PMI Learning Center

The Veil of Ignorance — What a Harvard Philosopher Knew About Partnership Agreements

Written by Paul Vanchiere, MBA | Aug 13, 2026, 1:33:19 PM

 John Rawls argued that fair rules are the ones people would choose without knowing which position they will occupy when the rules apply. A society can only imagine that condition. A young partnership actually stands in it — briefly — and every year of waiting lifts the veil a little more. The fairest agreement is the one drafted while nobody knows whose name the provisions will carry.

 The short answer. Rawls's veil of ignorance — choosing rules without knowing which seat will be yours — is the working principle behind every well-drafted partnership provision. In a practice, the veil is not imagined; it is temporal. Before anyone announces a retirement, receives a diagnosis, ends a marriage, or fields an offer, no partner knows which side of any clause they will stand on, and rules written then are written fair. The veil lifts a little every year, which is why the drafting belongs on a calendar rather than on a grievance. 

 

In 1971, the Harvard philosopher John Rawls published A Theory of Justice, built around a thought experiment that has outlived most of the academic arguments it started. Imagine a group designing the rules of a society before its members know anything about their own places in it — not their wealth, their talents, their health, or their positions. Behind that "veil of ignorance," Rawls argued, people choose fair rules for a reason that has nothing to do with virtue: any seat in the society they design might turn out to be theirs. Self-interest, denied the information it needs to be selfish, becomes indistinguishable from fairness. The rule-maker who might be anyone drafts rules that work for everyone — and pays particular attention to how the rules treat the person they land on hardest, because that person might be him.

Rawls was describing an imaginary condition. No citizen ever actually stands behind the veil; societies inherit their positions before anyone gets to vote on the rules. What makes the idea more than philosophy for a medical practice is this: a young partnership actually stands behind the veil. It is not a thought experiment. It is a brief, real, and expiring condition.

Consider what the partners of a newly formed pediatric practice genuinely do not know. Nobody knows who will want to retire first, or with how much notice. Nobody knows whose health will fail, whose marriage will end, or whose spouse will take the job two states away. Nobody knows which partner will be the one a hospital system tries to hire away, which one will cut back to three days, or which one the group will someday wish it could remove. The valuation field has long organized the forcing events into the four Ds — death, disability, divorce, and divestiture — and the thing to notice is that every one of them arrives with a side already favored. On the day the event occurs, there is a partner who benefits from a high number and a partner who benefits from a low one, a partner protected by the clause and a partner constrained by it. The day before, there is only a group of physicians who cannot tell which chair will be theirs. That not-knowing is the veil, and it is the only moment the rules can be written by people whose self-interest is structurally aligned with fairness.

The same clause, before and after

The practical force of the idea shows in how a provision changes its moral character depending on when it is proposed — the words identical, the meaning transformed. A valuation formula proposed three years before anyone plans to leave is twenty minutes of a partner retreat; the same formula proposed after a retirement announcement is a negotiating tactic, and everyone in the room knows it. A buyout discount for short notice is a fair allocation of recruiting risk when it describes nobody, and an act of aggression when everyone knows whose exit it will price. Deadlock machinery is designed best while nobody knows which side of the tie they will someday occupy — that is the only moment the design can be fair, and the only moment it is cheap. Mediation-first dispute clauses look obviously reasonable at a retreat and look like surrender in a crisis, which is precisely why they get chosen at the retreat. And the disability provision may be the purest case of all: the kindest clause in any agreement is the one written years before anyone needed it, by people who did not yet know which of them it would protect.

Nothing in the drafting changed between those before-and-after pairs. What changed is information. Once the partners know who the clause describes, they are no longer behind the veil, and every proposal becomes a position. Rawls's insight, translated into practice governance, is that fairness is less a property of people than a property of timing — the same partners, with the same characters, will draft fair rules early and fight over the identical rules late.

The veil is a wasting asset

This is the part the philosophy cannot supply and a practice must: the veil does not stay down. Every year lifts it a little. Ages diverge, and the retirement horizon stops being hypothetical for someone. Health declares itself. Ambitions announce. An acquisition offer arrives addressed to the whole group but read very differently in each chair. A practice that postpones its agreement — or signs one and never revisits the hard provisions — is not preserving neutrality; it is spending it. The group that finally sits down to write a valuation formula in the same quarter a founder announces her exit will discover that the original position has closed. They are not Rawls's rule-makers anymore. They are negotiators with positions to protect, doing a fundamentally different and more expensive kind of work, usually with counsel present.

