You hear all of this talk about contract review and you may be thinking, “why do I need to review my contract? There are so many pages, and it is confusing, why should I stress about reading every detail?”
I know that many people have been in this exact mindset, but I want to share with you a quick story that demonstrates the real importance of contract review and how it has severely affected people's lives.
A few years back, I got an email from an Orthopedic Surgeon asking for help in finding any sort of loophole within his contract. After reading his email, I was a little confused because it seemed a little backwards (first you review, then you sign!).
I asked him to fill me in on what was going on so I could better help him within his situation, and what he told me was heartbreaking.
In the beginning things looked great for him. He had just finished training when he found his dream job as an Orthopedic Surgeon back in his hometown. He was excited to finally start practicing medicine, and quickly signed his new contract.
He and his family uprooted, moved, and settled into their beautiful new home.
Unfortunately, the first year of his new career was a little rough. Family issues arose and both he and his wife got sick.
He had to take an extended amount of time off to take care of everything and ended up missing quite a bit of work.
When it was time for his year-end review, his company was more than happy to renew his contract and he couldn’t be happier to continue working with this great team.
After the excitement had died down, they informed him that they were going to need him to write a check for $300,000.
Little did he know that by not reviewing his contract, he had signed into a productivity-based salary stipulation, meaning his $500,000 annual income wasn’t guaranteed.
Due to his extended time off he had only produced $200,000 worth of revenue and had to make up the remaining $300,000.
After hearing this, he was naturally confused and in shock at the large amount he owed to his employer. It was at that point he decided to get his contract reviewed to see if there was a way out of it.
Unfortunately, it was too late.
The only way to pay out his dues was to take out a loan on top of his accumulated medical school loan debt. To make it even worse, his new home had already set him back a half a million dollars and within six months, the practice he was working for went out of business.
So at this point he found himself sitting in $1.1 million of debt. Now he had no job, a lifestyle he couldn’t afford, and over $1 million in debt.
He could have avoided all of this trouble if he had his contract reviewed before signing, but because he didn’t understand the terms and conditions of his compensation, his life played out differently than he expected and ended up setting him back a long way.
This story shocks a lot of people, but it could happen to anyone. It is always important to understand what you are signing, and to know exactly what you are really getting into! Your dream job could turn out to be something of a nightmare. If you have any questions or need help in reviewing your contract, don’t hesitate to give us a call.