When I visit my dentist for active care treatment, I can’t help but wonder sometimes: “What exactly am I paying for here? Aren’t they just removing calculus? A little bit of polishing after that. Rinse and spit. Couldn’t I do that? Why am I paying so much for something that seems so trivial which I could probably do myself.” Well, if you’re a dentist reading this, you’re probably thinking: “This guy has no clue…”. And that’s exactly how we feel at DMC LLP when a dentist comes to us and says “what exactly am I paying for here? Isn’t it just a bunch of paper-pushing? Just using standard templates and making some tweaks? Couldn’t I do that? Why am I paying so much for something that seems so trivial which I could probably do myself” Okay, so I don’t expect a dentist to know or appreciate what we do on their behalf that makes us charge what we do. So let me shed some light on this topic in the context of a purchase and sale transaction. If we are engaged to represent a dentist to purchase a dental practice, some of the things that we would spend a lot of time doing include (but are not limited to):
- Educating you about the whole transaction (see all points below)
- Reviewing the appraisal (typically around 30-50 pages)
- Helping to arrange for financing, an equipment inspection, and a chart audit
- Reviewing the lease (typically around 30-50 pages)
- Reviewing employee contracts
- Reviewing HARP reports
- Reviewing and organizing an existing dentistry professional corporation (to make sure it is up-to-date)
- Setting up a professional corporation that is appropriate for income splitting with family members and obtaining a Certificate of Authorization from the RCDSO
- Determining the proper structure of the transaction (share purchase vs. asset purchase; person vs. corporate purchaser, real estate being sold via a corporation or as an asset, etc.)
- Drafting, negotiating and finalizing the Letter of Intent (this requires a lot of diligence and fact-gathering).
- Getting the lease assigned or entering into a new lease with the landlord (something that is very time-consuming and difficult – particularly with stubborn and uncooperative landlords) OR facilitating the purchase of land and building
- Drafting, negotiating and finalizing the Agreement of Purchase and Sale (this could take weeks to do)
- Facilitating the purchase and sale transaction (this means that we will prepare our own and review the other side’s 40+ documents; we will also meet at our office to get all the signatures, exchange funds, and deal with any last-minute details)
- Drafting, negotiating and finalizing an associate agreement with the vendor (if one is required)
- Drafting a letter of introduction
- Conduct searches to ensure that there are no issues with what you are purchasing (e.g. PPSA searches, Writ searches, RCDSO searches, etc.)
- Drafting a shareholders agreement (if there is a new dentistry professional corporation) or partnership agreement for dentists wishing to partner up to purchase a practice
- Dealing with post-closing matters such as: amalgamating corporations (which involves drafting a lot of paperwork and filing documents with the Government and RCDSO), drafting and presenting employee contracts, updating a corporate minute book, drafting dual Wills and Powers of Attorneys for the dentist and their family, drafting a lease between a real estate company and the practice (if applicable), drafting an employee agreement between a dentistry professional corporation and the dentist, etc.
- Provide legal advice and representation along the way
- Put you in touch with all the right people who serve the dental industry (e.g. realtors, bankers, accountants, consultants, insurance brokers, etc.)
- Deal with third parties on your behalf (e.g. your accountant, realtor, banker, insurance broker, consultant, equipment inspector, and the other side’s lawyer, realtor, etc.)
- Providing you with a reporting letter to explain all the important details of the transaction and the timelines going forward.
So you see, there are a lot of things that go into buying/selling a dental practice. It takes at least a few weeks and could take a few months to do all of the above for any given transaction. The other side may not have a dental lawyer representing them and this could be either a good or bad thing (depending on whether they are cooperative or fight for the sake of fighting). The landlord may be uncooperative and unavailable, which may lead to delays. Typically, dental lawyers charge around $500 per hour in the GTA. But their knowledge, skills, and expertise in facilitating these types of transactions is imperative to have if you are a dentist who is in the midst of one of these transactions.
So I hope now that, if you’re a dentist and you have/are about to complain about the fees that lawyers charge to facilitate a transaction, just remember this blog and all the hard work that we have to do to protect your rights and promote your interests. You don’t want to try to nickel and dime your dental lawyer; we’ve got your best interests at heart and we’re here to make the transaction smooth and as enjoyable as it could be. We’re here to hold your hand and walk you through the process that we are involved in ON A DAILY BASIS. And we end up charging what is fair and reasonable for the amount of time, work, and complexity involved. By the way, given that we’ve done so many of these transactions, we here at DMC LLP are able to provide you with an up-front quote of how much it will cost to facilitate your purchase and sale transaction. There may be a few unknowns along the way, but we’re pretty good at sticking to our estimate. And this gives dentists peace of mind (so they’re not up late at night worried about the $500 / hour rate, or making phone calls or sending us emails – for which we don’t charge ;-).