Damien Weinstein, far left, partner at Weinstein + Klein PC, says fair contract negotiating is vitally important because it will often set the tone and define the relationship between parties. Photo courtesy of Damien Weinstein

When planners are negotiating contracts for an insurance or financial meeting — or really any convention or event where they are in charge — it’s important they have all their ducks in a row to ensure that no legal issues pop up unexpectedly. That’s more complicated than ever due to issues brought up by the COVID-19 pandemic.

Robert C. Bird, professor of Business Law, Eversource Energy Chair in Business Ethics at the University of Connecticut School of Business, notes that planning for future meetings has become increasingly unstable as today’s contracts need to consider things that never were an issue before 2020. “Meeting planners will have to anticipate the impact of COVID on their future events,” he says. “I remember vividly in early 2020 having to make the difficult decision to move to our discipline’s first online conference ever in light of what was then a brand-new virus. Force majeure and related clauses will be particularly relevant and no longer relegated to the standard ‘boilerplate’ language of a contract.”

That’s why it’s so important to think ahead. “The contract must anticipate a variety of conditions, and not leave the planner in financially difficult posture or in a breach of contract situation,” Bird says.

Paul Dolce, V.P., Hospitality – Arch Amenities Group, notes insurance and financial customers especially appreciate keeping information secure, and that’s something that all planners should prioritize to stay out of legal trouble. “We don’t publicly post their company name in our space. We secure their meeting space to ensure none of their information being presented can be accessed, and we offer shredding services for any information that may get left behind,” he says. “[Our organization] also has the strictest of PCI compliance policies in place as well to secure our customers’ data.”

Money Matters

When it comes to negotiating contracts, Dolce says the most important issue is the financial commitment they’re making on behalf of their company or organization, as well as the terms and conditions regarding cancellation, guarantees and deposits required. He stresses the importance of understanding all financial and legal commitments. “Planners could be legally binding their company to a financial commitment without knowing it,” he says. “For example, a non-refundable deposit could be required in a contract without the planner realizing it if they don’t look over the contract carefully.”

Andrew R. Shedlock, a partner with Kutak Rock LLP, notes there are two main things that can happen to a planner if things aren’t done correctly. The first is litigation and having to deal with a court battle. The second, potentially more important, is the loss of reputation in the community and online reviews. “A planner never wants to be in a position where their clients/customers are bad-mouthing them on the internet for a failure to negotiate a contract once an event is canceled,” he says. “Consider whether retaining a deposit is worth it when compared with the blow back that may happen.”

Shedlock has represented a few clients since the pandemic who have sought to get out of contracts due to COVID. “From a planner perspective, the most important thing to do is to make sure the contract is clear on who retains what funds for what reason,” he says. “For example, does the contract dictate that there will be no monetary refunds for any reason [including COVID-19]? If I’m a planner, I’m very interested in the upfront retainer. Once a venue has your money, it’s difficult to get it back.”

From a venue perspective, he recommends the highest possible non-refundable retainer — 50% or more. “If I’m a planner negotiating on behalf of a client, I want a retainer of 10% or less,” Shedlock says. “That’s the key negotiating point. Just assume that once you write that check, that money is gone.”

Pandemic Changes

There is now a greater focus on the force majeure clause of contracts, specifying what constitutes a pandemic, lockdowns and what factors allow a cancellation or rescheduling to take place without penalties. Marla Everett, CMP, CMM, CITP, director, consulting solutions for Event Travel Management, says that since the pandemic, rebooking clauses are becoming more difficult to use. “Hotels do not always have mutually agreeable dates to offer, and the rates are sometimes quite different than the original meeting,” she says. “Staffing expectations need to be outlined and clear upfront so that hotels can deliver the expected service level. We’re seeing some hotels with skeleton crews, which may impact the frequency of housekeeping and/or the hours when a front desk is staffed.”

