Home' micenet eMag : micenet October 2017 Contents LEGAL ISSUES | MATT CROUCH
have had a spate of situations in recent
times where clients have got into legal
strife because they over-promised on the
outcomes of the events they were
managing for their clients. The word
“guarantee” is dangerous. It is especially
dangerous when we use it in connection with
our promises to clients and customers – that
is, in our promotional material, pitches for
work, and in our client contracts themselves.
So, I ask you this: Would you be prepared
to guarantee to a client that the sun will rise
tomorrow? I often ask my event management
law students this and a good proportion of
each group answers they would be prepared
to do this. I realise I am being fanciful, but
bear with me...
If you, like most of my students, answered
“yes”, allow me to play the smart-alec lawyer
for a moment. The sun does not actually rise.
The earth spins and the sun appears to rise.
Also, what if there was a heavy overcast sky
and you could not see the sun? Or an
eclipse? Or if you were in a submarine and
could not witness it?
A smart-alec lawyer is just who you will
find is representing your client if your client is
unhappy with your services and is making a
legal claim against you. All of a sudden,
expressions that you thought had obvious
meaning are capable of an entirely different
The point is that words matter. The words
you use to describe your services – in your
Matt Crouch asks whether you would “guarantee” to your clients that the
sun will rise tomorrow. If you do, then you’re asking for trouble.
promotional material, pitches and contracts – matter a lot. When describing your services,
confine yourself to describing what you’ll do, when and, if really necessary, how you will do it.
Avoid describing your services by reference to the outcomes of those services and be especially
careful to avoid promising outcomes where you are not wholly in control of those outcomes.
Consider the PCO who, after reviewing the past several years’ history of an annual
conference, promised (in his contract with his client) that the next conference would generate a
substantial financial surplus. Purely based on history, that was not an unreasonable prediction.
The trouble was, members of the PCO’s client (an association) stayed away in droves
because of a controversy brewing within the association. In addition, the planet was in the grip
of a financial crisis and the anticipated overseas delegates did not sign up. Sponsors did not
materialise. Financially, the conference was a flop and ultimately made a loss. The client pointed
to the contract and demanded that the PCO pay all of the expenses of the conference and cut
a cheque for the promised surplus. A dispute with substantial legal costs ensued. The outcome
of all this is irrelevant – you don’t want this happening to you! So, in practice:
• Avoid using the word “guarantee” in your promises, both promotional and contractual;
• Avoid promising things that you cannot wholly control;
• If you are making promises based on assumptions, be careful to state those assumptions
explicitly and make it clear that your promise is dependent on the assumption holding true;
• Describe the work you will do, not outcomes of the work. For example, avoid promises like:
“at least 1000 delegates will register” or “you will make at least a $50K surplus”;
• If it is not your event, then usually you should state that the client is entitled to any surplus,
but also bears the risk of financial losses – from its own pocket, not yours!
• If you are promising a financial outcome, then I suggest that you are in fact underwriting the
event and should be entitled to a share of the surplus (or saving, as the case may be). The
reward for doing work (ie, providing services), is a fee. The reward for business risk is profit. If
you are basing your remuneration on the financial success of the event, that is, in reality,
taking a risk position on that event, then you should be entitled to a slice of any surplus/profit.
• Sometimes clients will want to impose “KPIs” on your services. Avoid KPIs that involve
promises by you that you will achieve registrations, sponsorship revenues or financial surplus
and if, despite what I have said, you have to, I recommend you allow for a sliding scale so
that failure to meet the targets does not disentitle you to your whole fee.
And if the sun doesn’t rise tomorrow – see you in the next life – or the next issue. m
Matt is the principal of Matt Crouch Legal and can be contacted on email@example.com.
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