Contract Review

What is the Purpose of a Contract Review?

Contract review is the process of examining a legal agreement before signing to ensure its terms are fair, clear, and legally sound.

In essence, the purpose of a contract review is to protect your interests by identifying potential risks and ensuring all obligations and benefits are clearly defined.

This is particularly important for physicians and other professionals entering employment, partnership, or service agreements, as contracts dictate key aspects of their career and financial stability.

Why Contract Review is Important

Understanding what is the purpose of a contract review helps professionals recognize why this step is essential.

A well-executed contract review prevents misunderstandings, protects legal rights, and ensures compliance with industry regulations.

Without a thorough review, professionals risk signing agreements with unfavorable terms, hidden clauses, or legal loopholes that could impact their income, job security, or ability to practice medicine freely.

A recent study, “Why Do Physicians Depart Their Practice? A Qualitative Study of Voluntary Physician Turnover” published in the Journal of the American Board of Family Medicine, found that financial issues, particularly compensation and contract terms, were among the major reasons physicians choose to leave their positions. This finding underscores how crucial it is for physicians to fully understand and negotiate their contracts before signing. A thoughtful contract review not only prevents dissatisfaction and turnover but also helps physicians build stable, rewarding careers aligned with their long-term goals.

Key Elements of a Contract Review

When reviewing a contract, professionals should focus on these critical elements to fulfill the purpose of a contract review:

• Compensation & Benefits: Ensure clarity on salary, bonuses, incentives, and perks like retirement contributions and malpractice coverage.
• Work Expectations: Define job duties, work hours, patient loads, and on-call responsibilities.
• Termination Clauses: Understand conditions under which employment can be terminated, including notice periods and severance pay.
• Non-Compete Agreements: Assess restrictions on practicing within a geographic area after leaving a position.
• Liability & Malpractice Coverage: Confirm adequate legal and financial protection against lawsuits and claims.
• Contract Length & Renewal Terms: Review the duration of the contract and conditions for renewal or renegotiation.

A proper contract review can identify these concerns and allow for renegotiation before signing.

Common Contract Clauses to Review

Certain clauses require extra scrutiny to avoid legal and financial risks. This is another reason why the purpose of a contract review is so critical.

• Indemnification Clauses: Determine which party is responsible for legal claims and liabilities.
• Dispute Resolution Clauses: Establish how conflicts will be handled—through arbitration, mediation, or litigation.
• Default Clauses: Outline the consequences of failing to fulfill contractual obligations.

Understanding these clauses helps professionals navigate their rights and responsibilities before signing a binding agreement.

Contract Review Process

A structured review process ensures contracts are legally sound and aligned with professional goals. Here’s a step-by-step approach that highlights the purpose of a contract review in action:

1. Initial Read-Through: Identify key obligations and overall structure.
2. Identify Key Terms & Risks: Highlight compensation, restrictive covenants, and liability clauses.
3. Consult a Legal Professional: Work with an attorney specializing in contract law for expert assessment.
4. Negotiate Terms: Adjust unfavorable clauses before signing.
5. Regularly Review Existing Contracts: Ensure agreements remain compliant and beneficial over time.

Having multiple reviewers, such as legal advisors and industry professionals, increases the likelihood of identifying potential issues before they become liabilities.

AI and Contract Review: Efficiency vs. Expertise

AI-powered contract review tools analyze contracts quickly, identifying problematic clauses, tracking deadlines, and flagging inconsistencies.

Features like automated redlining, data extraction, and compliance verification can enhance the review process by improving efficiency and reducing human error.

However, AI lacks the ability to interpret contract nuances, industry-specific legal considerations, and negotiation tactics.

While contract review software can scan agreements for errors and missing elements, it cannot replace the strategic insight of an experienced legal professional.

Attorneys who specialize in contract review understand negotiation strategies, risk assessment, and legal implications that software cannot fully grasp.

Physicians, in particular, should rely on legal professionals rather than AI-driven tools to ensure their contracts are structured in their best interest.

Final Thoughts

So, what is the purpose of a contract review? Simply put, it’s to protect your professional future.

Contract review is a crucial step for physicians and professionals before signing any legal agreement.

While AI and contract review software provide efficiency, they cannot replace the expertise of a skilled legal professional.

Engaging an experienced attorney ensures contracts are fair, legally sound, and aligned with long-term career and financial success.

A proactive contract review approach helps professionals safeguard their interests, negotiate favorable terms, and avoid costly legal pitfalls.