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Planners face a host of legal issues as they plan and execute meetings. Here’s what industry legal experts say planners should understand.

Most meeting-related legal issues aren’t specific to the financial or insurance industries; they’re faced by planners and organizations across industries. But there are some instances when meetings within those industries may be more sensitive to issues.

The question as to which legal issues planners should be aware of and understand today is a complicated one, according to Jonathan T. Howe, Esq., president and founding partner of Howe & Hutton Ltd. in Chicago, IL.  “Since emerging from the pandemic, the industry has faced many challenges. What organizations need to do today, is to evaluate the landscape,” said Howe.

Once they do, “service” becomes a key concern, along with the lack of people who can provide it adequately enough to meet planners’ needs. “Think for a minute about the whole issue of housekeeping, catering and other high-intensive areas requiring personnel,” he said. “Unlike in previous eras, the need for performance clauses is now much more imperative. Questions of price, contract negotiation and availability have tightened. Now more than ever, the laws of supply and demand are totally in effect as to bargaining and negotiating positioning. To protect yourself, you must understand the territory and what your specific, vital needs are for a successful event.”

Since the pandemic, he has identified that the lack of staffing correlates with a general shortage  of people in the industry who are trained or experienced, which results in the necessity of a degree of “handholding” on both sides. Moreover, while there’s an increasingly greater need for good negotiating,  the clauses mandated by the legal departments of many hotels are making negotiating much more difficult, and concession by hotels harder to come by.

Room blocks are another area of concern. Planners have become far more conservative in booking room blocks than before. In the past, the focus was more about “slippage” and how to reduce the number of rooms blocked. Howe said, “Today, planners are booking less rooms, then providing for potential increases as time goes by and evaluations are made.”

Health and safety have always been areas of concern, but  that has increased because of today’s rising crime rates. “Safety has expanded to health and safety. Due diligence on the part of the planner to determine what risks might be involved at the venue is key,” he said. According to him, planners should evaluate their specific needs and retain the services of a security consultant to overcome any challenges and help planners protect the property, as well as the safety and health of their attendees. “That,” he added, “is part of the planner’s attention to the duty of care.”

Concerns about hotels fulfilling their contracted obligations is a perpetual problem, he noted. “It comes down to what is the legal damage that can be enforced, and the remedies obtained. The most important thing here is an adage I’ve been preaching for years: ‘I cannot blame you for bad news, but I can blame you for not telling me.’ That coupled with a person who writes their own contract is a lawyer’s best friend. Get legal help before you sign, not after. The sooner you can share what may be a possible problem, the faster and perhaps the easier you can resolve it.” Resolution may not be mutual satisfaction for both parties, he added, but it can avoid but a total crisis.

When it comes to negotiating, the biggest mistake planners make is not fully understanding what they’re negotiating. “Too often, we have terms put into agreements that neither side really understands. If you don’t know the meaning of a term, ask,” Howe said. “In this environment today, good legal advice is an investment that should be made with a lawyer who is knowledgeable in the industry and understands your needs.”

Howe’s primary tips for planners to appropriately address or avoid legal issues is simple: “Know what you’re getting into. Know your product. Recognize what you don’t know and get help.”

Lisa Sommer Devlin, Devlin Law Firm P.C. in Phoenix, AZ, lists the three most significant issues facing planners. Agree on the following:

1. A room block and space commitment.
2. Damages that will be owed if a group cancels or does not perform.
3. The process for resolving disputes that arise between the parties.

The pandemic also affected cancellations and the rescheduling of meetings. “When events literally could not happen during the pandemic, hotels were willing to reschedule/rebook. Now that there are no event restrictions, those rebooking agreements are no longer happening. A rescheduling is a cancellation, except when the event could not have taken place due to the pandemic restrictions on meetings,” Devlin said. For new bookings today, pandemic-era cancellation allowances are a thing of the past.

As attendees have become less predictable, shifts have been made to room-block needs, too. According to Devlin, in contracts, planners should negotiate time periods for releasing rooms in advance of the event. “While a hotel is not legally required to renegotiate the block, a hotel is more likely to work with a group if the rooms are released earlier than later,” she said. “You can build that into your contract.”

However good a contract is, it can be canceled by either party. The question then becomes who owes what to whom in damages. For example, what can planners do if a hotel doesn’t fulfill its contracted obligations and concessions? What if a hotel cancels a meeting and the planner must move it to a different hotel?

“Either party always has the right to cancel a contract but will owe damages to the other party if it does,” Devlin explained. “Hotels understand that if they cancel a group, they’ll owe them the additional expenses incurred in moving the event. Hotel management has a responsibility to the owner to maximize revenue, so if the hotel gets an opportunity to do so that will require cancelling a group already on the books, it will do so. These cases usually settle quickly because the hotel acknowledges its obligation.”

