Partnership disputes: managing fractured relationships

Nicola Marchant, managing partner in the dispute resolution team at law firm Pannone Corporate, discusses how practice managers can manage and avert partnership disputes

Even at the best of times, relationships between partners can be intense and pressurised, as differing personalities can test the collegiate and collaborative culture required for practices to succeed. A global pandemic only adds to these pressures.

GP surgeries have faced extreme challenges since March 2020 in having to contend with such an indiscriminate issue – one that has stretched resources, made normal working practices difficult to manage, and placed considerable pressure on every type of operation, as surgeries have played a vital role in the fight against coronavirus. Any potential fragility amongst partners has only been exacerbated because of COVID-19.

The last 12 months will have placed a significant amount of pressure on partners, as they try to maintain GP contracts, manage complex government guidance for primary care, adhere to ever-changing protocols and operating procedures for general practice, while protecting staff on the frontline.

With time and efforts focused solely on dealing with the pandemic, it’s unsurprising that the number of GP partnership disputes remains relatively low. This is in sharp contrast to the commercial world, where periods of intense economic activity can lead to an increase in disputes at a senior level. Conversely, it is when the impact of the pandemic begins to lessen, and GP practices begin to see a reduction in intensity, that disputes amongst partners are more likely to arise. Periods of reflection will enable partners to assess whether certain members of the senior team have shouldered more responsibility than others in dealing with the intense work pressure. It is that difference in perception, as to who has contributed more, that will lead to an increase in tensions between partners concerning distribution in profit and ongoing value/contribution to the partnership.

Problems, such as these, can happen at any sized organisation, but it is often more pronounced in smaller surgeries that are more personality driven than larger practices. The way general practices are contracted and funded is complex and very different from other businesses. Every individual or partnership of GPs must hold an NHS GP contract to run an NHS-commissioned general practice, which can also add a layer of complexity if a dispute arises. So, what can practice managers do proactively ahead of potential disputes?

Partnership agreements

There are some basic contractual arrangements that can, and should, be put in place as a starting point in any partnership. A Partnership Agreement is essential if you want to avoid your partnership being governed by the Partnership Act 1890, which lacks the scope and subtlety now needed for modern partnerships. The Agreement provides certainty about how the partnership is operated – for example, regarding distribution of profits and how to expel or admit partners. It will also provide clarity around partners’ liabilities and include specifics around cover for leave and locum costs.

A partnership dispute can be very difficult and stressful for the individuals concerned – not to mention being corrosive and debilitating for staff and potentially patients who may become aware of tensions in the practice. Resolving disputes under normal operating circumstances can be very costly and time intensive – this will only be intensified in the current climate. The time taken to resolve this type of dispute is a significant distraction from the core day-to-day business and can often lead to a deterioration in performance and damage to the practice’s brand.

Carefully drafted documents, such as a Partnership Agreement, will go a long way to preventing a dispute. However, if one does occur, then tackling the issue at an early stage is key. The Partnership Agreements may contain provisions that anticipate a dispute and require the respective parties to try and resolve their differences with the benefit of a neutral third party – a trained mediator, for example. Maintaining a positive dialogue, rather than allowing a hardening of people’s positions, is very important. The longer a dispute carries on, the more entrenched the respective positions become. An early roundtable meeting, with the assistance of a neutral third party, will often help to narrow the issues in dispute and help to focus the personalities involved on agreeing a productive way forward. 

It’s clear that general practice has been profoundly affected by the pandemic. The rate of recovery and the side effects of the enormity of effort in regard to the UK’s vaccination roll-out remain to be seen. However, the likelihood of a fallout at partnership level is ever present. By taking the right steps, and ensuring the most appropriate framework is in place, will help to prevent widespread damage to the practice and ensure the dispute doesn’t destroy the partnership beyond repair.