When physicians, dentists, lawyers and other professionals face marital separation and divorce, their cases require special attention and care. Medical and professional practices may have some of the characteristics of a business and might be treated as a marital asset in a divorce, or they may be treated as a job without any value independent of the income they generate. Detecting the difference between a practice that has asset value and one that does not is a challenging endeavor which requires experience with complex divorce issues. The lawyers of Pollock Begg have been representing professionals for decades in this area of family law.

How is patient or client information kept confidential?

When a professional gets divorced, it is important to consider the confidentiality rights of patients and clients whose personal information is maintained by a medical or legal practice. This information may be protected by entering into a confidentiality agreement, which contractually binds the lawyers, spouses and experts. In some instances, it might be appropriate to redact or withhold confidential information that is legally protected or privileged. Another option is to keep these cases out of court by engaging in private settlement negotiations or alternative dispute resolution methods such as collaborative law, mediation or private arbitration.

What is goodwill?

Some businesses and professional practices are sold for a price that exceeds the market value of their equipment, supplies and other assets. Goodwill describes this intangible value. Goodwill may be associated with the positive reputation that a business or professional practice has developed. Goodwill may be associated with the business itself (“enterprise goodwill”), or it may be more closely related to the skills and reputation of the doctor, lawyer, dentist or other professional (“personal goodwill”). In Pennsylvania divorce cases, a professional practice may be treated as an asset to be considered in equitable distribution if the goodwill can be transferred to a potential buyer. A professional should ask herself or himself, “Would someone be willing to pay a price for my practice?” If the answer is yes, then the practice may have transferable enterprise goodwill.

Most operating companies and some professional practices, such as general dentistry, are recognized as having enterprise goodwill that might be transferable in divorce. Other practices, such as surgical and specialty practices, might have a combination of personal and enterprise goodwill. Often, a valuation expert or judge may be required to distinguish and quantify each of these types of goodwill in professional practices.

How are the spouses of professionals compensated?

In cases where the practice is counted as an asset, a value is assigned to the practice, just like a residence or a bank account. The value of the professional practice is added to the entire marital estate, and then a court (or the lawyers, if they are negotiating a settlement out of court) decides upon the percentage to be allocated to each spouse. Typically, if there are sufficient assets in the marital estate, the spouse of a professional can be compensated by receiving other assets in exchange for the value of the practice. In other cases, it may be necessary to set up a payment plan over time.

For decades, the lawyers of Pollock Begg have been representing doctors, lawyers, accountants, architects, dentists, engineers and other professionals in family law matters. We also represent the spouses of these professionals to pursue fair and equitable outcomes in divorce. We understand the unique issues surrounding professional practices and how these cases can be satisfactorily resolved.

Call one of our partners to make an appointment if your divorce involves a medical or professional practice in Pennsylvania.

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