Law Society to issue new guidance on non-disclosure agreements as scrutiny over use grows
Society's employment law committee canvasses partners to compile guidelines for NDAs
April 26, 2018 at 09:26 AM
3 minute read
The Law Society is set to issue new guidance on non-disclosure agreements (NDAs) and confidentiality clauses, amid growing scrutiny over their use by law firms and their clients in the wake of the #MeToo movement.
The society's employment law committee – which includes City partners such as Dechert London employment head Charles Wynn-Evans and Taylor Wessing's Sean Nesbitt – is currently canvassing the views of employment partners to formulate the guidance, which it is aiming to release in June.
The guidance will be split into two parts – the first will be issued to solicitors to set out best practice for the use of NDAs, while the second will be publicly available and designed to inform people who sign NDAs of their legal rights regarding such documents.
It is expected that the practice note for Law Society members will contain information on how NDAs should and can be applied in real-life situations based on professional standards, including the need for lawyers to make it clear that such documents should not muzzle potential whistleblowers.
Committee chair Max Winthrop, head of employment at Newcastle firm Short Richardson & Forth, told Legal Week: "There a variety of different interests to carefully balance here. It's always going to be a contentious issue. It's never going to be easy, despite what some may think – there are always areas where knowing what is the right thing to do is going to be difficult. Hence, the employment law committee feels there is a need for further guidance."
He added that the committee would consider whether restrictions on NDAs may be appropriate but said "an outright ban on the use of NDAs or confidentiality provisions would not help employees or employers resolve disputes".
The move comes amid the Women and Equalities Committee's investigation into the potential abuse of NDAs relating to allegations of sexual harassment in the workplace.
During an evidence session held last month (28 March), Harvey Weinstein's former assistant Zelda Perkins spoke of her distress at signing an NDA – drawn up by Allen & Overy partner Mark Mansell – relating to her historical settlement following allegations she had made against the disgraced movie producer.
Perkins said she felt at the time that she would face legal action if she spoke about the details within the NDA, and called for reforms to their use, stating: "I feel let down by the lack of law around them. I'm sure all the lawyers were all working within the legal constraints, but it's more shocking they were able to do that."
Yesterday (25 April), the Solicitors Regulation Authority confirmed it has opened an investigation into A&O's role on the agreement, although Conservative MP Philip Davies questioned the regulator's approach, likening its relationships with major law firms to "a cosy old boys' network".
This March, the SRA warned law firms in England and Wales not to use NDAs to prevent the reporting of professional misconduct within their own businesses, in the wake of several sexual harassment scandals that have rocked the profession.
Winthrop added: "The SRA's warning notice is helpful, and I've already seen clauses appearing in settlement agreements which qualify confidentiality by reference to the expectation the SRA has set out in the notice. In fact, as a simple step, reading the warning notice before a solicitor drafts an NDA or a confidentiality clause may save that solicitor from professional embarrassment or worse."
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