Defining expectations and repercussions also may need to be outlined upfront to avoid any legal problems. Already, availability is tight for the remainder of 2022, and Everett is seeing meeting hosts have less flexibility. “If they need to hold a meeting, they need to commit to it, and the hotel contract is their ‘insurance’ that they will have the space,” she says. “If a host is hesitant and waits to look for space, they may find that it is not available. Or, they may need to be very flexible with their expectations, such as going to a more limited-service property, choosing a second-tier city, paying a higher rate or changing dates, agenda, etc. to fit.”

So, when negotiating contracts, she stresses being careful with terminology. For example, using the term right of termination instead of force majeure. “Force majeure is generally situations that are unforeseen and out of the parties’ control,” Everett says. “There is some gray area around whether COVID can be considered a foreseen situation now, so it might not be covered under force majeure. If you have a right of termination clause, then you are simply outlining scenarios when the contract may be terminated and what happens in those scenarios. The hotel and meeting host could jointly agree on how/when a termination for a pandemic would apply.”

Virtual meetings have also changed some of the legal issues that must be considered. As efficient and safe as they may be, there’s a barrier between the parties that isn’t present in person. With this, miscommunication or misunderstandings happen. On a more technical level, planners need to understand where someone is located. A lot of people relocated during the pandemic and virtual meetings allow them to take calls anywhere — so making sure you’re licensed and authorized to practice/sell/work in that jurisdiction is vital.

Damien Weinstein, far left, partner at Weinstein + Klein PC, says fair contract negotiating is vitally important because it will often set the tone and define the relationship between parties. Photo courtesy of Damien Weinstein

Negotiating Contracts

Damien H. Weinstein, a partner in Weinstein + Klein PC, notes the contract will often define the relationship and set the tone. “As in any ‘sales’ situation, the potential buyer wants to see the fine print,” he says. “And given the sensitive nature, they may be on high alert and inherently nervous, suspicious or event skeptical. The most important issue is having a clear, understandable, and the least ‘legalese’ contract as possible,” he says. “Don’t make the arrangement more confusing or difficult than it needs to be. Clear, concise and fairly drafted agreements can put the other party at ease, encourage closing the deal and avoid delay, distrust or the concerning ‘I’ll take this back and look it over.’”

Disclaimers are one thing that needs to be checked for sure, Weinstein says. “No guaranteed results, figures are based on projections only, nothing is binding until signed,” he says. “Don’t overdo these, since you should stand by your pitch — but make sure that the other party understands the hypothetical nature of some of the information conveyed. Equally important is a disclaimer about uncontrollable events. In the financial world, the markets are outside of our control. Don’t accidentally include language in the contract that suggests otherwise.”

Kim Chan, founder and CEO of DocPro, has more than 20 years of experience providing legal advice to meeting planners. “The most important issue is not how much the meeting planner can charge, but what is the potential liability for planning, supervising and coordinating the activities necessary for the production of events,” he says. “Should an accident occur, it has the potential effect of devastating your business or even ruining you personally if you are conducting your business as a sole proprietor and not a company.”

Generally, the employer or the customer, is likely to be responsible for the action of its employees, and also the safety of the premises it occupies and manages. It is not so clear cut in the case of meeting planners who are not employees and may have some degree of control of the event venue.

“The test to establish occupier’s liability is whether a person has a sufficient degree of control over the premises that they owe a duty of care to those lawfully on the premises,” Chan says. “It is important for the meeting planner to agree with the customer that it is not an occupier. It is not responsible for the control of the premises. Its liability is limited to the amount of fees it received, and if there is sufficient third-party insurance to cover the event. If possible, it is good to get warranties and indemnities from the customer.”

Other legal issues that must be considered, according to Chan, are the completion date of the project and if it can be extended by either party; servicer’s obligations, and what the event planner’s services cover; pre-event consultation, and how it should be conducted; how much to charge for service fees; licenses, permits and/or permissions to provide the services; and the ever-changing cancellation policy. “There should definitely be a COVID disclaimer for the event,” Chan says.

