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1 Hotel Sales and Ethics: Avoiding the Slippery Slope Steve Rudner Steve Rudner Lisa Sommer Devlin
2 States t Adopting the ABA Model Rules Alabama Alaska Arizona Arkansas Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virgin Islands Virginia Washington West Virginia Wisconsin Wyoming
3 Rule : Advisor Counselor Rule 2.1 Advisor In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client's situation.
4 Candid Advice Hotel client knows that damages must be reasonable Wants to have amount that is too high (i.e. 100% of catering revenue) Argues that customer always negotiates after cancellation Some customers pay without dispute (weddings) What should the lawyer advise?
5 Moral, Social, Political l factors Customers ask for clauses requesting right to terminate due to objectionable bl laws AZ SB 1070 NC Bathroom law Is it right as lawyer for the customer to encourage placing the burden on the hotel?
6 Rule 3.1: Meritorious Claims & Contentions ti Advocate Rule 3.1 Meritorious i Claims And Contentions ti A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law
7 Basis in law or fact Customer insists in negotiating cancellation clause: I know you ll resell these rooms Meeting is being booked in Oct. in NY hotel likely WILL resell guest rooms, not food and beverage Hotel suggests unreasonable cancellation scale, customer (a law firm) does not object After cancellation, lawyer says, I know hotel resold these rooms While irrelevant under the law or contract terms, you know that rooms were resold
8 Rule 4.1: Truthfulness in Statements to Others Transactions With Persons Other Than Clients Rule 4.1 Truthfulness In Statements To Others In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.
9 ASSIGNMENT AND RE-SALE CLAUSE Hotel contract contains a clause which says that the group will not re-sell the contracted t room nights. Group signs the contract, and its lawyers know that the group is a reseller of room nights, for the Super Bowl, which fact it has not disclosed to hotel. Is that an ethical violation? Hotel finds out about the situation and seeks s to invalidate contract. Lawyer insists still that group will not resell. Is that a further violation?
10 AMERICANS WITH DISABILITIES ACT Group asks Hotel for a contract clause in which Hotel affirms that it will comply pywith the ADA. Not all areas of the Hotel are accessible; hotel s non-accessibility is permitted because it meets the grandfather provisions of the ADA. Though the Hotel is not accessible, it complies with the ADA. Must the hotel disclose this issue? Group asks Hotel for a contract clause in which the Hotel affirms that it will comply with the ADA. Group will have attendees who are hearing impaired and who will not be able to hear the speakers without assistance, which is the group s responsibility. Group s clause allows it to argue that the Hotel has assumed the responsibility for providing this assistance. Is that ethical on the part of the Group? What should lawyer do if lawyer was not involved in the contract What should lawyer do if lawyer was not involved in the contract negotiation but finds out later?
11 WALK CLAUSE Hotel agrees to a clause pursuant to which it agrees to the damages that t it will pay if it walks group s guests, knowing that the damages it would owe for breaching that clause are exactly the same damages it would pay even without the clause. Does hotel have the obligation to disclose that to the group? Hotel agrees to a clause that say that it will not walk group s guests, knowing that it is impossible to guarantee such commitment. Does hotel have the obligation to disclose that to the group?
12 CHANGE IN MANAGEMENT/OWNERSHIP Hotel knows that after the contract is signed, there will be a change in ownership and/or management. Does the hotel have an ethical duty to disclose?
13 Confidentiality Customer requests onerous clause that hotel will never follow. Customer insists terms are deal breaker
14 PERSONALLY IDENTIFIABLE INFORMATION Group asks for, and hotel agrees to a clause, pursuant to which h Hotel agrees it will only use guests personally identifiable information in order to fulfill its obligations pursuant to the Group sales contract, knowing that will not happen. Is hotel acting ethically? Group asks for a clause requiring hotel to purge PII of group attendees from hotel systems after departure. Hotels knows it will not, and cannot do that. Group insists, so Hotel accepts clause. Is Hotel acting ethically? What should lawyer negotiating contract do?
15 Lowest Rate Guarantee Group asks for a lowest rate guarantee clause. Group s own failure to reserve its contracted t rooms causes excess supply at the hotel, as the result of which hotel must lower its rates, allowing group to take advantage of the lowest rate guarantee as the result of its own failure to perform. Knowing that to be the case, is it ethical for group to contract for more rooms (with higher permissible attrition) than it will need?
16 Liquor Liability Hotel agrees to be liable for claims arising from its service of alcoholic li beverages, knowing the Group believes it is taking reasonable steps as the result of the clause to guard against claims. Hotel knows people can order alcoholic beverages from room service, and that the minibars contain liquor or liquor can be purchased in the hotel gift shop. Is Hotel s conduct ethical?
17 A Lawyer s Creed of Professionalism of the State t Bar of Arizona I will be courteous and civil, both in oral and in written communication; I will not knowingly make statements of fact or of law that are untrue; In business transactions I will not quarrel over matters of form or style but will concentrate on matters of substance and content; I will identify clearly, for other counsel or parties, all changes that I have made in documents submitted to me for review.
18 Identifying i changes Customer or lawyer makes changes but does not track Does lawyer have obligation to do compare document on every document sent as final?
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