A letter of intent for employment agreement purposes, often referred to simply as a “letter of intent” or “LOI,” is a preliminary document used in the employment negotiation process. It outlines the key terms and conditions that both the employer and the prospective employee intend to include in the final employment contract. The contents can vary greatly but they discuss terms about the job itself and compensation. Legal terms are often reserved for the underlying employment agreement.
Not all physicians will receive a letter of intent from a potential employer. If you do receive one, here are a few things to keep in mind.
Not Legally Binding
A letter of intent is merely an intention for the parties to enter into a binding agreement. The LOI should contain language stating that the LOI is not intended to be a legally binding agreement. While signing a letter of intent doesn’t legally obligate you to accept the job, doing so prematurely can have consequences. Physicians should take these letters seriously.
Physician letters of intent serve to align expectations. It signals that the employer is serious about moving forward with an employment opportunity based upon the key terms and conditions set forth in the LOI. Employers typically don’t send multiple letters of intent for one position, indicating their preference for you.
By presenting the initial terms and conditions, an LOI serves as a starting point for negotiations. It allows the parties to discuss, clarify, and potentially modify these terms to reach a mutually acceptable agreement. The level of detail can vary greatly depending on the employer but most LOIs discuss the position, expected compensation including benefits, and the next steps to help keep negotiations on track and prevent delays. Some LOIs may discuss limited legal terms such as confidentiality clauses and non-compete and/or non-solicitation covenants. The letter typically concludes with a section for the prospective employee to sign, indicating their acceptance of the terms, and any deadline. The employer may also countersign to formalize the offer.
What Happens After Signing?
Once both parties agree to the terms outlined in the LOI, the employer will direct its legal department to populate an employment agreement using the agreed terms in the LOI. The employment agreement will then be presented to you for your review often with a deadline for signing. Mistakes can happen so read the employment agreement carefully to confirm the terms outlined in the LOI match the terms in the employment agreement.
Can You Re-Negotiate an Agreed Term in the Employment Agreement?
It may be frowned upon by an employer if you re-negotiate a term, such as base salary, after you have already signed the LOI. However, you may discover something new or unique in the employment agreement that may increase your risk in accepting the job and thus, justify your re-negotiating a term. For example, you may discover that the terms of the non-compete are much more onerous than discussed in the LOI. For that reason, it may make sense for you to ask for a higher salary to compensate you for that additional risk. To provide comfort to the employer that you will be negotiating in good faith after signing the LOI, consider informing them in advance that you may want to revisit some of the terms in the LOI after you have had a chance to fully vet the employment agreement. You will not know the “full picture” of what the employer is offering until you had a chance to review all the contents of the employment agreement.
Should You Seek Legal Review?
Whether or not you should seek an attorney to review a letter of intent depends on several factors, including the complexity of the agreement, the potential consequences of the LOI, and your level of comfort and expertise in legal matters. If the LOI involves complex legal terms, financial arrangements, or significant obligations, it’s generally a good idea to consult with an attorney. Attorneys can help ensure that the language is clear, the terms are fair, and your rights and interests are protected. An attorney can help you understand the legal protections and obligations outlined in the LOI. They can also advise you on whether the document adequately safeguards your interests.