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Regulators plan new work on lawyers’ misuse of NDAs

By John Hyde >>

(23 January 2023)

Regulators will seek to draw up new rules on dealing with lawyers who use non-disclosure agreements to cover up clients’ sexual misconduct and harassment, it has emerged. 

The Legal Services Board, the oversight regulator, plans to consult publicly on new expectations of lawyers’ conduct this summer and wants in particular to look at how best to address the misuse of NDAs. Concerns remain that lawyers may be using such agreements to stop wrongdoing from coming to light and going beyond their professional ethics and the rule of law.

The intention to make changes is outlined in board papers released ahead of the LSB’s meeting tomorrow. Members are likely to agree to publish a call for evidence to inform policy development.

The issue of NDAs has been prominent since the #metoo movement raised public awareness that famous, wealthy or influential people may be using these legal enforceable agreements to silence or intimidate victims of sexual misconduct, harassment or discrimination in the workplace. While the behaviour of individuals has been under the spotlight, the role of their lawyers in constructing or advising on NDAs has also come into question.

The LSB said there is evidence that NDAs are being misused to exploit the imbalance of power between employers and employees. The SRA has issued warning notices about the ethical use of NDAs and is understood to be investigating cases involving the potential misuse.

The LSB heard first-hand of the issue at its annual conference last October, when Zelda Perkins, a former employee of film producer Harvey Weinstein and founder of the Can’t Buy My Silence campaign, said she did not receive the support she expected from her lawyer when she signed an NDA in connection with Weinstein’s sexual abuse.

Perkins told the conference that regulation and legislation does not presently support the profession to make strong ethical decisions and does not hold non-compliant lawyers to account.

The LSB paper states: ‘Given the capacity for the misuse of NDAs to undermine the rule of law, and have a negative impact on EDI, as well as the appetite from government, regulators, the sector, and the public to address this, we consider that there is a strong policy imperative for us to conduct this work and ensure work being undertaken by others is being developed appropriately.’

The LSB will make a call for evidence in March before consulting formally in the summer on a policy statement or guidance to be issued early next year.

(Courtesy: The Law Society Gazette)