Over last few months I have been asking the Law Society and
its President, Christina Blacklaws to reconsider its practice
note on NDAs
(You will need to register to read this but there is no
charge). I have raised the issue on LinkedIn and Twitter and I have e-mailed
the President and her CEO on the subject. I have received no reply and no
engagement on the issue. Let me explain what concerns me with the practice
note, what could be done to remedy the situation and what lessons we might
learn from this episode.
Most readers will be familiar with the background to
concerns about the use of NDAs and in particular certain types of clauses. The
#metoo campaign and the revelations of the settlement between Harvey Weinstein
and Zelda Perkins are well publicised. The many stories we have seen raise
concerns about how employers handle allegations of harassment and
discrimination, using confidentially provisions to avoid scrutiny of the
employer. NDAs might even be used by senior staff to protect themselves from Board level scrutiny.
Do Board’s know much about the use of NDAs in their business? Of course NDAs
are a useful tool for employers and employees – they help provide a framework
for settling disputes without further escalation, and often employees gain as
much as employers. In the end it is a matter of public policy – for Parliament
to decide on their use and limits. But here I am focused more on the ethics of
lawyers when using NDAs under the instruction of employers.
The issue with NDAs and the ethics of lawyers is perhaps
best tackled by the University College London’s Centre for Ethics and Law
publication: “ Ethics
and NDAs
” in April 2018. The SRA
also issued a warning
notice
in the same month and addressed the issue in its November 2018 “ Balancing
duties in litigation
” report. The
Law Society’s practice note finally followed in January 2019. Professor
Moorhead led the critique of that practice note in his written
evidence
to the Women’s and Equalities Select Committee.
The problem with the guidance is that it does not support
the SRA warning notice. It is woolly and gives too much room to solicitors to
use clauses that risk the silencing of appropriate reporting to the police or
regulators, or perhaps even giving evidence in trials. We know there are
problems with solicitors’ behaviour in this area.
The SRA has confirmed
it is investigating a number of lawyers and firms, and at least one solicitor has
been referred
to the Solicitors Disciplinary Tribunal. Zelda Perkins said in her written
evidence
to the Women’s and Equalities Committee that “ As recently as last month, 12 top UK firms when approached were willing
in principle, to draw up NDA’s, which CLEARLY break the SRA’s warning notices.
”
Whatever the effect of the debate so far it does not appear to have solved the
problem of solicitors improperly advising in cases where NDAs are used.
It may be that the use of NDAs in sexual harassment cases
will be restricted. Regardless of what Parliament does the Law Society can do
better.
Some of its material beyond the practice note is better. It
advertises a webinar on 11 June with this from Paul Macfarlane: “You can't be prevented from reporting a
crime. You can't be prevented from reporting a protected disclosure to a
regulatory authority. You can't be prevented from co-operating with a criminal
investigation. You can't be prevented from keeping or receiving a copy of the
agreement.”
The Law Society could also provide significant support to
solicitors on both sides of an employment dispute on how to comply with their ethical
obligations. It might even draft new standard clauses on reporting and
confidentiality. Many solicitors would welcome this given the level of debate
about the need for better standard clauses. It could offer leadership and look
outwards by engaging publicly with all the interested parties as these are
developed.
But it does not. As I have said
before, it still looks inwards. The Law Society continues to ignore demands to
amend or withdraw the guidance; that is undermining ethical lawyering. They
should withdraw their guidance; an amended version that is consistent with the SRA
warning notice would be pointless repetition.
Senior city employment lawyers tell me of other lawyers not
understanding their obligations, relying on the Law Society guidance rather
than the SRA warning notice and thereby risking the rule of law. If we were to
do a survey of solicitors – across the market; trainees through to senior
partners; in-house; high street and city firms – asking about the status of Law
Society practice notes and their relationship to regulation, what would we
find? I fear, confusion.
Some of this is because Law Society has not come to terms
with the loss of its regulatory role. Its advice to solicitors and firms is
rarely clear that it is the advice of a professional body or trade association
with no role in regulation.
I hear from several sources that the original draft of the
NDA practice note, written by the executive with expert input from specialist and employment lawyers, was effective and consistent with the SRA warning
notice. However, I am told that it got redrafted by the Policy & Regulatory
Affairs Committee, chaired David
Greene. Is that an example of political interference with the work of experts?
Or more crudely the interests of solicitors being put ahead of the public
interest?
This is why, in the end, this is a regulatory issue that the
Legal Services Board (LSB) needs to consider and learn from. Its Internal
Governance Rules
on how the Law Society should relate to the SRA, given
that they are the same legal entity, offer some direction to the Law Society
when issuing its own guidance: it should
“ ensure that it does not contradict [the
SRAs warning notice or guidance]
”.
Let us hope the LSB is watching this, and in due course,
will take action. In the meantime I am sure that the Law Society will show the
leadership that its membership deserves. It must withdraw the practice note and
find other ways to support solicitors comply with their regulatory and ethical
obligations. That so many solicitors have acknowledged the problem and are
casting around for solutions, appears to be an opportunity that an outward
looking Law Society would seize.
This is the long/unedited version of a blog that first appeared on The Times Legal Brief today, with a supporting
story
(behind paywall).
