Meetings and Legal IssuesNovember 1, 2016

Like It or Not, Planners Must Weigh Risks and Legal Considerations at All Times By
November 1, 2016

Meetings and Legal Issues

Like It or Not, Planners Must Weigh Risks and Legal Considerations at All Times

Depressing businessLike it or not, the possibility of lawsuits or other legal challenges is a part of the meeting planner’s world. Even with the most careful planning, every event involves some level of risk. And that in turn brings a variety of legal considerations. 

“Planners need to weigh the risks and benefits associated with every meeting location they’re considering,” says Philadelphia attorney Joshua L. Grimes. “There are legal consequences to canceling an event, failing to meet a contracted room block and to assigning responsibility when something goes wrong. The days of meetings proceeding just on good faith without each party agreeing to be legally liable for their obligations are over.”

Of course every problem doesn’t have serious repercussions. Frequently the threat of legal action is a hollow one voiced by those who feel aggrieved, or that possibility is not even raised. But the legal angle should never be ignored.

“The days of meetings proceeding just on good faith without each party agreeing to be legally liable for their obligations are over.”
— Joshua L. Grimes, Esq.

“While many times there is no harm from a failure to follow good practices or take potential legal issues into account, if something does go wrong, there may be the potential for liability, financial loss or personal injuries,” says Laurie E. Sherwood, a partner at Walsworth LLP, a California law firm.

In fact it’s extremely important to take legal considerations into account and treat them seriously, according to Wendy Spivak, principal and co-founder of the Castle Group, a Boston firm focusing on PR, events management, crisis communications and digital media. She notes that agreements are the foundation of the vendor/partner relationship and are a reflection of the climate in which meeting planners will be working. At the same time, they are not the only factors to take into account.

“All event details flow from a contract — from financial arrangements, cancellation and attrition to concessions and confirmed function space,” she says. “However, it’s important to be cognizant of legal considerations beyond contracts as well.”

Beyond Contracts

She notes that ADA regulations, environmental requirements and tax regulations, among others, all have potential legal implications and need to be taken into consideration. Spivak says planners also should be sure to consider noise and open flame restrictions and local licensing requirements, especially if the event is being held in a different country or culture. An example is Europe’s strict entertainment licensing fees, which are important to take into account when planning abroad.

It should never be forgotten that while many forms and templates used in planning meetings may seem mere formalities, once signed these forms become contracts that govern the rights and responsibilities of the participating parties. This means they have real legal and financial consequences, notes Patricia S. Mahlstedt, Esq., a member of Eckert Seamans Cherin & Mellott LLC in Pittsburgh, Pennsylvania.

In the process, it pays to remember that your client also is the hotel’s client.

“Although the hotel certainly wants to make a profit on the event, it is in the best interest of both you and the hotel that the client is happy with the event,” she says. “Therefore, if you make reasonable requests of the hotel in your contract negotiations, the hotel will typically make an effort to accommodate your request.”

As an example, she points to a situation where a hotel’s proposed form of agreement asks for a deposit but the planner is concerned the group may need to cancel for any number of reasons. An alternative might be to ask that any cancellation fee be reduced if the hotel is able to book an event over the same period with another group, or request that the client be permitted to cancel the event (without a cancellation fee) within a designated time period prior to the event dates. Mahlstedt says that in making these requests, it’s always wise to understand the hotel’s perspective. Since the hotel is turning away other business when booking for the specified dates, hotel reps will likely request that a minimum fee or a termination fee be paid, or that the group rebook the event within another designated time period.

Similar logic applies in instances where unusual risks might be involved.

“If your event includes something the hotel will perceive as a higher risk, such as fireworks on property or a fire-eater at your luau, then the hotel will almost certainly request additional insurance and indemnification from your group, Mahlstedt says. “Be prepared to address those with your client.”

Not Cookie-Cutter

Much of the challenge in dealing with legal considerations is the broad range of circumstances that might be faced.

