Closing the Deal: Are Your Words Part of a Well-Crafted Sales Pitch — Or Do They Border on Fraud and Misrepresentation?
Featured in Landman, March/April 2019
CONSIDER THE FOLLOWING SCENARIO:
Katie, a new landman, goes with her mentor, Carter, to visit with prospective lessors — the Keesons. Katie is caught off guard when the meeting turns into a high-pressure sales pitch.
Carter is determined to get a signed lease in hand. When the Keesons say they need more time to think about what it will mean for them to lease their land for oil and gas development, Carter pounces. He exaggerates the potential income, assures them that drilling operations (and, therefore, royalty payments) are just a few months away and implies a sense of urgency to sign, carefully choosing his words to insinuate all the neighbors have signed leases.
Once they are back at the car — and out of earshot — Katie confronts Carter and tells him that while she’s grateful for all he has taught her over the last couple of weeks, some of his tactics make her uncomfortable. She has noticed that Carter adjusts his approach based on the landowners’ knowledge of the leasing process and what he suspects motivates them. For example, the Keesons seemed motivated by money, so he played up financial benefits like quick cash from the bonus and rapid returns from the royalties.
Carter thinks his approach is simply savvy sales techniques to get a lease signed. After all, he didn’t tell the Keesons exactly how much royalty they could expect and he didn’t actually say their neighbors had signed. He can’t help what they might infer from the conversation. “You need to get one thing straight, Katie: This is a sales job,” Carter tells the young landman. “This job is about doing whatever it takes, and that’s exactly what I’m showing you.” Now what should Katie do?
On-the-job pressures to perform — whether it’s taking leases, meeting deadlines or just wanting to “measure up” at work — can be strong motivators and drive our behavior. They can also impact our ability to make good choices.
In his zeal to get results, Carter chose to disguise the truth and employed overstatement, distortion and inference to mislead the landowners. Since his intent was to misinform and manipulate, Carter’s conduct was unethical.
Katie, a new landman, is in an uncomfortable and awkward position. She’s new to the job, anxious to learn and make a good impression, but she’s witnessed a more senior employee — her mentor — engage in behavior that she sees as inappropriate at best and devious at worst. To complicate matters, she now has directly observed apparent ethical misconduct by another AAPL member. Coming forward would not only jeopardize her relationship with a co-worker, but it also could adversely impact her employment.
However, failure to disclose is itself a violation (Standard No. 9) and could result in sanctions if she does nothing. Her only choice is to report what she witnessed.
Landmen have a solemn obligation to “present an accurate representation in [their] disclosures to the public” (Standard No. 13). Carter’s decision to conceal or misrepresent the truth in his communications with the landowners clearly violates this standard.
Choosing a dishonest or unethical approach to meet a work-related objective — in this case taking a lease — is wrong. Being unethical for the sake of expediency is not an option and never appropriate.
The conclusive test for establishing misconduct and/or fraud in this context is whether the landman, by act of omission or commission, intentionally misled or misrepresented facts with the intent to deceive — and the landowner relied on that information to make decisions. In this scenario, overstating or distorting the truth in an effort to manipulate prospective lessors was deceitful — and unethical.
AAPL Standard No. 2 requires members to “protect the … public … against fraud, misrepresentation, and unethical practices … which could be damaging to the public or bring discredit” to our industry.
By choosing to disguise the truth and using exaggeration, distortion and inference to mislead the landowners, Carter violated his duty (spelled out in Standard No. 3) to “protect and promote the interests of his employer” and to “act in an ethical manner.”
In addition, according to Code of Ethics Section 1, the “Land Professional, in his dealings with landowners, industry parties, and others outside the industry, shall conduct himself in a manner consistent with fairness and honesty, such as to maintain the respect of the public.”
Misrepresenting, obfuscating and/ or deceiving prospective lessors is inconsistent with fairness and honesty. What you communicate to the public matters. Choose your words carefully and make sure your intent is always above reproach. Your actions reflect not only your own reputation as a professional, but they also represent your employer, your fellow AAPL members and our entire industry.
Standard No. 2: It is the duty of the land professional to protect the members of the public with whom he deals against fraud, misrepresentation, and unethical practices. He shall eliminate any practices which could be damaging to the public or bring discredit to the petroleum, mining or environmental industries.
Standard No. 3: In accepting employment, the land professional pledges himself to protect and promote the interests of his employer or client. This obligation of absolute fidelity to the employer’s or client’s interest is primary but it does not relieve the land professional of his obligation to treat fairly all parties to any transaction, or act in an ethical manner.
Standard No. 9: If a land professional is charged with unethical practice or is asked to present evidence in any disciplinary proceeding or investigation, or has direct knowledge of apparent unethical misconduct of another member, he shall place all pertinent facts before the proper authority of the American Association of Professional Landmen.
Standard No. 13: The land professional shall at all times present an accurate representation in his advertising and disclosures to the public.
View APPL’s Standards of Practice in their entirety at landman.org.