How One Attorney Canceled Her Regus Office Lease Contract

Regus is the largest provider in the world of "flexible office space." It leases virtual offices to business owners who need things like a business address, a place to occasionally meet with clients, and a receptionist to answer the phone.

Most Regus customers therefore actually share the same office space and attendant resources with other Regus customers (called "Regus members").

Have issues with your Regus contract? Talk with one of our Regus experts to learn exactly how you can resolve your issues and leave Regus.

Unlike a standard office lease in which you might have one or two tenants per space, Regus office spaces are sometimes overbooked because it is hard to predict when each of a space's, say, one hundred simultaneous tenants might need to use a given resource. This uncertainty of resource availability reminds me of the disastrous bank runs of 1930 and 1931, which led to the Great Depression. That might strike you as a Debbie-Downer analogy to make, but you should remember that Regus leases space to business owners who probably depend entirely on their business for their livelihoods. If a business owner needs to use a Regus resources that he/she contracted for, but that resource is not available, this could have a massive, adverse affect on that business's ability to operate and, in turn, that business owner's ability to earn an income.

A Regus member's ability to benefit from his/her membership is undermined when Regus leases the same space to too many people. For that reason, a Regus member is probably not expecting that he will not be able to get what he pays for when he decides to sign a contract with Regus for office space. For if he were expecting this, then why would he sign the contract at all?

This--missed expectations--probably explains why there are so many negative Regus reviews on sites like TrustPilot and Yelp (and even one site dedicated exclusively to rants about Regus). Heck, one former Regus member, Shilo Burt, was so moved to write about her bad experience with Regus that she published it on her personal LinkedIn blog with the title: Regus Review: Stay Away!

Note the stats on this post: almost 2,500 views!

It is clear that there are a lot of people who feel wronged by Regus.

But what is hard to find is someone who actually figured out how to do something about it--how to actually get out of an unwanted Regus contract. And that is why I decided to write this post, because...I found someone.

She is an attorney in California, and we will call her "Hannah." She figured out how to get out of her Regus lease contract early, which saved her $4,459.

This is why, in her own words, Hannah, a former Regus member, decided that it was time to break-up with Regus:

Strike 1

Strike 2

Strike 3

Strike 4

(something I had to invent just now to keep Hannah's litany of gripes organized)

Strike 5

(which, again, is not actually a thing)

Hannah--an attorney, remember--tried at first to resolve these issues with the office manager. She emailed the office manager and asked to schedule a call with him. He replied to say that he was too busy for a phone call and that Hannah should just ask her question via email (he was printing stuff for other tenants, most likely). She replied back to say that she had found another office and would not need to renew her lease when it expired later in the year, and she also asked if she could somehow downgrade her membership since she would no longer be using the Regus office space at all (Regus should have taken that offer, as you will see in a minute). But the office manager told Hannah that he could not offer any sort of downgrade, which meant Hannah would be required to pay $3,861 for the remaining duration of her Regus lease that she would not use.

Note that Hannah's reason for wanting to get out of her Regus contract early was that her business was suffering due to Regus's inability to provide her with what she was paying for--exactly the reason that we imagined most people who have had bad experiences with Regus had.

I imagine that this is the question that anyone who is not an attorney might first ask. After all, Regus members sign a lease contract, and if you really dig into that contract, you will realize that it seems quite one-sided, perhaps even unfair, in Regus's favor, of course. With a contract like that, it is likely that most people who have a gripe with Regus give up before they even begin trying to break their lease agreement because they suppose the deck is stacked against them.

Since Hannah is an attorney, this is not the first question she asked, because she already knew in her case that the answer was yes.

It is basic legal doctrine that when two people sign a contract under which one person agrees to pay money in return for the other providing a particular service, if the second party fails to provide the service while the first party continues to pay as agreed, it is generally accepted that the first party has the right to void the contract with no penalty. So when people talk about canceling a contract, breaking a contract, or getting out of a contract, if they have legitimate cause like Hannah, because the service provider failed to provide service as agreed, then it is likely that they can legally break the contract in question. In a minute, I will illustrate this by showing you what specific actions Hannah took and the result she got (spoiler: she won!).

But first, let me highlight a few of the more offensive parts of Regus's actual lease agreement that, based on my reading of several of the Regus reviews referenced above, many people seem to have an issue with.

