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The start of a new year is the perfect time to focus on your dental practice’s next stage of growth. Whether you’re expanding locations, bringing on new partners, or strengthening your business foundation, legal preparation is essential for sustainable success.
At Polished Legal, we work with dentists across Los Angeles to strategically structure their practices for growth. From partner buy-ins to employment agreements and funding models, careful legal planning in Q1 can set the tone for a profitable and organized year ahead.
Here’s a practical legal roadmap to help you position your dental practice for growth in the new year.
Formalize or Update Partner Buy-Ins
As your practice grows, you may bring on new partners or transition existing associates into ownership roles. A well-structured buy-in agreement clarifies valuation, ownership percentages, timelines, and expectations.
Key considerations include:
- Valuation Method: Use an agreed-upon formula or independent appraisal to avoid disputes.
- Timing & Payment Structure: Consider lump-sum vs. phased buy-ins tied to production or tenure.
- Equity vs. Income Share: Determine how ownership affects profit distribution and voting rights.
- Exit Clauses: Plan for future buy-outs or changes in ownership.
In Los Angeles, where dental practices often involve significant goodwill value, it’s critical to structure ownership transfers carefully to protect both parties.
Review and Strengthen Strategic Contracts
Contracts form the legal backbone of a growing dental practice. Start the year by auditing your key agreements to ensure they reflect your current business model and expansion plans.
Essential contracts to review include:
- Commercial Leases: Confirm renewal terms, expansion rights, and modification clauses to accommodate growth.
- Space Sharing or Subleasing Agreements: If you plan to bring in specialists or co-locate, clarify scheduling, billing, and liability.
- Vendor and Equipment Contracts: Align terms with future expansion, especially for new technologies or lab relationships.
Well-drafted contracts reduce ambiguity and give you leverage as opportunities arise.
Plan for Associate Hiring and Employment Compliance
Hiring additional associates is often the fastest way to increase production and service capacity—but employment agreements must be carefully crafted to avoid future disputes.
Elements to include in associate contracts:
- Compensation Models: Base vs. production-based pay structures, with clear definitions of collections and adjustments.
- Production & Performance Clauses: Define expectations and review processes to ensure alignment.
- Restrictive Covenants: Non-compete and non-solicitation clauses must comply with California law and be carefully tailored.
- Termination Provisions: Outline grounds for termination and post-termination obligations.
In Los Angeles, dental practices must also comply with California’s strict employment regulations—including wage and hour laws, benefits requirements, and classification rules. A legally sound employment strategy protects your practice from costly claims.
Evaluate Your Funding and Ownership Structure
Expansion often requires capital—whether for new equipment, facility improvements, or acquisitions. Take time early in the year to review your legal and financial structure to ensure it supports your growth plans.
Options may include:
- Separate Entities for Real Estate & Practice: Creating an LLC to hold property can provide tax advantages and liability protection.
- Partnership or Shareholder Agreements: Outline how additional funding contributions are handled and how returns are distributed.
- Bank Financing: Work with lenders who understand dental transactions and ensure loan terms align with your legal entities.
- Private Investment or Seller Financing: Structure agreements to balance control, repayment terms, and regulatory compliance.
A well-planned funding structure minimizes financial risk and provides flexibility as your practice scales.
Protect Against Common Growth Pitfalls
Growth brings opportunity, but also new legal vulnerabilities. As part of your Q1 planning, address these potential issues:
- Regulatory Compliance: Ensure your new operations meet state dental board rules, OSHA standards, and ADA requirements.
- Licensing & Permits: Expanding locations may require new business licenses, facility permits, or zoning approvals.
- Governance Gaps: As ownership structures evolve, clearly define decision-making protocols to avoid conflicts.
- Integration Oversight: If acquiring or merging, establish legal timelines for patient records, billing systems, and staff transitions.
Proactive legal planning helps you avoid scrambling mid-year to fix preventable issues.
Position Your Practice for Strategic Growth with Polished Legal
The new year is an ideal moment to align your legal foundation with your business goals. At Polished Legal, we guide dental professionals across Los Angeles through ownership transitions, associate hiring, strategic contracting, and growth planning.
Whether you’re expanding your footprint, preparing for a partner buy-in, or upgrading your legal structures, our experienced team can help you build a plan that supports long-term success.
Contact Polished Legal today to schedule a consultation and ensure your dental practice is legally prepared for growth this year.
