By Matt Crouch, principal, Matt Crouch Legal
In this article, legal expert Matt Crouch talks what Covid-19 has taught us from a legal point of view, and the next steps event professionals should take.
Post-bushfires, which, we mustn’t forget, took a terrible toll, especially on regional events, the events sector has now lived with that nasty little strand of viral DNA for more than nine months. What have we learned? What has changed? Where to next?
That little chunk of DNA will be here for some time yet. It is a resilient little bugger and the white-coats are saying that effective inoculation may be a good while off. And all this may be a warning shot as to what we might expect to see more often in the future. The world is rapidly demonstrating that the notion of “six degrees of separation” may be under-selling our true, global inter-connectedness.
What have we learned? Just as the pandemic has illustrated that, as the cliché has it, “we are all in this together” biologically, it is also very clear that we are all in this together economically, especially in the events sector.
A venue plays hard ball and insists on relying on its old, narrow force majeure clause, where losses lie where they fall. An association is unable to hold its annual conference and does not get a refund from the venue. The association is now insolvent and must consider submitting to administration or liquidation. Association staff lose their jobs. All of the other contracted suppliers also miss out – the AV supplier, website developer, conference app provider, cleaning company, security people, entertainers, food and beverage suppliers, secondary venues such as restaurants, tour-guides, transport providers, accommodation facilities – they all lose an important job. And sponsors, exhibitors and speakers miss the opportunity to promote their services and products.
For some, this may be the tipping point for their own insolvency, voluntary administration or liquidation; for others, it will mean shedding staff. Those that lose their jobs now have less, or nothing to spend. The circular flow of income contracts. Fewer and fewer have the financial resources or the confidence to spend money on attending or sponsoring events… and the dominos fall.
How utterly depressing!
The good news is that from where I sit, we have learned a lot about playing co-operatively in the sand pit. I use the example of venue contracts because the venue is the biggest cost for most events. Most venues, I am happy to say, have been wonderfully understanding and co-operative – they have listened to and negotiated on proposals for postponements, and to convert events into hybrid (part face-to-face and part virtual) arrangements. We must remember, the venues have also been hurting financially. But it only takes one or two stick-in-the-muds, and the dominos start falling.
Lesson one that we have learned is the need for flexibility and understanding with each other, not just in terms of biological and mental health, but in business too. This spirit of co-operation must endure!
The business health of us all depends on it. How great would it be if the current spirit of co-operation continued well past the demise of that nasty little strand of DNA?
What has changed? Our understanding of frustration of contract and force majeure – and I include myself in this – has undergone a huge leap. Old, narrow contract provisions that simply call everything off, and allow losses to “lie where they fall” are no good for anyone. Those who dig their heels in and insist on enforcing their old -style force majeure clauses may make short-term windfall gains, but they will lose business and clients, big-time, in the medium and longer terms.
Recalcitrant venues and others will lose clients, both to insolvency and, more broadly in the post-pandemic future, due to the reputational damage they will suffer. Events sector participants will have long memories – and they will talk!
Where to next? As you might expect, I have been doing a lot of work for event managers, PCOs, associations and other event industry participants, reviewing and negotiating existing contracts (especially with venues) and updating contracts for future use.
The three “Cs” – Contracts, contracts, contracts. They are your front-line tools for managing the variety of issues that have confronted us throughout 2020. If you still have not found the time or resources to review and update your contracts, you will find yourself behind the game in the foreseeable future.
All PCOs and event managers needs to review their delegate registration terms, sponsor and exhibitor agreements, and client contracts – the sooner the better! All event sector suppliers need to review their terms of trade. And all event sector participants need to have sharp eyes (when they review supplier contracts – in particular, venue-hire contracts) to spot unsophisticated force majeure and cancellation clauses, that do not provide for postponements and refunds if events cannot proceed as intended. And be prepared to negotiate!
There’s no doubting that horrid little strand of DNA has caused a lot of misery and sadness. However, I firmly believe that if we can remember the lessons we have learned – and retain a positive and, above all, flexible approach – the events sector will emerge so much the stronger, and better equipped to handle the next “annus horribilis”, whenever that should befall us.