Academic Contracts: Proceed With Confidence

Of all the qualities typically associated with surgeons, trepidation isn’t one of them. However, a seemingly generous offer at a prestigious institution can often cause a surgeon’s apprehensive gene to emerge.

Steve Harris, an attorney with McDonald Hopkins LLC in Chicago, explains, “I have had numerous physician clients who tell me, ‘Just look over this contract. It should be fine. I mean it is from one of the most well regarded institutions in the country.’ At that point I suspect that they are afraid to rock the boat.”

But rocking the boat doesn’t mean you have to sink it…just make sure that the contract takes care of your best interests. “One of the biggest misconceptions out there is that all contracts are the same. The surgeon will often be told by the university, ‘All of our doctors sign the same contract.’ As you can imagine, this puts an immediate chilling effect on any substantive discussions, especially in the case of an inexperienced doctor. What this means in many instances is that if they believe all doctors are signing the same contract—one that can’t be changed—then they may not have the contract reviewed until it’s too late.”

When the monolithic mountain of academia speaks, prospective employees tend to listen. The first thing, says Harris, is to get past the ‘set in stone’ story. “Let’s say a university says, ‘This is it. This is what everyone signs.’ Stop and think about this for a moment: it is really possible that a first year, new associate doctor coming into a practice has the same contract as a division chief? That is impossible. I also say to my clients, ‘If you want to preserve this fiction that all doctors sign the same contract I can help you do that. We will sign this boilerplate, but at the same time I want the university to sign an amendment or letter of agreement that addresses the contract and trumps the terms in the amendment.’ I usually don’t have any difficulty getting the university to sign such an agreement because doing so means they can perpetuate the aforementioned fiction.”

Taking Care of Your Best Interests

Most people wouldn’t confuse a lawyer with a psychiatrist, but Steve Harris leans on a skill in the latter’s toolbox. “To be a good attorney you have to listen more than anything else. That is the best way to ensure that you’re meeting the client’s—doctor’s—priorities. I listen, and then I push them a little. Many surgeons I’ve worked with don’t even read the contract. I have them review it and then ask them what their thoughts and/or concerns about the document are, and what they think is missing. I have them reflect on the interview process and determine if there were any questions they raised that are not addressed in the contract.”

And the hot buttons in most contracts? Steve Harris: “Restrictive covenants, the stipulation that if a doctor leaves for any reason, then he or she may not practice within a certain distance of his former employer/institution, can be controversial. Over the last 10 years these have increasingly crept into academic contracts. And the long term implications of these are often not clear to physicians.

“I’ve had doctors say to me, ‘I have a great opportunity at XYZ prestigious clinic and yes, there’s a restrictive covenant, but that’s fine. I know that if it doesn’t work out I am not staying in that town.’ My job is to see what my clients can’t, and to help them keep their careers as flexible as possible. The fact is that many doctors think they would leave if the job didn’t work out, but then they meet someone special or fall in love with the location and want to stay. You have to take that into consideration ahead of time.”

It’s only one, perhaps two, words…how could such language seriously affect your future? Harris explains,

A doctor may tell me, ‘They are offering me a two, three, or four year deal.’ I say, ‘I know you’re thrilled, but let’s look more closely at the language in the contract.’ These documents often say, ‘notwithstanding the terms in paragraph five’ – the section which addresses the length of the contract. There it stipulates that the contract may be terminated without cause. The bottom line is that legally this is a 30, 60, or 90 day commitment. I ask the doctor, are you really willing to move your family across the country for what may be a 30 day period? When I tell them, ‘Read paragraph 15 in combination with paragraph 5, they go silent.

Protecting Your Intellectual Property and Compensation

And what of the surgeon who is committed to device development? Whose bone graft/disc is it anyway? Steve Harris: “Physicians who are engaged in product development should have a clear understanding of who owns what with regard to intellectual property (IP). Let’s say that either pre or post employment you began working on a new aspect of knee replacement, essentially enhancing xyz device. Before the product enters the development stage both the doctor and the university should have a clear agreement about who owns the IP.

“In negotiating such things most universities will begin from the position of, ‘Anything developed here is ours.’ Your job during the negotiation is to move their thinking toward the center. But one must be reasonable. If you are doing a patient study out of the university and using university resources, then the IP should be shared with the institution. Some products strike it big…if and when that happens, then the university wants to be at the table. And don’t forget that you as the developer create a cache of goodwill, a la ‘Dr. Smith of xyz university has developed the first…’”

With regard to compensation, Steve Harris also finds that he has to help doctors put on the brakes. “Physicians look at the base salary and productivity bonus or incentive clause and they get excited. The fly in the ointment is that these compensation arrangements are subject to the policies and procedures of the institution. The doctor is working under the fair assumption that their compensation is base salary plus discretionary bonuses based on ABC formula—then halfway through the term, the institution changes its policies and procedures and the compensation described in paragraph X of the contract goes away. This happens very frequently. Naturally, the frustrated physician is left thinking, ‘I’m the most productive doctor in the department, but I’m not getting any bonuses.’ To handle this issue up front I advise clients to put in the contract that he or she will make not less than X dollars in any given year.”

After one’s tenure has come to a close, says Harris, it is wise to ensure that one’s malpractice tail is covered. “Continuing liability insurance after you leave a university, often called tail coverage, means that anything that happened while you were employed by the university, regardless of when the claim is brought, is covered. Specifically, the coverage should be ‘occurrence’ coverage, rather than claims made.”

Proceeding with Confidence

Now back to that boat. Asking a university’s leadership for clarifications and modifications leaves many doctors feeling like they are indeed stirring up the waters. Steve Harris says, “Doctors often say to me, ‘I’m concerned that if I bring up these topics then I will be viewed as an outlier or problem person.’ I tell them that if they ask well thought out questions and probe areas of the contract that are fertile for discussion, then they will leave the exchange with the university in a better position. Why? Because the smarter leadership at any university will understand that someone who has thought through the issues is to be valued. The art is knowing how to raise the right issues. You certainly can’t come off as being omniscient in your first year. There is a way to be somewhat deferential, yet specific with your requests. For example, it’s fair game to ask the university to forecast volume of cases without specifically locking in a future incentive compensation.”

So entrust the contractual details of your future academic life to an attorney, be clear about your non-negotiables, and make sure that this is one boat you want to be in.