The discipline that follows is almost embarrassingly simple: draft while the veil is down, and re-sign while it is still mostly down. The annual value update — the formula rerun with fresh numbers and signed by every partner, every year — is the veil of ignorance converted into a calendar habit. Each signature is collected at a moment when the signers still cannot be sure whether they will be the buyer or the seller, the staying partner or the departing one, when the number next matters. A useful drafting convention sharpens the incentive: where the partners cannot agree on a new value, the old one stays in force — so the partner tempted to stall the update is gambling that last year's number favors the chair he cannot yet know he will occupy. And every admission re-opens the original position for a moment: a new partner signing the agreement is the practice's chance to re-ask whether the rules still read fair to someone who does not yet know her seat.

The Rawlsian test, as a working tool

Beyond timing, Rawls supplies a test any partner group can run on any proposed provision, no philosophy degree required: would each partner sign this clause without knowing which side of it they will be on? The test has teeth because of where Rawls pointed it — at the seat the rule treats worst. A forced-buyout provision is judged not by how it serves the majority that invokes it but by how it treats the partner it is invoked upon, which is why the well-drafted version pays a premium over formula value and requires an independent valuation signed before the vote. A short-notice discount is judged from the chair of the partner whose family emergency forces a fast exit. A non-solicitation clause is judged from both chairs at once — the practice protecting the panel it built, and the departing physician whose patients have the right to follow her. A provision that survives the test from its worst seat will survive anything the practice's future delivers. A provision that only reads fair from the winning seat has a constituency, not a principle — and constituencies change chairs.

Physicians already know this instinct in another form. Nobody thinks a coin flip is made fair by flipping after the result is known. The partnership agreement is a long series of coin flips — who retires first, who falls ill, whose circumstances change — and the agreement's job is to call every flip in advance, while the coin is still in the air for everyone. Rawls needed an elaborate thought experiment to put society's rule-makers behind a veil. A partnership needs only a calendar and the humility to admit that nobody in the room knows whose name the provisions will eventually carry. The fairest time to write a rule is while it still describes nobody. That is not merely the timing rule this series returns to again and again. It is, it turns out, a respectable position in political philosophy.

 

Running the veil test on any provision

  • Would every partner sign this clause without knowing which side of it they will occupy?
  • How does the clause treat the partner it lands on hardest — and would the drafters accept that seat?
  • Is anyone at the table already able to predict which chair will be theirs? If so, the veil has lifted for that provision — draft with independent valuation and disclosure safeguards, not assumptions of neutrality.
  • Is the provision being proposed in response to a known, named situation? Then it is a position, not a rule — expect it to be read that way.
  • When was the formula last re-signed? Every year behind the veil is cheap; every year past it compounds the eventual price.

Frequently asked questions

What is the veil of ignorance?

A thought experiment from John Rawls's A Theory of Justice (1971): rules are fair when chosen by people who do not know which position they will occupy once the rules apply. Denied the information needed to be self-serving, rule-makers protect every seat — especially the worst one — because any seat might be theirs.

How does the veil of ignorance apply to a partnership agreement?

Early in a partnership, no partner knows who will retire first, whose health will fail, whose marriage will end, or who will want to sell — so provisions drafted then are drafted by people structurally aligned with fairness. The same provisions proposed after a triggering event announce themselves become negotiating positions, because everyone knows which chair is whose.

When should a practice draft or update its partnership agreement?

While the veil is still down: before any forcing event is in view, with the valuation formula rerun and re-signed annually so every signature is collected while the signers still cannot know whether they will be buyer or seller when the number next matters. A practice that waits for a retirement announcement is no longer writing rules; it is negotiating positions, at several times the cost.

Put a number on the agreement

The Partnership Agreement Analyzer scores an existing agreement against the framework this series is built on — or schedule a discovery call to work through it with PMI. The full framework, with the arithmetic, lives in the textbook Pediatric Practice Management: The Fundamentals.