Many of you are just now getting ready to secure your own office space and it’s likely you are considering subleasing. Patti Diffee is preparing to open her practice in Monument, Colorado (USA) and wrote in on Facebook to ask . . .
Hi! I’m a ‘newbie.’ New graduate and just about the begin private practice. I have a part-time job that provides steady paycheck and benefits. Now I’m wanting to begin a part-time private practice – partly because that’s what I always wanted to do and also to supplement my income.
I’ll be sub-leasing an
office from a therapist who’s been in the community for a long time (14 yrs.) and doesn’t utilize her office very much. The ‘deal’ sounds almost too good to be true – the office is great, she’s not asking me to be on the lease at all, she is very casual about everything and seems to genuinely want to help me begin to build my practice without all of the strings attached. I don’t see a lot of info. about sub-leasing. Do you know of things I should be aware of? Just want to make sure I’m going about this in the best way. Thanks for your help!”
Patti, I’m so glad that you asked! I typically recommend that all new therapists in private practice start off by subleasing office space . . . by the hour, if possible, and as their practices grow, by the day(s) and eventually by the week. It’s a much gentler way to encounter the unexpected and surprising “soft” costs, as well as the ebb and flow of income in private practice. (I think of it as The Big-Toe Approach rather than The Whole-Ass-in-the-Bath Approach to testing the financial life of your practice.)
Having said that, I am a little more squeamish about “too good to be true” deals for therapists and especially those with no contracts. Here’s why . . . .
I’ve told you already that I made more than my share of mistakes when I first went into private practice. I did a lot of things right but . . . I should have done a few more things right as well. One of my first experiences was to be invited to join the practice of a very prominent and clinically well-respected therapist. Let’s call her Wisdom.
Wisdom was such a gift to me in so many different ways. She was kind and encouraging and willing to mentor me. And, in many ways, I can credit her with shaping my attitudes about clients and therapists, collegiality and reciprocity, marketing and self care . . . and the list could go on and on.
My arrangement with Wisdom was that I would see clients and pay her a flat 30% of whatever I brought in. She provided billing services, a beautifully appointed office, a telephone (land line), copier, and group room. And, for all of that and much more, I will always be grateful. However, there was no written contract.
Wisdom made some mistakes along the way, too. One of those was apparently making some financial decisions that did not bode well for her . . . . After officing with her and seeing clients for about two years, I walked in on a Wednesday to receive a handwritten note stating . . .
I have leased the entire suite of offices. You will need to have all of your things out by Friday afternoon.”
There was no discussion. And, no explanation. Only later did I find out from an office mate that Wisdom had run into financial problems and needed to sublease the entire suite of offices. In hindsight, I’m sure she was embarrassed about the circumstances and timing and way the events transpired. 20 years later, I certainly don’t hold any grudge toward her. But at the time . . . it was a very difficult dilemma for a young practitioner to face alone. And, that’s how I came to abruptly end my professional relationship with Wisdom.
I already had clients scheduled in the office for the next two days i.e. Thursday and Friday . . . and most of the next week and the next. I was single and hardly able to move my desk and files by myself. There was no time to even think about looking for office space . . . and, truthfully it wasn’t in my budget either! I had, at the time, never negotiated a contract, had no idea what to look for in a landlord, had no idea what the average office space would rent for (or that you rent it by the square foot!) and couldn’t have found space at any price for my solo practice in the same part of town anyway.
To this day, that remains one of the biggest crises in my professional life. It was – at thirty-something – traumatic! It was also just one more gift from Wisdom. So, let me pass that gift on to each of you who is now considering a too-good-to-be-true subleasing deal with no contract.
I believe that contracts can be formal or informal but they should always be in writing. Carla, if you are not going to formalize this office situation with a contract, I would encourage you to get the details in writing i.e. communicate via email so that you have a paper trail. Ask your questions via email OR at the very least follow up verbal information with emails that say “Just to be clear, this is what I believe you said” or “. . . we agreed to . . . .”
And, it would be a good idea to close with “Please let me know if I have misunderstood any of the above. It’s important to me that we build our professional relationship on a spirit of trust and mutual respect. I hope you will let me know if either of these is ever in doubt. I look forward to working with you!” In other words, you can be as collegial as you would like to be, just don’t be naive and get sloppy with you. I did. It ruined a good relationship with Wisdom, it scared the sass out of me (financially), and it had the potential (but did not materialize) to cost me clients, too.
Is there anyone else out there who has had too-good-to-be-true subleasing deals with no contracts? Or, were you smarter than me and knew ahead of time to not go there? Please share your experiences here so that others may learn!