Note: if legalese bores you, then I suggest you skip this section and move on the the part that explains step-by-step how Hannah got out of her Regus lease contract. Otherwise, let's geek out for a moment on jurisprudence. 

Also, keep in mind that I am not your attorney...heck, for all you know, I could be a twelve-year old who reads at a third-grade level. So if you suspect that my analysis here is incorrect, you might be right (unless you are a twelve-year old who reads at second-grade level (or below)--in which case, why are you reading this article at all?

The parts of the Regus lease agreement that people seem to make the most noise about are sections 2.2 and 2.3, which conceal this nasty term called "automatic renewal." I bet that the reason this term causes the most heartache is that is costs people the most money in aggregate--and it is just sneaky as hell.

It first says that the contract will auto-renew if you do not state in writing that you wish to cancel at the end of the original contract term. It then says that you must give this written notice at least three months before that end date. Who has the spare mental bandwidth to keep track of this? Not most people, I bet. Thus, it seems that quite a bit of people end up getting hit with an extra three months of rent beyond when they probably were thinking they would be done with Regus. If someone, for example, is paying $500 per month in rent, that is an extra $1,500, or an extra 25%, than the person had probably budgeted for office space. It is dirty, and there is no legitimate reason for it other than for Regus to milk people for everything they can as they are trying to leave.

I included section 2.4 here because of what seems to me to be an absurd possibility for Hannah, given the strike 3 that she described above. Section 2.4 says that Regus may determine, at its sole discretion, if a member's "conduct...is incompatible with ordinary office use." I wonder if the receptionist considered Hannah's copious use of the printer to be incompatible with ordinary office use. She did, after all, suggest that Hannah's use of the printer was a bother. If the answer is yes, then according to this section, Regus could arguably terminate the lease immediately, and Hannah would still be liable to pay the remaining $3,861 due under that lease. Man, that would be dirty. And although that has not happened here, the point is that such one-sided contracts like this seem to allow for it to happen. And again, there is just no legitimate reason for it.

Section 2.5 seems to say that in the event that a bank run happens, and Regus is not able to provide the service for which it signed a contract to provide, then there would be no consequence for either party. Now, that might seem benign at first, but consider this reversal. What if the member's lease budget were "no longer available," and he was not therefore able to make his rent payment? Do you suppose that the lease agreement would simply end, with no consequence to either Regus or the member? No. Regus would rake the member over the coals trying to recover whatever fees it expected the member to pay. Again, one-sided contracts deserve the characterization "unfair" when there does not seem to be a better word for them. And there does not.

Remember that part about business owners depending on their businesses for income? Well section 5 basically says, suppose Regus completely craps its pants and fails to provide any service that it said it would...well, in that case, the business owner cannot pursue Regus for any sort of damages to recover his economic loss. Suppose that the client from Hannah's strike 1 or the clients from strike 4 deciding not to hire Hannah because they felt that Hannah was unprofessional--in the case of strike 1, because the client had to wait for thirty-five minutes before Hannah greeted her, or in the case of strike 4, because Hannah was unable to book a meeting in time. That would have meant significant economic loss for Hannah, and section 5 says that Regus will not be responsible for that loss.

Again, by contrast, nowhere does this lease agreement preclude Regus from pursuing the member should he fail to hold up his end of the deal by not making his agreed upon payments. Both parties to a contract, it seems, should have a fair shot at either getting what they were promised or getting commensurate compensation when they do not get what they were promised.

Then there is section 2.11, which is designed to dissuade Regus customers from suing in court and instead to pursue legal claims against Regus through secret arbitration. Big companies like Regus prefer arbitration for a number of reasons, all because these reasons conspire to deter people from bringing a claim in the first place and give Regus an upper hand at trial should a member bring a claim against Regus anyway. One reason companies like Regus tend to have the upper hand in arbitration is that the cost to file a consumer arbitration might be around $2,500, versus an average cost to file a lawsuit in court of around $200.

I could go on opining why arbitration is generally favorable to big companies and resentful toward consumers, but instead I will just cite the secretiveness of arbitration: companies like Regus like the fact that arbitrations tends to be confidential, so that if some anomalous consumer does manage to win a case, no one else can learn from it because the arbitration proceedings are required to be held in strict confidentiality. It beckons that whole concept of "sunshine is the best antiseptic," in the sense that places where sunshine is not permitted to reach must be filthy.

