[author: Jonathan Armstrong]
Corporate counsel increasingly have a role to play in helping their corporations plan for the unusual. Some of the issues being faced in London this year are illustrative of those issues others will face when planning around future major events.
The Olympics As Example
The Olympics will run from July 27 to Aug. 12 with venues all over London, together with events like football and sailing outside of the capital. There are likely to be significant extra visitors to London, not just those visiting the events themselves, but armies of hospitality staff, security personnel, media, sponsors and hangers-on. There is no doubt that the Olympics will be a spectacular event and London will welcome visitors from around the world. For most organizations, however, planning is essential. Among the planning tasks to be included are those in the following areas.
This is likely to be significantly more expensive during the Olympics, and there are already rumors of some restaurants increasing their prices to meet higher demand. For those fortunate enough to be entertaining at the Olympics proper planning needs to be undertaken to avoid committing an offense under the Bribery Act 2010, which covers giving and receiving hospitality. Unlike equivalent U.S. legislation, there is no need for public officials to be involved — offenses can be committed under the Act even when one company executive invites another. In fact, offenses can be committed even if neither the giver nor the recipients are UK citizens. Given the prices of official hospitality packages, planning should include looking at guest lists and checking the motivation behind the hospitality being offered. Accepting hospitality is also under the scope of the Act, so if you have employees being entertained at the Olympics, you need to do those checks too.
When the UK bribery legislation was introduced, the Ministry of Justice (MoJ) made it clear that hospitality is fully within the ambit of the new law, saying, "Hospitality and promotional expenditure can be employed improperly and illegally as a bribe." It seems to be the view of the UK government and the prosecutors that hospitality is often just the first act in a bribery play. For example, one of the prosecutors said during the implementation process that hospitality is “used … to groom employees … into a position of obligation and thereby prepare the way for major bribery." The MoJ's guidance also says that the sector of business shouldbe taken into account. What is viewed as normal entertaining in some industries would likely appear lavish in others. The guidance also explains that travel and hospitality connected with the service offered is unlikely to be prosecuted — again showing the importance of working out the exact purpose of the hospitality and the itinerary for the trip.
Aside from the Olympics, the more general point is that when planning for major events, corporations can no longer assume that U.S. law on hospitality is the toughest. While the Olympics may be the first event to put the spotlight on hospitality, pressure groups, regulators and shareholders have a real focus on hospitality and proper planning is needed to ensure that allegations of "junketing on the firm's expense" are avoided.
Use of Social Media
It is likely that employees' use of social media and their personal Internet use will increase, partly through a desire to follow events and partly (for those based in the UK) to keep up to date with travel issues affecting the journeyhome. Employers may want to review their social media policies, look at a central Intranet portal for travel news, and possibly relax elements of their policy for the period of the games. In addition, it may be a good time to remind employees of the special restrictions that exist during the Olympics on advertising (seebelow and of the need to have transparency on Twitter and Facebook when talking about your products or services. In the UK, as in the U.S., the regulators are investigating companies whose employees used social media to promotetheir products without disclosing their relationship with the company.
London's public transport was an element of the Olympic bid, which scored poorly in the IOC’s initial evaluation. However, significant improvements have been made since London won the bid in 2005. Large corporations that need its employees to travel around London have been looking at contingency plans, but some of those have a legal impact too. As just one example of the legal issues in this type of contingency planning, in London, one alternative might be the recently introduced and highly sophisticated cycle hire scheme known locally as the "Boris Bikes." The bikes saw a considerable increase in activity during earlier transport strikes but, disproving the common saying, it seems that many users had forgotten how to ride a bike in the 30 years or so since they left school. For businesses contemplating advocating cycle use, it's important to prepare. This may include making provision for cycling proficiency courses and allocating space for bike and helmet storage. Employers could also consider taking the longterm hire of bikes for employees. There are, however, employment and health and safety considerations in providing equipment. On a cultural note that the terms "office bike" and "office bicycle" should be avoided.
Working from Home
For many organizations, telling staff to work at home may be the answer to transportation difficulties. Be aware, however, that this is likely to have security implications. It is unlikely that employees will have a home Internet connection as secure as your corporate network. If they are using their own laptops or transferring information to home computers using e-mail or USB sticks, be aware of the data security risk and consider whether you need to offer employees additional support, for example virus protection or a security application like Computrace, in case their laptop is stolen. Data protection legislation in Europe and security breach legislation in the U.S. makes an organization responsible for the security of the personal data it holds. You might want to make special provisions for employees who are dealing with more secure data, for example you might want to prohibit online corporate banking from home. You may also need to check software licences, as some may prohibit use of devices that are not part of the corporate network. If you are encouraging home working look at the capacity of your network. For example if your employees are going to access the corporate network over Citrix, make sure that you have enough licenses inplace and if you do have limits on your infrastructure consider telling employees outside of the area where the event is taking place that you would like them to work in the office to free up Citrix capacity for those users who have home working priority for the duration of the event.
Mobile bandwidth may also be an issue. As phones gets smarter and new devices like iPads enable us to use more and more bandwidth to do more and more things while mobile, the London mobile infrastructure has struggled to keep up. Providers are investing in adding capacity to the network but it is now a race against time, particularly as the demand for mobile access generally continues to increase. Last year's prolonged BlackBerry outage in London and the 7/7 terrorist bombings have taught people in the UK that coverage cannot be guaranteed. Companies that may need emergency access to their employees should consider contingency plans, which could include issuing them with SIM cards from an alternative provider, and establishing a reporting procedure using landlines or face-to-face reporting if coverage goes down.
Advertising and Marketing
Be aware that specific regulations exist for the Olympics to prohibit ambush marketing. The organizers issued special guidance in April 2010 on their special powers. As with previous Olympics, there is tightened trademark and copyright protection for Olympic symbols, words and logos. In addition, special laws deal with street trading, ticket sales and the unauthorized use of Olympics tickets as prizes in promotions. Coupled with that, UK law protects sports personalities who have been featured in marketing campaigns without their consent. In one case, for example, a Formula 1 driver recovered damages after a radio station implied that he endorsed their coverage. If you are planning an event-related marketing campaign, make sure that it is compliant. While the Olympics protection is perhaps the most well-known example, similar protection does exist for other sporting events and ticket regulations for many more minor events will also include restrictions on ambush marketing.
As with any good contingency plan, the primary solution is to think through what your business needs and how the event might impact on your ability to do business. You might have capacity in other offices in other locations that you could use on a temporary basis. You may be able to manage your customer relationships, for example by with the Olympics by sending out July invoices earlier to avoid capacity issues at the end of July, which will also be the start of the Olympics. As with any event, lawyers don't want to be seen to be spoiling the fun. Proper planning, however, is essential to ensure that we can all sit down and enjoy the event safe in the knowledge that we’ve done our best to plan for the event and safe in the knowledge that we have alternate plans should events take a different turn. To stretch the Olympics analogy contingency, planning in itself can be likened to a multisport competition like the decathlon. It requires many and varied skills, training and persistence. For many counsel however their core attributes, including their ability to gather facts and respond quickly, make them essential members ofthe team.
Jonathan P. Armstrong is partner in the London office of Duane Morris LLP. A member of this newsletter's Board of Editors Armstrong practices in the area of corporate law with a concentration in technology and compliance, counselling multinational companies on matters involving risk, technology and compliance across Europe.