Published on November 8th, 2013 by Alan L Sklover
You can’t do better than to expect the unexpected.
“Nothing is so certain as the unexpected.”
- English Proverb
TWO ACTUAL “CASE HISTORIES”: Melinda was a 32-year-old family practice physician recruited to leave her home and practice in the suburbs of Boston to join a large family-medicine practice in southern Maine. As is so often the custom, she was told that after two years of practice, provided her skills and demeanor were found to meet the practice’s standards, she would become a Partner in the practice, with a 15% ownership stake.
Melinda had no qualms about the deal. First, she was entirely confident she would meet all criteria for becoming a Partner in the practice. Second, it was spelled out entirely clearly in her contract, and her brother – an experienced attorney – said “It could not be clearer.” Third, the practice was a growing one, and her 15% ownership would surely “set her up for life.”
Then, 18 months after Melinda joined the medical practice, something entirely unexpected happened: a corporate health service headquartered in Boston made a very significant offer to purchase the family medical practice in order to merge it into their growing network of family medical service centers throughout the northeast U.S. The physician-partners all sold their shares in the medical practice for a handsome price, and were offered long-term jobs afterwards.
Melinda? Because she had not been a physician in the practice for two full years, she got nothing. She was not even offered a job by the corporate health service. It all came to be a very large loss to her – and a serious setback in her life plans.
Something very different happened to Howard, a 31-year-old hedge fund trader at a small hedge fund in St. Louis. After leaving a large Wall Street firm, he joined the hedge fund in large part because he was offered ten percent (10%) of the firm stock if he remained with the firm for two full years. Like Melinda, Howard saw it as an opportunity to become an “owner,” and to establish himself for the long term.
Fortunately for Howard, we assisted him with his contract of employment that provided him with his ten percent (10%) ownership interest. We insisted on what we call an “in-the-meantime” clause that provided that, if anything happened “in the meantime” to prevent his receipt of fully vested stock due to no fault of his own, in all events Howard would receive the stock or its equivalent in value in cash.
Sure enough, when Howard’s small hedge fund merged with a large hedge fund headquartered in Chicago, the owners received a hefty purchase price. Howard’s stock did not get a chance to vest, so he would likely lose out completely, as Melinda did. In Howard’s contract, though, his “in-the-meantime clause” saved the day. Because it was there, Howard received the same purchase price as if he had owned the stock.
LESSON TO LEARN: An ounce of “in-the-meantime” forethought is surely worth more than a pound of “I wish I had thought of that,” or even a ton of “I can’t believe what just happened.”
If, in your employment negotiations, you are being offered a “thing of value,” but must wait to receive it – whether it is elevation to a partnership, an annual bonus, vested stock or stock options, a promotion, or a coveted sales territory, just to name a few – insist on an ‘in-the-meantime” clause to provide that, if for any reason other than your own misconduct you don’t receive it, you will be given either its monetary value or an alternative, but no less valuable “thing of value.”
Chances are you will never need it. But, if you do, you sure will be glad you have it.
WHAT YOU CAN DO: So many of our clients have requested, and received, “in-the-meantime” clauses in their offer letters, employment agreements, relocation agreements, retention agreements, and other work-related contracts. While few have ended up needing to exercise their rights under their “in-the-meantime” clauses, those who have done so have been just thrilled to have the “safety net” they provide. Here are five things you can do to help yourself in this regard:
1. Watch out for possible scenarios that may arise “in the meantime” by which you could suffer loss of a deferred “prize.” For every “reward” you are offered by an employer, if it is not paid or provided today, it may not be paid or provided ever, because so many things can happen “in-the-meantime.” Keep that thought in mind, and keep your mind on the lookout for the many different circumstances in which this could happen.
Sale of the company? Merger of the firm? Dissolution of the enterprise? Insufficient funds to pay? Court Order froze assets? It could be any one or more of these circumstances, and so many others.
Perhaps the saddest part of those who miss out on deferred rewards at work is that so often they have worked extra hard, for a long period, with the deferred reward utmost in their minds. The loss so often suffered in these scenarios is heartbreaking.
