"Letters of Intent" in contract negotiation

[gabe1701]

Longtime WCI reader, first time poster.

 

I am finishing a medical subspecialty fellowship in June and have been interviewing at several places.  One location in my howetown that is desperate for physicians sent me a full contract days after the interview.  Two locations, both hospitals that are part of multi-state (Catholic if it matters) health systems, have sent 1-2 page 'letters of intent' which list the basic compensation details(base, pdtn bonus, signing bonus, relocation, # shifts etc).  That seems nice, but both ask for my signature on the form if I am interested.  The language around the significance of this signature is odd: it is clearly non-binding, but there is a lot of forceful-sounding language, about my '...expression of interest and intent with the above general terms and your non-binding intent to relocate to (x) upon succcesful negotiation and execution of a written employment agreement.'

 

Some, but not everyone, that I've spoken to have encountered this although I get the feeling it is common.  Several questions:

1)Is this especially common with large health systems?

2)Clearly this is non-binding, but it feels like the employer might use my signing of it as a way to evade negotiation of some of the listed terms, saying that I had already said I was interested in the job while knowing that that was what they were offering.  I know that I could totally back out of negotiations if I felt like I was being pressured into certain terms, but I would like to avoid having to do that.

3)In terms of etiquette/expectations, is it common to sign several of these letters of interest at once?  I am coming out of training and have interviewed w/ several places, it is not like I am already deep into practice and just looking to jump from one location to another and speaking to a single group.

 

These might be obvious or rookie questions, but this is my first time and the stakes seem intimidatingly high.   Would love to hear some of the forum's experience here.

[Craigy]

These can be pretty hairy, but you shouldn't necessarily let it scare you away.  It really all depends on the language of the document.  Generally, you should seek legal counsel and should avoid signing anything without a complete understanding of what you're signing.

Letters of intent, memos of understanding, etc., can very well be binding contracts, again, depending on the wording and state law.

In my experience, letters of intent are typically made in order to lock the parties into an exclusive period for due diligence and negotiation, and usually have confidentiality agreements contained within.

You can always have your own counsel review, and you can always ask to change terms in the letter.  Or you can ask to dispense with the LOI altogether.

I'm interested to see if any of the other posters have experience with these with regard to employment.

[gabe1701]

Thanks for the reply Craigy.  When one of the places had mentioned that they would first send me a letter with their basic terms, on the spot I thought, "yeah, that sounds nice and simple!"  Now it feels like, as you said, they are trying to pull me into a period of exclusive negotiation since the letter only has fun things, like salary and bonuses, but none of the tricky stuff like noncompetes and terminations.  I'm pushing back a bit by sending a lot of questions to both places that have sent me a letter of intent to try to get a better idea of the overall terms.  Prior to signing either of them, I have asked the contract folks I'm going to work with to also review the LOI.

 

Anyone else on the forum have experience with this?  Is it really the corporate man holding me down, or do I need to turn down my own paranoia and relax?

[q-school]

In my day we called that a promissory ring. Nowadays I guess it would be like changing Facebook status to in a relationship. Crazy you are talking about a job and not a person.

Good luck!

[Craigy]

gabe1701 wrote:

Thanks for the reply Craigy.  When one of the places had mentioned that they would first send me a letter with their basic terms, on the spot I thought, “yeah, that sounds nice and simple!”  Now it feels like, as you said, they are trying to pull me into a period of exclusive negotiation since the letter only has fun things, like salary and bonuses, but none of the tricky stuff like noncompetes and terminations.  I’m pushing back a bit by sending a lot of questions to both places that have sent me a letter of intent to try to get a better idea of the overall terms.  Prior to signing either of them, I have asked the contract folks I’m going to work with to also review the LOI.

 

Anyone else on the forum have experience with this?  Is it really the corporate man holding me down, or do I need to turn down my own paranoia and relax?

Click to expand...

It really all depends on the language of the LOI.

If it says nothing about exclusivity, confidentiality, noncompete, etc., it might be fine to sign, not sure why they want it.  Definitely have your contract people review.

When she took her job, my wife signed a term sheet with things like salary, bonus, benefits, with no binding language on it.  Again, not sure why they wanted it, but it seemed harmless so she signed it.

