that maintain electronic records to furnish an electronic copy of records to patients upon request.

You should review your current HIPAA and HIPAA Business Associate policies and forms with your advisors to ensure compliance with HIPAA and HITECH.