Just completed residency? Hire a lawyer to review your first contract

By Naveed Saleh, MD, MS | Fact-checked by Barbara Bekiesz
Published May 1, 2023

Key Takeaways

  • When seeking employment, all physicians—particularly newly graduated residents—can benefit greatly from hiring an experienced lawyer specializing in physician contracts.

  • Although a letter of intent (LOI) is nonbinding, it guides the terms and expectations of the negotiations.

  • State medical associations can help physicians find legal counsel for contract negotiations.

Getting an offer from a potential employer can be an exciting event, but it can also be stressful—especially if you have just completed residency and it’s your first practicing job outside of training.

The AMA recommends that physicians at any level—including those faced with a first contract—invest in the services of a lawyer specializing in physician contracts.[] This can help you to navigate the nuances of physician employment and arrive at the best financial outcomes.

In fact, the AMA recommends that residents save for the cost of a lawyer while in residency to ensure future success. 

Understanding the LOI

The process of securing gainful employment with a hospital or other healthcare institution begins with a letter of intent (LOI), which typically precedes a formal offer of employment.

An LOI is an initial letter that an employer offers which sets the tone for the negotiation process. The LOI establishes that the potential employee shares a common understanding with the employer with regard to various features of employment, such as the term (eg, 1 or 2 years), compensation, benefits (eg, health insurance, covered CME costs), call responsibilities, and hours of duty (eg, full-time, part-time).

Speaking for AMA's podcast Making the Rounds, AMA senior attorney Wes Cleveland offered his take on LOIs and medical contracts.[]

“If you receive a letter of intent, I would recommend at that point having a lawyer look at that,” Cleveland said. “Again, a lawyer who specializes in representing physicians in employment agreements. At that stage, I would, because it's an important document."

What to do before signing an LOI

In their unsigned form, LOIs can make remarkable bargaining chips, according to a blog posting by lawyer David M. Briglia.[]

“A letter of intent can be valuable to the prospective employee as a tool for comparing competing employment offers,” he said. “The best way for an employee to get what he or she wants in an employment negotiation is to have alternatives; and having sufficiently detailed letters of intent for each employment offer provides an easy way to make apples-to-apples comparisons among them.” 

Although LOIs are usually nonbinding, if not set up carefully, they can impede the employee’s ability to negotiate better terms later in the negotiation process. 

At the extreme, demanding more money after signing the LOI may result in an end to the negotiations.

 Consequently, it’s important to have a lawyer help negotiate pay and other benefits, starting with the LOI.

Be careful, though: In some states and under certain circumstances, LOIs can be binding. In these cases, advises Cleveland in his podcast, it’s especially important to have a lawyer help in the negotiations and request a competitive salary before it’s too late. The Medical Group Management Association publishes surveys on compensation, to which a lawyer should have access.

Clarifying the benefits

During medical contract negotiations, a lawyer can advocate for various fringe benefits, which can drastically enhance the quality of your employment.

Fringe benefits, says Cleveland, can include vacation, personal time off, life insurance, CME, credentialing application fees, and disability insurance. All such benefits should be reviewed carefully with a lawyer. If you are trying to negotiate for a flexible time schedule, be sure to establish the exact hours, days, and locations you are expected to work—definitions in contracts are extremely important.

Aside from navigating the legal intricacies of employment contracts with you, an experienced lawyer has some intangible benefits to offer, Cleveland notes. These lawyers know the market, and they may even know the prospective employer and the company’s or institution’s culture. This added value may save you time and money in negotiations. 

Finding a lawyer

A good place to seek out a lawyer specializing in physician-employment contracts is your state medical association. It’s important to find an attorney licensed to practice law in the state in which you will be working, as legally required on a state and federal level.

Legal fees vary and depend on services rendered. Lawyers can charge per hour or via a flat fee.

Choosing the right lawyer

It’s important to choose a lawyer who has plenty of experience and devotes a lot of their time to reviewing physician contracts. Don’t be shy to ask about experience, says the American Academy of Family Physicians (AAFP).[]

"Although all contracts share common features, physician contracts have unique provisions that require expertise of counsel, just as real estate contracts require review by a real estate lawyer."

American Academy of Family Physicians

“Additionally, contract lawyers are generally used to making deals and seeking a win-win outcome. Sometimes using a lawyer with a litigation background can backfire on a physician because an overly aggressive or litigious approach does not always send the right message in a contract negotiation,” the AAFP added.

Before the initial meeting

Before meeting with your lawyer for the first time, it’s important to prepare three talking points, says the AAFP. 

First, be prepared to explain your specific goals, including geographic restrictions or preferences and family needs. Next, bring up specific concerns, such as things you’ve heard about the employer, or previous negative experiences you’ve had. Third, mention any promises that the prospective employer made. But keep in mind that no promise is binding unless it’s specified in the contract. 

Cleveland tells it straight about promises that have been made to you during a period of discussion or negotiation: “None of it's going to matter unless it's in the contract. If there are promises that were made to you and it sounds great and they don't make it in the contract, the employer's not going to be bound to that.”

"It's got to be in the contract, so that's why it's important really to review it very carefully."

Wes Cleveland, AMA senior attorney

Employment contracts follow the old adage, “Get it in writing.” As Cleveland warns, “If it's not reduced to writing, then it's not going to be part of your agreement.”

What this means for you

All physicians—including physicians completing residency—can benefit from having an experienced lawyer review their employment contracts. Lawyers experienced in physician contracts can help negotiate optimal pay and benefits, as well as provide perspective on the employer. Negotiations begin with LOIs, which, although nonbinding, set expectations with regard to salary and other terms of the job. When preparing to speak with your lawyer, review your goals and concerns, as well as any promises made by the potential employer. Remember that promises not specified in the contract are not guaranteed.

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