Meeting planners spend a lot of time putting out fires and reacting to change. Of course, some fires are bigger than others. A three-alarm headache hit the industry this summer when Event411 went out of business, leaving drop-jawed clients scrambling to replace its online meeting and attendee management services.

Michael Maddalena, partner at Summit Events LLC (www.seonthenet.com), a HoHoKus, N.J., independent meeting management company, was just a few weeks away from the start of a multiwave retailer meeting for Volvo Cars of North America when he got the news. “Janice Whiffen, the [Event411] VP of customer service, who is excellent, sent us an e-mail that said, basically, they'd lost control of their software and their site, and she didn't know when they were going to go down — but that they could go down any time.”

Maddalena was using Event411 for online registration for the Volvo event. The problem was that the registration site was still live, but he didn't know how much longer he'd be able to retrieve information from the system. “I was unable to get any confirmation from Passkey [Event411's primary creditor, which had taken possession of its registration technology and some fixed assets] or any assurances about the situation. To that end, we couldn't rely on the site anymore.”

Maddalena decided to abandon ship. “We asked Janice Whiffen and her remaining technology person to forward any hits to our [registration] URL to our main site. We had our Web posting company in New Jersey put up a banner that said, ‘If you attempted to register for the Volvo SUV launch in California, we've suspended online registration. Call this number … .’ We tried to cut it off ourselves rather than leaving ourselves totally vulnerable.” Summit took registrations via telephone or fax. “No one complained too much,” said Maddalena, who had signed on with Event411 after Volvo requested, as part of an ecological initiative that Summit minimize paper usage. He is grateful that he wasn't doing housing through the system, or taking payments, or registering attendees for complicated educational tracks.

The Next Vendor?

Summit Events wasn't the only company under the gun. The Event411 client list included AlphaMedica, Philip Morris Management Corp., Barclays Global Investors, Diebold Inc., CIBA Vision, and many other smart companies that picked the Marina del Rey, Calif.-based dot-com to play a role in their meeting efforts. In fact, Tempe, Ariz.-based Leadership Network Corp. had started working with Event411 just a year ago after hiring a tech consultant to assess the field of online registration vendors.

“It kind of makes you leery about the other [registration] companies,” says Leadership Network's Sabrina Grile, registration specialist and IS manager, “They all say, ‘We have great service, and we've been around so long, and we have great technology.’ … The initial expense is the scary part because you're going in, you're training, you're paying the money. … OK, so, are you sure you're going to be around?” At the suggestion of her Event411 contact, Grile moved her business to Westport, Conn.-based b-there, but she hasn't gotten over the unceremonious demise of Event411. “It was kind of a shocker. … We got a call on a Wednesday. The next day the only people in the office were my contact and an account rep.”

Should Event411's clients have seen the trouble coming? Could they have protected themselves? And what about the other meeting industry dot-coms? How long will they remain in business?

Maddalena is asking all those questions as he looks ahead to his next online registration provider. “We've been in contact with b-there and [Philadelphia-based] StarCite. Both have offered to do an online demo — I told them that ease of use of the tools is now not the primary consideration on our end, and that we really would prefer to go and meet them. Our decision is not going to be based on whose color palette is more attractive. They're so similar. Some are more powerful than others, but I'd rather to go with a company that has a stable financial future than one that might have an extra bell or whistle.”

Measuring Stability

Maddalena is not completely certain of the yardstick he will use to measure the financial stability of the new vendors, but he expects to ask about their investors and client base. Meeting expert Jed Mandel, partner in the Chicago-based law firm of Neal, Gerber & Eisenberg, says that Maddalena is on the right track. “People ought to be concerned about the financial health of the people with whom they're doing business, and they ought to make appropriate inquiries, at least on a historical basis, as to how they performed, how they followed through, whether they paid their bills, and what their credit rating is.

“If someone is providing a service for your meeting and they fold three weeks beforehand,” continues Mandel, “it doesn't matter if you have some means to get satisfaction in terms of monetary damages; your meeting is killed at that point.” But having said that, Mandel suggests escrow accounts and insurance as ways to improve your chances of remuneration. (See box below.)

Mandel reminds planners that, in addition to taking a legalistic approach, they should not take any vendor for granted. “One of the ways that you avoid last-minute surprises is by having good communication, knowing what's going on, and developing and maintaining relationships with vendors, so that when things start to go bad, they tell you early on rather than surprise you.”

You can't contract for that.

Scott Pollack assessing and protecting

How can you judge whether your vendor is on solid financial footing? Privately held companies don't have to open their books, but you can still ask questions and build security into the contract. Jed Mandel, partner in the law firm of Neal, Gerber & Eisenberg in Chicago, has this advice.

Client references

Ask for references of companies that have used the vendor for meetings of similar size and scope.

Financial references

Ask for bank references. “If they say, ‘I'm not going to tell you where I have my banking relationship,’ it might give someone pause,” Mandel says.

Escrow account

“In negotiating with a company without a known history,” he says, “ask for funds to be escrowed in the way of potential liquidated damages. So if the company … all of a sudden doesn't exist, there's at least some funds set aside for damages.”

Insurance

“You could contractually require the vendor to have insurance covering certain events and naming you as an additional insured, or you can obtain the insurance and ask the vendor to pay. These are all business terms to be negotiated,” Mandel says. “I don't want to suggest that every vendor will be willing to buy your insurance,” he adds, “but if people are scrambling for business and it's part of an overall agreement, someone may be willing to do that.”