When a veterinarian joins an existing clinic, one of the first decisions they must make is whether to come on as an employee or pursue an ownership role as a partner. On the surface, both options may seem similar—you’ll treat animals, serve clients, and be part of a team. But legally, these two roles come with vastly different rights, responsibilities, and risks.
At Mahan Law, we help veterinarians evaluate their options and understand the long-term implications of joining a practice in either capacity. Before you sign an offer or shake hands on a deal, here’s what you should know about the legal and financial impact of becoming an employee versus a partner.
The Employment Route: Pros, Cons, and What to Watch For
Most veterinarians begin their careers as employees. In this role, you’re hired by the practice to provide veterinary services in exchange for a salary, benefits, and (in some cases) production-based bonuses. The practice owner retains full control over the business.
Advantages of Employment
- Lower risk: You don’t have to invest capital or take on business liabilities.
- Defined schedule and responsibilities: You focus on patient care, not management or finances.
- Benefits and protections: Health insurance, retirement plans, and malpractice coverage are often included.
- No ownership headaches: You’re not responsible for staffing issues, leases, or vendor negotiations.
Key Legal Considerations
Even though you won’t be an owner, your employment agreement still has important legal implications. Be sure to review:
- Compensation structure: Is your pay purely salary-based, or does it include production bonuses? How are those calculated?
- Non-compete and non-solicitation clauses: These can restrict your ability to work elsewhere or take clients with you if you leave.
- Termination terms: Understand the notice required, grounds for termination, and whether severance is provided.
- Workload expectations: Clarify scheduling, on-call duties, and minimum case loads.
An unclear or overly restrictive employment contract can limit your mobility and earning potential, so it’s essential to have the agreement reviewed before signing.
The Partnership Path: Opportunity with Responsibility
Joining as a partner means becoming a partial owner of the veterinary practice. This role includes a voice in business decisions, a share of the profits, and, often, a share of the risks.
Advantages of Partnership
- Equity and profit-sharing: As a partner, you’re entitled to a percentage of the practice’s earnings.
- Decision-making authority: You have input into how the clinic is run, from hiring to investments.
- Long-term growth: Your ownership stake may increase in value, especially if the practice grows or is sold.
- Professional independence: You’ll have more autonomy and the opportunity to shape the practice’s future.
Legal Considerations Before Becoming a Partner
Before signing on as a partner, it’s crucial to conduct due diligence and negotiate a comprehensive partnership or shareholder agreement. Key issues include:
- Buy-in terms: What is the purchase price for your ownership interest? How is it calculated, and how will it be financed?
- Governance and decision-making: How are major decisions made? Does each partner have an equal vote?
- Profit distribution: Will profits be split evenly or based on ownership percentage, production, or another formula?
- Exit strategy: What happens if you want to sell your interest, retire, or leave? A buy-sell agreement should address valuation, payment terms, and restrictions.
- Liability and obligations: Are you responsible for any debts or leases? Will you be required to personally guarantee anything?
- Non-compete clauses: Even as an owner, you may be subject to restrictions if you exit the practice.
Becoming a partner is a significant legal commitment. Without an explicit agreement in place, disputes over money, management, or expectations can derail the business and damage relationships.
Hybrid Models: The Employment-to-Ownership Track
Some practices offer an “employment-to-ownership” path, where you begin as an employee and gradually become a partner over time. This model can provide flexibility, allowing both parties to build trust before committing fully.
If you’re entering this kind of arrangement, be sure to outline:
- Timeline and benchmarks for ownership
- How the buy-in price will be determined
- Whether equity is earned, purchased, or both
- What happens if the transition doesn’t move forward as planned
Without a written agreement, verbal promises can be difficult to enforce and disappointing if expectations don’t align.
Choosing the Right Path for Your Career
There’s no one-size-fits-all answer to the question of employment vs. partnership. The right choice depends on your financial readiness, long-term goals, appetite for risk, and the specific dynamics of the practice you’re joining.
At Mahan Law, we help veterinarians make informed decisions that support both their personal and professional futures. Whether you’re reviewing an employment agreement or considering a buy-in opportunity, we can help you evaluate the offer, identify red flags, and negotiate terms that protect your interests. Contact us today.