Business Contracts – The Hold Harmless Clause

Starting a new practice or joining one can be a daunting process. You’re comfortable with the clinical end of things, but the legal issues can be really intimidating. Reading business contracts can make as much sense as looking at hieroglyphics. One clause that is sometimes inserted into business contracts is the Hold Harmless clause. Essentially, it says that by working in the practice, you agree to hold the practice harmless for any work that you do. This seems innocuous enough, as it would make sense that if you did something wrong, you are responsible for it. But the clause holds the practice harmless for anything you do. What does that mean? It means that if the practice gets sued because of what you did, you are now responsible for defending the practice as well as yourself.

This can present a big problem. You will have professional liability (malpractice) insurance for your “acts.” But your policy won’t cover the practice. Since you’re responsible for defending the practice, you’ll have to hire and pay for an attorney to defend it.

Does this often happen? No. Could it? Yes. Very simply put, in the legal world, each party should be responsible for itself (you, the practice, any other practitioner, etc.). But this doesn’t stop some businesses from trying to foist their responsibility onto someone else (you!).

It’s truly vital to review contracts carefully before signing them to protect your interests. Having an attorney do this is a very good idea. One word of caution – don’t ask your cousin who specializes in real estate law to review the contract. Professional liability issues are very specific, and you want someone reviewing it who knows what they are doing. It could make a big difference down the road.

For more information, EDIC has a webinar on their website titled “Contract Reading.” Click on http://www.edic.com/risk-management/risk-management-webinars/, click on the “View Course Materials” link, register for a new account, and view the webinar free of charge.

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