Oh, this is a good topic for discussion! My experience is on the other side of the equation as I lease office space by the hour to therapists who are just starting out or who need a space only a few hours a week. I have an agreement that we both sign and it stipulates expectations from both me and the therapist who will be leasing space from me. The agreement is good for one year but has a clause that either party can terminate the agreement with thirty day advance notification.
Pam, thank you so much for sharing this info! Got any interest in writing a guest post that lists what to include in a contract (or what to consider) when leasing office space (from either end of the experience)?
I can do that!
Excellent! Drop me an email back channel if you have any questions!
Wow! The timing of this blog post is amazing! I actually am about to agree to a “no contract” sublease agreement for 2 days per week. Almost the same story as above: very laid back, seems genuinely interested in helping me out. Thank you for posting this question and response. I will request something in writing from her to make sure that we are in agreement with everything, and that she will give me notice if things change for her in the future!
🙂
LIndsey, how exciting for you! I think if you refer your new landlord to this blog post, s/he will understand exactly why you both need a contract in writing. You both deserve to have things spelled out and agreed upon . . . and any ethical landlord should not hesitate to provide a fair written contract that protects you both.
This is such a good question. Although I haven’t rented space yet, I’m looking to start part-time by Fall of next year. But I have already been presented with a similar proposition like you Patti from one of my mentors. I decided not to go that route because I didn’t want to mix lines.
Just how we shouldnt be a therapist to a family member or close friend, I didn’t want to mix business with someone I love and admire. I’ve been to my mentor’s house and he knows personal things about me. I want to keep our relationship separate from the business side of things. What if something happens where I’m forced to move? I dont want things to feel akward between us then.
I would suggest Patti that what ever you choose, to have it in writting. Nothing fancy, just an agreement between you and the lessor and have it notarized. This is part of business. If you dont get into the habit of seeing yourself as not only a therapist, but a business woman, there could be potentially bigger problems ahead.
Liza! This is such great advice! Thank you for taking time to share it!
I am planning to start a practice through distance (or online counseling). While this is far from the only reason that I decided to do that, I didn’t want to have the cost of leasing office space, particularly in the beginning when I’m not likely to have a lot of clients. I know Tamara mentioned to try to do this by hour in the beginning.
I also saw that the term “part-time private practice” was used. I have read several different books and articles that recommend using the term “limited private practice.” Please use what you are comfortable with – I just wanted to offer the information.
Best of luck to you!
Hi, Lauren! Thanks so much for taking time to share our ideas. I, too, encourage those who are practicing “part-time” to consider using the term “limited practice” instead. The latter implies that you are in control and choosing to restrict your practice rather than the former term which may sound as if you are considering counseling to be merely a hobby.
Another great article Tamara. As another professional on the “other side” (I sub-let to others), I’d like to point out how important it is for BOTH sides to have an agreement. While someone who has a successful private practice may have more financial security and might be taking less risk renting by the hour, there is still risk. There are a plethora of details to be addressed including things like honoring the requirements of the master lease to when payment is expected all the way down to who’s responsible for keeping the office(s) clean. As Pam indicates, having expectations of both sides clearly spelled out is important since this can affect both sides financially as well as in their professional reputation/relationships.
Thanks, Rob, for taking the time to drop in here and address the “other side.” You are 100% right, of course. There are risks and benefits on both sides and contracts can protect both.
Thanks Pam for sharing the conventional “wisdom”. Sometimes we are too excited by the offer or too skeptical about typical business transaction, we forget how to take care of business. Most clinicians are not trained for entrepreneurship so your information is really appreciated.
Thanks, Shawn, for taking a moment to drop in to share your appreciation. Your comment is a perfect example of how to contribute to building a supportive online community here at Private Practice from the Inside Out. I hope you will come back often and share your own ideas, resources and concerns!
This is a really great piece of business advice. By having a contract that protects you, you create a safe space for you (and your clients) to do your work. I know it can be especially hard for folks new to the field to suggest to a more experienced therapist that a contract is necessary– lots of “who am I to speak up about that??” thoughts come up– and yet it is beneficial for everyone involved! I think lots of people do the more informal, verbal agreement– and that may turn out just fine in some cases. But Tamara’s story is a cautionary tale about all the sorts of things can go wrong– and not out of malice or spite, but simple good intentions and plans that folks could not fulfill!
Thanks, Ann, for sharing your thoughts on this topic.
Wondering if anyone else out there has a personal anecdote to share related to this contract / no contract when securing your office space . . . .