Sherwood offers an example where a meeting planner contracts with an outside vendor to plan a physical teambuilding activity. The vendor decides on a relay obstacle race. During the event, one of the participants trips and breaks his ankle. Sherwood says that depending on the jurisdiction, legal issues could include whether the activity was voluntary; whether the injury is covered by workers’ compensation; and whether the participant could sue his employer, an outside meeting planner or the activity vendor. Another factor would be whether the contract with the activity vendor contained indemnity and insurance provisions protecting the employer or outside meeting planner.

Grimes cites a situation where a group fails to meet its room block and a hotel assesses attrition damages. In such an instance, the meeting contract must be carefully reviewed to determine how to properly calculate the amount owed by the group in damages.

“If the contract contains a rebooking clause, the group may be entitled to a partial credit for rooms in the group’s block that the hotel is able to rebook,” Grimes says. “There are frequently legal disputes over the proper amount owed by the group.”

Another example involves a group’s right to cancel a meeting without liability when a hurricane causes extensive damages to the meeting hotel. Grimes notes that if the hotel will not be operating due to the weather damage, the group will be relieved of its obligations. But if the hotel might be able to repair its facilities and reopen shortly before the meeting dates, disputes can arise as to whether “act of God” cancellation is appropriate.

“The group will argue that it should be able to cancel because there is no guarantee the hotel will be up and running in time, and the hotel will argue that it will meet a re-opening deadline,” Grimes says. “These kinds of disagreements can be resolved only after a careful examination of the facts unique to each situation.”

Kerry Bannigan, co-founder and CEO of Nolcha Events, a New York City events agency, says that the process of obtaining legal permits can itself pose challenges. She recalls the effort involved in arranging a tent for a media meeting space at a high-level international event.

“Due to the outdoor requirements as well as security measures that had to be taken, the sign-offs of legal permits and vendor contracts were crucial,” she says. “Time was ticking extremely fast for the approaching event deadline and each day there was another obstacle to receiving legal sign-off.”

She says the stress level was high as everything else had moved forward for the event — guests, media, catering, scheduling — but until late in the game, word had still not come through on the permits.

“Thankfully all worked out fantastically in the end,” Bannigan says. “But I always recommend being prepared for this type of thing when a client puts together a last-minute event.”

And no matter the level of previous experience, there always seems to be the potential for something new.

“I have reviewed thousands of contracts and faced many challenges over the years, but just recently had a situation that surprised even me,” Spivak says. “After weeks of negotiation with a large global hotel brand, and over a million-dollar program, we almost had to walk away because we could not come to terms on the cancellation policy.”

She says that traditionally, cancellation clauses are rather straightforward but this hotel wanted to include language that would allow the hotel to cancel her group at any time for any reason.

“This was clearly unacceptable,” she says. “We were signing this contract on behalf of one of our clients and would never put them at risk in that way. We stood our ground and got our lawyers involved to add a little weight to the situation since we were dealing with a huge global entity.”

Ultimately, the hotel agreed to the terms, and the cancellation clause was removed. But a lesson affirmed was that sometimes it’s necessary to “get scrappy,” Spivak says.

Care With Contracts

When it comes to contracts, paying upfront attention to all details is the only way to go, according to Mahlstedt.

“It’s easy to skim over the boilerplate legal language at the end of the agreement and focus on the business terms and fees on page one,” she says. “However, the legal language can have a significant financial impact on your client if an issue arises. It’s important to understand the benefits and the risks of the provisions in the agreement.”

She says if there is a provision you don’t understand or have questions about, it’s best to ask a lawyer.

“An experienced hospitality lawyer will be able to interpret the provision for you, give you a sense of whether this language is typical in the marketplace, and/or provide you with suggestions for a compromise position that will work to the benefit of your client,” she says.

Sherwood agrees on the value of expert help.

“While the meeting planners can generally negotiate the terms of a contract, it’s advisable to have an attorney review the actual contracts before they are signed,” she says. “In negotiating terms of contracts, it is important for the meeting planner to not only focus on the key terms that are important to them and their meeting group, but also to focus on minimizing risk.”

Knowing your client also is a must.