As for bad service, Devlin encourages planners to be proactive. “Meet with hotel department heads before the event to determine if there are any issues that might impact service and prepare for alternatives. Once on-site, as soon as there’s an issue, bring it to the attention of your convention service person and the hotel’s general manager. Document your concerns in writing or email. If they’re unable to correct the issues during the event, they’ll negotiate an appropriate credit to the master account. The only time I’ve seen lawyers have to get involved is when the group waits to raise complaints until after it gets the master bill,” she said.

The main mistake planners make when negotiating contracts is not putting in the time and effort necessary. The devil, as the saying goes, is in the details. Some things to consider, according to Devlin, are the following: Are your days and dates matching? Is your math right? Are your terms clear and unambiguous? Do you have duplicative or conflicting clauses? Are you relying on an ‘addenda’ or similar document to try to get the terms that you want rather than negotiating one complete contract with the hotel?

Legal clauses in contracts can be difficult to understand and planners shouldn’t hesitate to use trusted resources to help them fully understand wording, terms and clauses. “Be fair. When looking at clauses, ask yourself how you would feel if you were the hotel,” she added. “Are you putting too much risk on one side or the other? If you’re asking for a particular clause (renovation, competitors, etc.), explain to the hotel what you’re concerned about and make sure the clause addresses that concern. Many clauses don’t actually meet the needs or concerns planners are trying to address.”

Joshua L. Grimes, Esq., Grimes Law Offices, LLC in Bala Cynwd, PA, has a different set of legal issues he sees at the forefront of planning today. Here are a few:

• The impact of state laws on the safety and welfare of attendees. “For example, Florida law making it a criminal offense to use a restroom of a gender other than a person’s gender of birth can lead to arrest of an attendee, in addition to forcing attendees into uncomfortable situations in restrooms at the meeting venue,” he said.
• Other groups and organizations sharing the meeting venue. “It’s increasingly an issue for groups that another organization using another room in the same venue might be controversial, or even a competitor to your group,” Grimes said. “Another group in the venue might have a certain social message or include a speaker that attracts negative publicity. It can no longer be assumed that host venues are filtering out these issues.”
• Increasing costs. “This includes new and higher service charges, costly food and beverage and higher penalties for attrition and cancellation — even force majeure cancellation,” he said, adding that planners need to watch for potential charges and push back when appropriate. And while he agreed that most legal issues are not specific to the insurance and financial industries, he said meetings of those industries might be impacted in ways other meetings are not.

“These legal issues are shared by financial and insurance meetings and most other meetings,” he said. “But financial/insurance meetings might be particularly sensitive to the issue of controversial or competitor groups meeting in their venues. The key to resolving these issues is by incorporating sound contracting provisions in meeting contracts. Planners should also be insistent on protecting their organizations whenever necessary.”

Grimes has noted that since the pandemic, hotels and venues have created contract provisions that seek to tip the scales against meeting groups, potentially costing those groups much more in terms of expenses and fees. “Venues routinely seek to limit the circumstances that would allow a force majeure cancellation,” he said, “so even the worst of Covid might not allow the group to cancel without liability in a contract drafted by a hotel today.”

On the room-block issue, Grimes suggested planners “commit to a smaller number of rooms today, with an option to add more rooms at the group rate later.” Or, he said, “Commit to a larger number of rooms in the contract, with an option to reduce by up to a predetermined percentage several months before the meeting.”

Like Devlin, Grimes encouraged planners faced with a hotel not honoring its obligations to first raise the issue with the hotel and ask them to address the problem. “If the hotel still doesn’t act appropriately, a lawyer might intervene,” he said. “However, a good contract will anticipate that a hotel might not fully perform and allow for a reasonable amount of damages to compensate for a default. There’s no way to compel a hotel not to renege on a contract provision; the issue is how much the hotel would pay for doing so.”

Echoing others, Grimes noted that the biggest mistake planners make when negotiating contracts is not carefully reading and understanding the contract, before signing. “Too often they don’t enter into negotiations with a viable alternative location for the meeting, so they have no real bargaining power,” he said. “It’s critical to enter into negotiations with the ability to say no if the hotel isn’t reasonable.”

Ask yourself if there is anyone among your attendees that local laws might affect. Grimes said there are multiple ways that state laws could put an attendee in danger, most of them are things planners would never have had to think about before, such as the aforementioned transgender law.

“Other laws make it a criminal offense to assist or employ an undocumented person and allow a private lawsuit against someone accused of ‘aiding and abetting’ a woman getting an abortion,” he said. “These laws can make someone a criminal and/or subject them to a lawsuit for everyday acts.”

“There are no longer restrictions in many areas on bringing firearms into venues. This can increase risks, particularly when alcohol is served, or controversial topics are involved. Planners need to anticipate these issues and ensure the safety of the meetings and attendees in the contract,” he added.

