Law Society: Employer clients’ interests don’t trump all in NDAs

Law Society: Solicitors should provide copy of NDA to parties

The Law Society has reminded solicitors that their duty to act in their client’s best interests can be trumped by other obligations when drafting non-disclosure agreements (NDAs).

The practice note issued yesterday is the latest response by the professional bodies and regulators to criticism of the use of NDAs, particularly when acting for employers in ending employment relationships.

That was the focus of the society’s advice, and it said that solicitors’ duty to their clients was subject to their duty to the court and to the administration of justice, both of which are core SRA Principles.

“Where two or more mandatory principles come into conflict, the principle which takes precedence is the one which best serves the public interest in the circumstances, especially the public interest in the proper administration of justice,” it said.

The society stressed that clauses suggesting that the reporting of any criminal offence was prevented by an NDA were legally unenforceable, while “it is unlikely to be legitimate to ask a person to sign an agreement in which they agree not to disclose an unlawful act that has not yet happened”.

Further, blocking the reporting of information relevant to regulating a sector was likely to be unacceptable to regulators while NDAs could also not be used to block whistleblowing protected by the Public Interest Disclosure Act 1998

In apparent response to concerns over the way City law firm Allen & Overy was reported to have handled the NDA signed in the 1990s by Harvey Weinstein’s assistant, Zelda Perkins, the practice note said: “For an agreement to work well it needs to be understood by all the parties.

“It is good practice to give anyone signing an NDA clause time to consider the implications of the proposed agreement, including giving them sufficient time and opportunity to obtain independent legal advice…

“It will not normally be appropriate to fail to provide a copy of relevant terms to parties who are obliged to comply with them.”

Last month, the government said it was “strongly” encouraging legal regulators to take action over lawyers who advise on the use of potentially unenforceable provisions in NDAs.

However, it said a call by the House of Commons’ women and equalities committee to make it a criminal offence to propose an NDA that was unenforceable could itself be difficult to enforce.

Interested in this topic? Check out the Legal Futures Masterclass on NDAs, Harassment and Whistleblowing. 27 June 2019, London.

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