“Different clients have different needs, and that will vary by industry and by individual entity,” Mahlstedt says. An example would be a pharmaceutical company that is sensitive to having a competing group booked at the hotel at the same time as its event. Planners might request a restriction against booking competitive groups, and also provide the hotel with a list of the names of the companies or groups that the client deems to be competitive.

“Attaching the list to the agreement will avoid any confusion by the hotel upfront and significantly lessen the risk of issues arising in the future,” Mahlstedt says. “So it is to the benefit of both parties.”

Spivak agrees that negotiating carefully at the outset is a key to avoiding surprises in any contract, as is reviewing each provision.

“Make sure to ask for what you need at the beginning of the negotiation process to avoid confusion and streamline the process,” she says. “Look at every contract with a fresh set of eyes. No two contracts are the same, and all require careful review.”

And the need to scrutinize the final version should not be overlooked.

“Always reread the contract before you sign,” Spivak say. “Sometimes there are so many rounds of edits that important details can unintentionally be left in or removed. Be sure all changes are updated in the final version.”

That includes making sure all provisions are acceptable whether the omission was intentional or not, according to Grimes.

“If something is missing from the contract, or a provision doesn’t seem right, the planner should insist on making important changes before signing,” he says.

In the process, language should be clarified wherever necessary

“The nature of a contract should be easy to read and follow for all parties,” says Amberlee Huggins, president and chief marketing officer for CSI, a Washington, DC, destination management company “When dealing with clauses that you are unfamiliar with during your negotiations, ask for examples where the clause may apply. If necessary, add this within the contract.”

She says that while contract terms may be written in black and white, unexpected events often occur. Provisions such as “what is reasonable in the circumstances” or “what the intention was between the parties” may need to be applied should a matter go to mediation or arbitration.

On the other hand, in some instances it serves all concerned to be more specific. For example, clauses pertaining to insurance requirements should be very specific, according to Huggins. She says the term “reasonable insurance” will mean different things depending on the entity or type of business with whom you are contracting, with a small business typically carrying different levels of insurance than a larger entity or hotel.

“Consider your insurance tolerance for the event at hand versus general policy and look to negotiate this if it works in your favor,” she says. “If you’re asking an entity to increase their insurance limits to meet your usual corporate guidelines, be prepared to see the additional costs applied to your program, as very often a small business will look to cover you as requested while retaining their existing insurance levels.”

Grimes recommends taking the time for some advance preparation leading up to contract discussions.

“Create a list of ‘must haves’ before starting negotiations that you can present to your contracting partner at the start of discussions,” he says. “Have other options in case you can’t reach an acceptable agreement with your preferred meeting venue or vendor.”

Plans for the Unexpected

No contract covers everything, and no plans are flawless, but some basic efforts will help head off legal problems.

“It’s important for meeting planners to do due diligence in selecting various vendors and suppliers such as venues, hotels and activity organizers,” Sherwood says. Along with checking liability policies to know what is covered and what is not covered, she advises having a crisis management plan in place in case of an incident.

Environmental hazards may merit special attention. Typical is the uproar created by the latest virus or infectious disease outbreak.

The Zika virus reflects one of many unwanted and in some instances, unexpected factors in the meeting and events industry, Huggins says. “Whether it is that attendees will choose to cancel or your organization has internal or external perception considerations, environmental threats are a part of meeting life.”

Health threats such as Zika and Ebola should be covered in a force majeure clause in the meeting contract, Grimes notes. The clause should be written if the threat is deemed by an independent medical body to be so serious that travel is inadvisable for meeting attendees.

“Some contracts also allow force majeure cancellation if the disease causes a large percentage of group members to cancel their meeting attendance,” he says. “This must be covered in the meeting contract, because if it isn’t and a disease takes hold, it is almost certain that the group and its vendors will argue over whether cancellation is warranted.”

Communicating with prospective travelers about dangers also can be a good idea.

“In the case of environmental threats such as Zika, prudent meeting planners with upcoming meetings in affected locales may want to direct participants to the CDC’s website and recommend they consult with a medical professional before traveling,” Sherwood says. This enables meeting participants to make informed health decisions and decide whether to proceed with their trip, she notes. Depending on the target population and the timing of the event, planners also may want to consider alternative locations. C&IT

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