I am about to enter into this arrangement and have agreed I would pay a rate per referral and a per use rate for the office as a sub lease. I am brand new out of school have already firmed up my own referral sources and now will be “sub letting” under the therapist who will also be my supervisor. I will be sure to get a contract per the advice stated here, but what goes in that contract? Should I pay her $10 or some percentage of my fee per referral? What is a good number? Should I pay her a per use amount each time I use the extra office space she has? She seems amenable to all of these suggestions but wants a “pitch” and I am up against two others. Please offer your suggestions. Thanks
Hi, Amy! Thanks so much for dropping in to Private Practice from the Inside Out to chat and congrats on your new plans for your practice! It’s rare that someone right out of school as “firmed up” their referral sources! How did you managed that?!
The rates for subleasing range from 30-50% of a therapist’s usual and customary fee. The higher the fee, the more you should expect to get for your money. For example, if you are angling for that 30% to pay your landlord, you will likely get an empty shell of an office and a parking space and possibly even restricted hours of use. (Plan to furnish it yourself.) If you are negotiating to pay the higher fee, you should expect to get lots more including furniture, use of office equipment and support (possibly receptionist, billing, etc.), office supplies, referrals for clients to see you, possibly professional development opportunities and even clinical supervision. Everything is negotiable.
Some therapists work under a graduated agreement that stipulates they work at a higher rate with their first 10 or 15 clients; then, as they acquire even more clients, the percentage gets reduced. This provides incentive for everyone to keep that therapist busy.
A different arrangement would be to pay for the use of the space only. Most therapists typically charge 15-30% of their usual and customary fee when subleasing in this way. It is not uncommon for them to vary their prices based on premium and off-times during the day or days of the week.
Best wishes on your journey!
The one thing I would not do is pay a referral fee. That is considered to be illegal in many states.
was there ever a sample sublet contract posted? i am searching for one!
Hello,
I am wondering if anyone can help me. I am a therapist who has office space in NYC. My name is the only name on the lease but I sublet it to 2 other clinicians. All of the discussions regarding the length of stay has been documented via e-mail. Yesterday I was contacted by one of the subletters stating that she will be moving out at the end of the year. She had stated in her e-mail that she would be staying until the end of April. I am going to have such a tough time carrying this rent. Do I have anything to counter with her? Is an e-mail with dates agreed upon a legal document?
Thanks so much!
-Nicola
Oh, Nicole! I’m so sorry to hear that you are in this situation! Obviously, I’m not an attorney and not offering legal advice because that’s outside my scope of practice. However, my understanding is that even a verbal agreement, while being much more difficult to prove, can be enforced as a contract.
It’s good you are reaching out for advice and it’s great that you have some email documentation. I suggest that you continue to gather witnesses, documentation, and any other possible proof in support of what you want. While you are doing that, I would suggest that you contact an attorney for legal advice. I know, on occassion, I have paid for a 15 or 30 minute consult with an attorney, followed up with a letter drafted by an attorney on their letterhead, and that alone got the results I was looking for. Surely that expense for 30 minutes cost less than the money you would lose if you lost your tenant.
Whatever happens, I hope you will either drop back in here or drop me a private email to let me know what happens. I would love to share the update with everyone here (maybe in a blog post?) so that others don’t continue to run into the same situation.
Has anyone seen where you pay a percentage, for example 35%, on top of a flat rate rent fee, $600/month?
When I first entered private practice I subleased as well. It was a great way to build my practice and learn the inner workings of being an entrepreneur and a clinician. Having a written agreement was very helpful because it allowed both parties to be clear about the expectations. Having a written agreement I think also helped us maintain our relationship after I was ready to move into my own space.
I’m looking for office space once more and I’m wondering if I should be looking for space that offers reception services. Do any of you with solo practices have a receptionist to greet your clients?
Hi, Kerri-Anne! I have officed both with and without receptionists and have found that they can be a lovely addition to your office while giving you more space to do what you do best.
However, a receptionist can also kill your practice if s/he is not chosen carefully.
When I’ve had a receptionist, I’ve had her greet clients, collect initial payments and paperwork from clients, answer the phones, complete paperwork for bank deposits, be responsible for copying, collating papers, maintain a neat appearance in the office a well as run errands (both for me personally and for the business), and sometimes assist me away from the office when I have done presentations.
However, make sure that you train your receptionist to practice confidentiality at all times including no discussion of clients outside your office; and, make sure to train her on HIPAA practices and policies.
I look forwad to hearing about others’ experiences with receptionists, too!