Speaking of confidentiality, section 2.9 is a real gem. Just in case a disgruntled member does not get wrapped up in the closed-door confidentiality of arbitration, Regus wants to cover its bases and attempt to silence all of its members. The first rule of Regus membership--well, the 2.9th rule, really--is that you cannot talk about Regus membership.

I am not a Regus member, so maybe I am excused from sleeping with one eye open given my publication of these Regus contract excerpts.

Here are the steps that Hannah took to get out of her Regus contract:

1. Document gripes, as Hannah did by keeping notes on what I called strikes.
2. Craft a legal demand letter in which you state what resolution you demand and why you think you are entitled to it.
3. Make sure the demand letter gives Regus a finite period to resolve the matter before which you move to next steps.
4. Send the letter in some in manner in which you can certify its receipt, preferably to a VP or higher at Regus.
5. When/if Regus responds to try to talk down from the ledge, simply defer to the demand letter that you already sent and refuse to engage in any communication that is not in writing and that is not itself a step toward resolution (like a settlement offer or asking which address to send you a check to).

Of these five steps, the most difficult and time-consuming are steps 2-4. Anyone can follow these five steps if you have enough time to spare and sufficient confidence that spending that time will actually give you the outcome you desire--and really, that just means confidence in yourself, to endure and overcome legal conflict. Not everyone has that mettle, but some do, and you may be one of them.

Hannah is an interesting case, because she of course knows how to do her own legal work. But did she in this case? No. Why not? That time-consuming part. Anyone whose time is valuable, attorneys included, are susceptible to what I call the "low-value claim" problem (something I have written about extensively on the official Veeto blog, Nothing But Teeth). In Hannah's case, it meant that even though she knew she had a legitimate claim against Regus that she felt she could win on her own, she was unwilling to fight that fight herself because she did not have time to argue back-and-forth with a slippery company like Regus.

So what did Hannah do instead?

As a Veeto member, Hannah sent her notes from step 1 to Veeto; Veeto's algorithm matched her complaint data with a legal demand letter crafted by Veeto's legal team; Veeto's app generated and sent the letter to a Regus VP; Veeto confirmed the letter's receipt; and within a few days, Regus agreed to release Hannah from her lease agreement exactly as her Veeto-generated letter had demanded.

All told, Hannah probably spent under an hour jotting down her notes from step 1, sending those to Veeto, and then exchanging emails with Regus once Veeto got her to step 5. Her Veeto membership cost $42.95, and that membership allows her to Veeto any purchase from any company, not just this Regus lease agreement. Still, in this one case alone, her $43 Veeto membership returned her $4,459 in avoided Regus early termination fees, lease payments, and forfeited deposit fees paid to Regus.

If you have heard of Veeto before--perhaps you have read about it in publications like the Huffington Post--then maybe you will understand what I mean when I say that it seems that Veeto has, in this case, performed the miracles ascribed to it. But if you have not heard of Veeto before, then I am guessing you do not get the joke. And that is OK. Here is the background on it.

Veeto is responsible for 42% of all annual consumer arbitration wins in the US. Like many big companies in the US who occasionally run afoul of their disgruntled customers, Regus knows that refusing to immediately satisfy a Veeto demand would result in an immediate lawsuit, bankrolled by Veeto. This is bad for Regus for four reasons:

1. Based on Veeto's 100% success rate, Regus would probably lose.
2. Based on the typical set of facts in Veeto cases, public lawsuits make companies like Regus look really bad in public (for example, after reading this, are you more sympathetic to Regus or Hannah?).
3. Since Veeto bankrolls Veeto members' lawsuits against companies who fail to immediately satisfy Veeto demands, Regus knows that there is little chance of deterring disgruntled customers like Hannah from moving forward--and also knows, for this reason, that they Veeto members are virtually immune to intimidation.
4. Even if Regus were to win a lawsuit--which has never happened when Veeto has been on the other side--they would probably have to spend almost as much as the dispute is worth just to hear the verdict.

Run a free Regus Contract Analysis with one of our Veeto Experts and see how you can leave Regus now.