2. Don’t be bashful about asking for an “in the meantime” clause. The most difficult part about asking for an “in-the-meantime” clause should be explaining the underlying rationale to your employer. Once they understand the concept, most employers do not hesitate too much about providing the requested protection. The chances are great, perhaps overwhelming, that it will never cost them a cent. And, if an “in-the-meantime” clause does get triggered, it should not cost your employer any more than it would have if you had received the originally promised “prize.”
3. Don’t be afraid to be creative in your suggestion of “alternative rewards.” Surely, “cash” is always “king” when it comes to getting an “alternative reward” for missing out on a “promised prize.” However, sometimes cash is not an option, and at other times cash is not the most valuable option. Other “things of value” just might be worth more to you.
For example, if you were supposed to get a bonus, but the business just does not have the funds, release from a signed non-compete agreement might be more valuable. So might be your right to retain client lists, a portfolio of your work, waiver of a repayment obligation, paid relocation to another city, or extra weeks or months of paid vacation. The point is this: sometimes freedom, opportunity, time and information are “priceless.” And, too, don’t be afraid to offer two or three “alternatives” in place of losing out on one deferred reward. Your only limitation is of your imagination.
4. Here are some handy “replies” to common employer “responses.” It is possible that the response you receive to your request for an “in-the-meantime” clause will be something like “What is the matter . . . don’t you trust us?” Your best response is “Yes, I trust my sister when she drives her car, too, but I fasten my seatbelt nonetheless.”
If the response you receive when asking for an “in-the-meantime” clause is “Don’t worry – we will always do right by you,” your best response is “I believe that, but what might seem ‘right’ today may not be the same thing that seems ‘right’ years from now. I would rather decide what is ‘right’ in our present circumstances, not later, unknown, circumstances. So, I’d like us all to agree, now, what ‘doing right’ in the event of unexpected loss means.”
If the response you receive when asking for an “in-the-meantime” clause is “We cannot do that,” then simply respond with “Well, what can we do to address this possible event? I should not be the only one holding the risk of an unanticipated situation.”
5. Please, please, please: Always get it in writing of some sort. I know it should go without saying, but you really do need to have a promise, assurance or understanding about an “in-the-meantime” clause placed into writing, whether it is incorporated into an offer letter, employment contract, retention agreement, buy-in agreement, or even put into an email. What is not in writing must be presumed to later be lost due to forgetfulness, bad faith, or otherwise. And if you lose your “deferred reward” for this purpose you will have absolutely no one but yourself to blame.
For those who are not sure “What to Say and How to Say It,” we offer a “Model Memo Requesting an “In-the-Meantime” Clause in your offer letter, employment contract, bonus guarantee, stock grant, or other deferred employment promise that you can use to protect yourself against the unexpected. To obtain a copy – Delivered Instantly by Email, 24 Hours a Day – just [click here.]
You can’t do better than expecting the unexpected and planning for it. That is what an “In-the-Meantime” Clause is all about.
P.S.: One of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate New Job Package” consisting of 10 items, including Resume Cover Letter, Thank You After Interview, Memo Confirming Terms Offered, Response to Offer Letter, our Master Checklist of Items to Negotiate, and 50 Good Reasons to Explain Your Departure from Your Last Job. To obtain a complete set, just [click here.] Delivered by Email – Instantly!
Help Yourself With These and Other
|New Job 3:||Confirming Basic Terms of New Job Offer|
|New Job 5:||Model Response to Receiving a New Job Offer|
|New Job 7:||Checklist of New Job Items to Consider Requesting/Negotiating|
|New Job 13:||Six Important Elements to Request Be In Your Expected Job Offer|
|New Job 15:||Model Request for Sign-On Bonus|
|New Job 16:||Two Model Memos to Protect Your Book Of Business ("B.O.B.")|
|Job Issues 5:||Model Response to Request That You Sign a Non-Compete|
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the bumps in the road. Using an “in-the-meantime” clause is a perfect example of that.
Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.
Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.
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© 2013 Alan L. Sklover, All Rights Reserved.