Transitions Are Never Easy

It has been an interesting and exciting few months. Having counseled and represented dental professionals in practice transitions for a number of years, it has still been a learning experience undergoing my own practice transition. It has given me new perspectives on the process and, I believe, will serve my clients well in future transitions. I thank and appreciate all of the colleagues and advisors who assisted me and look forward to renewing this blog as an active dialogue for dental professionals.

Which leads us to the topic of dental practice transitions and a prime example of why advance preparation and planning with competent and thorough professional advisors is the best practice. A recent case from the Michigan Court of Appeals illustrates what happens when a deal goes bad due to inadequate representation and advice. Buyer and Seller entered into a practice purchase to take place with three equal yearly installment payments. The seller was allowed a draw and certain other fees, payments and timing was controlled, loosely as it turn out, based upon whether profit was above or below her draw amount. The profit for seller and buyer would be distributed pursuant to then percent of ownership. The method for determining and calculating the profit was a short, handwritten addition to the last page of the contract.

Things got ugly. Seller believed the accounting method (accrual) used by seller's accountant had understated her profit and caused her to overpay, seller believed he was underpaid for account receivable, which weren't mentioned in the contract. Then it got worse. And all of this happened after the three years and the purchase having been completed. Three years later the case was tried to a jury. Eighteen months after the verdict the court of appeals issued its opinion upholding the jury verdict. The end result: a) the seller got $0 on his claims, b) buyer was awarded approximately $25,000 on her counter-claims, c) seller was required to pay $51,000 in attorney fees to BUYER (in additional to whatever he had to pay his own counsel for trial and through appeal) plus interest on all of it.

Sadly, almost all of this could have been avoided BEFORE the sale was concluded had the parties had a properly drawn and executed Purchase Agreement, had competent Accounting advisors and recognized that the only guaranteed winners in litigation are the lawyers.

Now, I'm all for attorneys making money, but I would rather see dental professionals pay for competent legal representation and avoid litigation costs.

Remember, it is never too early to speak with an attorney and most attorneys, and certainly this attorney, do not charge for an initial consultation. All you have to lose is a lot more money when it isn't done right.

My Dental Lawyer Launches new service

Now that Spring is here, more is changing than just the weather. I am pleased to announce that My Dental Lawyer is launching a new service for dental professionals. For a small registration fee and a low monthly subscription fee, members of My Dental Lawyer will have access to a legal professional with more than 25 years experience counseling and assisting dental and medical professionals, as wells as, access to professionals and consultants across a wide range of business and other services. Details will be announced here in the near future but if you would like more information now on how to reduce your legal expenses and obtain the piece of mind of having legal and other professionals "on call" send us an email to joe.labella@mydentallawyer.com.

The more things change....

A recent article at Asset Recovery Watch.com discussed psychological profiling of scammers who run Ponzi Schemes, as well as, a discussion about the victims. For anyone not aware, after the recent deluge of press about Bernie Madoff and some other recent high-profile schemes, a Ponzi Scheme is one in which the scammer uses recent invested funds to to keep earlier investors happy. The scheme requires aggressive continued scamming to keep new money coming in, as the scammer has spent or hidden much of the prior money, to keep paying the ususally high dividends/returns/rewards promised to everyone. Sometimes, in the case of the Florida scheme, the investment is in large scale real estate, which is never actually purchased or acquired.

The article talks about Greed but also talked about the "thrill' of the more average person or investor finally getting to share in the high rewards of the "other guy", the rich, or connected or those "wired-into" the deal. The etymology behind the term "Con Man" is that the confidence swindler gives you, the victim, his or her confidence. They "trust" you or share with you because they "believe in" you.

The Financial Industry Regulatory Authority, an industry watchdog group, profiled a typical victim of investment fraud. Their profile included people who are: highly educated, have higher incomes than non-victims, score higher on financial literacy tests, and are self-reliant preferring to act on their own knowledge rather than consult others.

In short, if it sounds too good or lucrative or unusually profitable to be true it probably is. If you are someone, on sober self-reflection, who fits the FIRA profile, you should also be smart enough to always go against impulse and consult professionals before ever committing significant funds with anyone.

Psst...Hey Buddy...have I got a deal for you...

If someone who happened to be pumping gas at the next gas island or standing in line behind you to buy movie tickets leaned over and asked for your Social Security Number or bank account number or your address, would you reply? Assuming your answer is no, then it is always good to remind ourselves that the convenience of the internet comes with anonymity. The next time anyone inquires of you over the internet for personal or private business information, ask yourself a couple of key questions:

1. Did this inquiry, transaction or dialogue begin via email? If so, did you initiate the email to a reputable website/company or did you respond to an email that may only appear to be legitimate. Will the person making the inquiry provide a telephone contact number to speak with someone in person? Can the telephone number be independently verified?

2. If speed or urgency, such as not to lose an "opportunity", is repeatedly stressed, examine the supposed basis for the urgency.

3. Your Mother, as they usually are, was right: "Don't take candy from strangers." If you do not know with whom you are dealing, find out first.

4. Have set and well defined rules in your practice as to which employees have access to private, personal and business information and to whom, under what circumstances, such information may be divulged. It is best practice to have a second contact person, CPA, attorney, practice consultant, for a staff person to contact if you are not available when responding to an inquiry.

For practical and valuable information regarding safety and security in the more physical sense, I strongly recommend you check out badguysatbay.blogspot.com where my friend Roger Walker, a residential and commercial security professional, blogs with advice and information.