Avoiding Common Legal Pitfalls in Dental Practice Ownership

Jorge Shomar
Jul 28
3 min read

Updated: Sep 11

In this Blog, I'll talk about New and established dentists considering buying, starting, or selling a practice, I hope this helps you understand a bit more about the transactional risks involved.

In this blog post, we will explore expert tips to help you navigate dental contracts effectively.

Whether you are a seasoned professional or just starting out, these insights will empower you to make informed decisions.

Key Words:

“legal mistakes dental practice”
“dental practice ownership legal advice”
“how to avoid dental board issues”
“legal guidance for dentists California”Potential Outline Topics:
The 3 most common mistakes dentists make when forming partnerships
The fine print in associate agreements
How Steve has helped clients prevent litigation and board complaints

Avoiding Common Legal Pitfalls in Dental Practice Ownership

By Steve Barrabee, Esq.

🦷 Introduction: A Practice is a Business — and a Legal One

Too often, dentists step into practice ownership with clinical confidence but contractual blind spots. Whether you're starting your own office, buying into a group, or managing partners, the legal landscape is more complex than many expect.

As an attorney with decades advising healthcare professionals, I’ve seen preventable mistakes cost dentists time, money, and professional relationships. This article outlines some of the most common pitfalls — and how to avoid them.

⚖️ 1. Skipping Contract Reviews (Because “It Looks Standard”)

Contracts between dentists often start friendly — between classmates, colleagues, or trusted professionals.

But even the most amicable beginnings can turn tense when:

Production expectations aren’t met
Buy-in terms are vague or one-sided
Exit clauses create uncertainty or loss

Don’t rely on assumptions. Have all contracts reviewed by legal counsel familiar with dental practices, not just general business law.

💔 2. Undefined Partnership Roles & Responsibilities

Many dental partnerships fall apart not due to fraud or malpractice — but due to miscommunication and poor planning.

If your agreement doesn't clearly define:

Clinical vs administrative duties
Profit sharing vs guaranteed compensation
Decision-making rights and voting thresholds

...you’re relying on hope, not strategy.

A written partnership agreement should reflect what you expect today, but also what could happen if things change tomorrow.

💼 3. Failing to Plan for Transitions (Death, Disability, or Departure)

You wouldn’t practice dentistry without malpractice insurance — yet many practice owners leave succession and exit planning to chance.

Does your agreement cover:

What happens if a partner becomes disabled?
Can a partner sell their share to anyone?
Is there a defined buy-out formula?

If not, you may be setting your practice up for internal disputes and external legal action.

📑 4. Using the Wrong Business Entity

Many dentists default to an LLC or S-Corp without fully understanding the tax or liability implications — especially in partnerships or multi-owner groups.

The right entity should protect your assets, optimize your taxes, and align with your growth plans. An attorney can walk you through options specific to California’s laws and dental board expectations.

🛡️ 5. Ignoring Regulatory Compliance in Contracts

Even something as “basic” as a referral agreement can trigger violations if it crosses paths with:

Stark Law
Anti-Kickback Statute
HIPAA
State board rules

These aren't just abstract risks — they can lead to fines, audits, or even license suspension. Contracts in healthcare need to do more than protect your business — they need to comply.

✅ Conclusion: Build Smart, Not Just Fast

You’ve invested years mastering your clinical expertise — but the success of your practice also depends on the strength of your legal foundation.

Whether you're just getting started, taking on a partner, or considering a transition, the right legal guidance protects your investment, your reputation, and your peace of mind.

📞 Need Support?

I’ve helped dentists across California avoid legal missteps and build practices that thrive. If you’re considering a partnership, new associate, or just want a second opinion on your contracts — let’s talk.