[Zaphod]

Craigy wrote:

gabe1701 wrote:

Thanks for the reply Craigy.  When one of the places had mentioned that they would first send me a letter with their basic terms, on the spot I thought, “yeah, that sounds nice and simple!”  Now it feels like, as you said, they are trying to pull me into a period of exclusive negotiation since the letter only has fun things, like salary and bonuses, but none of the tricky stuff like noncompetes and terminations.  I’m pushing back a bit by sending a lot of questions to both places that have sent me a letter of intent to try to get a better idea of the overall terms.  Prior to signing either of them, I have asked the contract folks I’m going to work with to also review the LOI.

 

Anyone else on the forum have experience with this?  Is it really the corporate man holding me down, or do I need to turn down my own paranoia and relax?

Click to expand…

It really all depends on the language of the LOI.

If it says nothing about exclusivity, confidentiality, noncompete, etc., it might be fine to sign, not sure why they want it.  Definitely have your contract people review.

When she took her job, my wife signed a term sheet with things like salary, bonus, benefits, with no binding language on it.  Again, not sure why they wanted it, but it seemed harmless so she signed it.

Click to expand...

Maybe its partly psychological to make one feel wedded and "in a relationship". Also anchors you to the terms on the sheet, gives them an area to be like, "look, you already agreed, why are you going back on your word"?

[Drsan1]

In my experience, the letters of Intent are not binding, but like someone said is lie a promissary ring. The expectation with signing is that the job is yours but the actual contract can take weeks to be complete. Systems that don't negotiate at all tend to have templated contracts that they can plug your name into in a few days. A friend of mine signed a letter of intent for one system but a month or so later got a better offer so he broke the note...nothing happened to him. I would only sign a letter of Intent for my first choice so you don't burn any bridges.

[Sneezy]

At my academic institution we send "offer letters" to successful candidates that spell out the basics like clinical obligations, pay, bonus, etc.  We have standard benefits (and no non-compete) and policies, so there is less need to spell that out (e.g. health care and 401k are same for everyone and info about those issent separately).

I think we do it so you can have a written record of what we are offering before getting the lawyers involved which can take forever.  People are sometimes hesitant to turn down other offers without something in writing.

We do specify that signing and returning the letter represents accepting the offer.  Not sure anyone has ever backed out but I'm sure we wouldn't do anything if they did

[SValleyMD]

Agree with the above.

I got one from a large hospital chain with the general terms that you shared. It was also a plug and play type of non-negotiable contract type job.

I ultimately signed it, did my second interview, then accepted a different job elsewhere.

I would sign it if somewhat interested in the job. If you resist they might tag you as a malcontent and move on. Such a fickle world these days.

[gabe1701]

Thanks for sharing your experiences.  You aren't going to believe what ended up happening with one of the two letters I got(or maybe you will): I had emailed back both places with clarifying questions, and the contract lady at choice B, which had offered more money for a few less days of work per month(which was really tempting, just in a far-flung location) emailed me to say that they had messed up the letter!  Their listed base salary was actually someone's copy/paste job of my total reimbursement for that year, which is to say base plus all available bonuses(signing, relocation, quality).  The actual base salary was $56,000 lower.

 

No matter that this letter had been viewed by all their administrators and was signed by the CMO.  At worst, it was bait-and-switch as I almost turned down some other offers given how lucrative theirs was.  At best, it was just total incompetence- they had taken weeks to send the letter and then took 6 days to realize their mistake, all while I'm trying to consider multiple offers.  I bet if I had signed the letter and then tried to renegotiate some of its non-binding terms they would have pointed out how I had signed it 'in good faith'.  What a joke.

 

Choice A hasn't appeared to do anything like that but I'm going to have to proceed with caution.  It seems like offer letters could be a good thing in theory, but in practice there are asymmetric standards between the good word of the potential employee versus that of the employer.

 

Last hurdle is to decide between employed Choice A, or now Choice C which is an actual private group.  That's a whole other bag of worms...

[q-school]

Re---tain---Er. Nobody in this town works without a retainer. Allegedly what I am saying is your position will be concurrently improved if I had two hundred bucks in my pocket right now.

[gabe1701]

q-school wrote:

Re—tain—Er. Nobody in this town works without a retainer. Allegedly what I am saying is your position will be concurrently improved if I had two hundred bucks in my pocket right now.

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Ha- I admit I had to google it to find the reference- I'm getting older than I thought.