Grimes has three tips planners should consider:

• Read a proposed contract offered by a hotel or venue carefully and understand the terms and their implications.
• Approach contract negotiations with a viable alternative so you can retain bargaining power and take the meeting elsewhere if you don’t reach acceptable terms.
• Make sure you select a meeting location that would not subject your attendees to lawsuits or undue risk of arrest.

Tyra Warner, PhD, JD, CMP Fellow, Chair for the Department of Hospitality, Tourism and Culinary Arts at the College of Coastal Georgia, points out that any issue can become a legal issue if it’s analyzed in the context of contracts or liability. Three big things  affecting meetings today are inflation, staffing shortages and “the never-ending quest to define force majeure.”

According to Warner, inflation is causing the price of goods and services to rise and affecting those areas of meetings contracts where prices are not locked in at signing, such as catering menu prices.  She said, “Food and beverage inflation is even higher than inflation for other goods and services, so typical escalation clauses (today’s menus plus 3% per year) are not being accepted as readily as they were.”

She added, “Inflation is also affecting deposit amounts and schedules because the person who holds the money the longest, wins. Having the money in hand reduces the risk that the other party will be insolvent or bankrupt; it also helps with cashflow.”

Warner said financial and insurance meetings might be more inclined than most to avail themselves of special escrow services available to the meetings industry to hold deposits.

Staffing shortages, of course, are seen across the industry but planners are — and should be — especially concerned about shortages or percentage of brand-new staff at a property and how that will affect the quality of service. “This is an issue that can be addressed in contracts,” said Warner. “Savvy planners may also change the nature of some program elements if they’re not confident in reduced or newly hired staff to make it happen.”

As for the force majeure clauses, she said, “This continues to be a mystery for many and figuring out when it does or doesn’t apply is a major-league sport.

“Covid brought a fresh perspective to the application of force majeure in terms of when the virus makes it ‘illegal or impossible’ (or ‘impracticable’ if the contract language includes that) to hold or host the meeting. The fact that Covid exists is not a force majeure, but when cities and counties pass ordinances forbidding public gatherings of more than X people, those ordinances make it ‘illegal’ to hold a meeting for more than X people.”

She added, “Other legal issues are centered around what a business, a hotel or convention center,  could require of attendees staying within its walls and what happened if the group wanted more or less strict requirements for its group.”

Groups are being challenged. “Planners want to be sure they can terminate the contract without liability in case of a major safety or security issue — war, political unrest, riot, etc. Indemnification plays a part here as well, as it holds responsible for any damage or injury the party that had control over the instrumentality that caused the damage or injury.  Indemnification is one of the least understood, yet most important, clauses in a meetings contract,” Warner said. She would like to see planners contracting for things like the hotel’s disclosure of their safety and security plan, an agreed walk-through of the evacuation plan on-site and a safety and security checklist of information for the hotel to fill out before the contract can be signed.

Also important are those attrition clauses when it comes to negotiations around room blocks. “A favorable attrition clause will help but is difficult to negotiate in this market,” she said. “A strong meeting history, a conservative room block, a clause that allows the planner to increase or decrease the room block by X% or Y rooms at some specific time before the cut-off date, releasing rooms back to the hotel as soon as they appear not to be needed, and a credit for resale clause is a winning combination of strategies. It is not perfect, but it attacks the problem from all angles.”

When faced with a hotel not fulfilling concessions and contracted obligations, having a lawyer on hand and addressing the issue in the drafting stage of the contracts is strongly recommended. “Too often there’s language that says, ‘The hotel will provide X, Y and Z.’ But there’s nothing indicating what happens if the hotel fails to provide X, Y or Z, or all three. Adding the hammer clause — the consequences — upfront, gives the parties a recourse if a hotel doesn’t fulfill contracted concessions/elements. It can be a discount on the master bill, a waiver of attrition, a free continental breakfast for the group. Whatever the group decides will make it whole is acceptable to use, as long as it isn’t of more value than the concession/element it’s making up for,” said Warner.

Not knowing how to negotiate a contract effectively can be a problem. For example, having a handful of ‘must-have’ clauses and not understanding contract language well enough to negotiate and modify their clauses or the other party’s clauses to reach a mutually agreeable version. It’s not enough to have language. You need to understand it.

To planners, Warner said, “Now, more than ever, bring a strong meeting history to the negotiating table if you can; it helps reduce the risk for the supplier and that can only help planners.”

She added, “Be clear on your ‘must-haves’ upfront, such as you’re not willing to hold your meeting at a hotel unless attrition is calculated on a cumulative basis, you earn 1:50 comps, you get the presidential suite over and above for five nights, or whatever it may be.”

A negotiation “implies give and take. Figure out what you can give up and still have a satisfactory result,” Warner concluded.   I&FMM