Mark A. Herschberg, author of “The Career Toolkit, Essential Skills for Success That No One Taught You” and professional conference speaker, has seen a lot change since COVID-19 reared its ugly head in March of 2020. “One conference I go to has been going to the same hotel for decades,” he says. “When COVID hit, someone was going to lose money. It was a question of how to split it between the conference and hotel. They could go to what the letter of the contract said based on the date decisions were made. Both sides recognized that they expected to work together for years to come, and in doing so, were less concerned over maximizing this one deal — minimizing their loss in this instance.”

So rather than bicker over the legalities, both parties recognized that, working together, instead of quibbling over a specific dollar today, generated the best outcome. “One way to price in uncertainty is allow for cancellations to become deferments,” Herschberg says. “As a simplified example, instead of a strict 66% refund, 33% refund or [no] refund, depending on how many days out an event is changed, maybe it’s more granular, and any remaining percent is a deposit split for future events over the next two years.” That’s something he thinks should be negotiated and included in the contract so no legal fight ensues if something were to happen.

Jonathan T. Howe, founding partner and president of Howe & Hutton Ltd., has fielded call after call from meeting planners about what’s going to happen with scheduled meetings in the upcoming months. “Bottom line is, you have this conflict between ‘Will I travel?’ ‘Can I travel?’ ‘What does my boss say?’ and ‘What do I say about how I feel about travel?’ The major concern is what is going on in the place I want to go, who else is going to be there and how am I going to plan this,” he says. “Everything is semi up for grabs right now. People want to get out and about and have face-to-face meetings.”

But the impact of COVID and the ability to get to a meeting safely is making that all hard. The airlines have canceled thousands of flights, and that is a concern and can impact who can attend a meeting, which could result in a legal battle over cancellation. “A lot of the insurance companies and financial institutions still have in-place restrictions on the ability of their people to be able to travel,” Howe said. “So, right away, if I’m a savvy meeting planner and I’m looking at what I want to do, I need to find out what the corporate policies may be at this given moment for my meetings in the next 6 to 7 months.”

After all, there were plenty of return-to-office programs scheduled for early this year, but the Omicron variant changed all those plans, with many being pushed out at least a month or two. “It comes down to doing your homework,” Howe said. “The problem is, a lot of these meetings have already been pre-planned, contracts have been signed and planners don’t know their legal options for the contract.”

One of Howe’s mottoes to clients is, “I cannot blame you for bad news, but I can blame you for not telling me.” He continues, “A lot of this comes down to negotiating contracts you may have signed in 2019, and now things are happening in a lot shorter term from the standpoint of booking, and what you want to put in play,” he says. “You need to be aware of your decision points — the dates you need to make a decision going forward as to a go or no-go.”

So, if someone is planning a meeting for 2023 right now, they need to consider the flexibility to renegotiate, postpone or even cancel, and build all of that into the contract. “Don’t assume the contract you saw yesterday is the same contract you are getting today,” Howe says. “Changes are being made. This is not a static industry, and terms and conditions are being adjusted according to the concept of risk. They are going to use the contract in no small part to be the device to limit the risk. If you don’t understand what it means, you better darn sure ask what it means.”

Final Thoughts

One thing the experts agree on is that planners, before signing any contract, should hire an attorney to look it over to protect their interests. “Better to do that upfront before signing rather than after,” Shedlock says. “However, if you find yourself in a situation where you’ve signed a contract and are now trying to undo it, contact an attorney. It may take several weeks’ worth of letters and negotiations, but most venues are reasonable.”

Weinstein has seen scenarios where cut/paste jobs carry over bad legal language from one contract to another. For example, choice of law provisions, arbitration v. litigation, etc. What works for one client may not work for another, so being diligent is vital. “My best advice is review, review and review, then have a lawyer review,” he says. “No two contracts are the same, and even the slightest confusion or ambiguity can have a disastrous impact. For such a foundational document, get professional eyes on the document.”

The financial and insurance industries can be complicated, nuanced and intricate. Don’t rely on stock or form agreements circulating the internet or available for purchase from “professional contract” websites. A little time, and a little expense, can go a long way to getting a contract that works for you. I&FMM.