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24/10/2018

Are NDAs ethical?

Whether or not you are a fan Cristiano Ronaldo, or high-flying British chief executives, you probably agree that anyone, irrespective of name, fame or fortune, should be held accountable for their actions. If they do something wrong, it shouldn’t matter how rich they are or how high the powerful commercial interests are in their professional livelihood, we should all be equal before the law, right?

But what if the people tasked with being the officers of the Court, and who manage the general public’s relationship with the laws of the land, pursue the narrow set of interests of their client so vigorously that they undermine the structures of legal principle they are supposed to uphold? Well, we end up with the Rule of Lawyers v The Rule of Law.

Allegations of criminal wrongdoing and the use of Non-Disclosure Agreements (NDAs) are gaining more and more attention in the cases of Harvey Weinstein, Cristiano Ronaldo, the President’s Club Gala Dinner, Donald Trump and in the case of the businessman ABC as alluded to in the Daily Telegraph’s story this week.

These cases have raised difficult questions about employees and whistleblowing, the freedom of the press, the rights of individuals’ privacy, and the criminal law. The issue of lawyers and how they conduct themselves in these cases however, is often not fully explored, and could be a key tool in the battle to balance the ancient principles of contract law and the pursuit of the wider public

“If lawyers draft NDAs that they know are unenforceable, they are potentially committing professional misconduct”

By way of explanation, the law recognises that people have the right to sell their silence on a subject matter and therefore the courts need some basis in which to enforce the contract underpinning the selling of silence. However, if you are an employee signing an NDA to your employer, whistleblowing law lets you speak out about the allegation if it is a “protected disclosure” even after signing a confidentiality agreement. The categories of protected disclosure are: commission of a criminal offence; breach of a legal obligation; miscarriage of justice; endangerment to health and safety; damage to the environment; or the covering up of any of the aforementioned wrongdoing.

Confidentiality agreements are most often drafted without the input of a judge or a court and rely completely on the integrity of the lawyers involved. The people involved have to trust that the lawyer drafting the agreement is doing so within the limits of the law and in compliance with the parameters of their professional conduct.

If lawyers draft NDAs that they know are unenforceable, they are potentially committing professional misconduct. However, often they may take this risk, either because their client is paying them loads of money and they like that, or they do not believe that anyone will ever call them up on it as they are merely bending, rather than breaking, rules. The real loser is the silenced party, who is often not only the victim of wrongdoing, but chilled from speaking out in fear of clauses in an agreement that are legally void.

Legal professional integrity in this area has come under such significant scrutiny in recent high profile cases that the Solicitors Regulation Authority, that oversee the conduct of the profession, had to issue a Warning Notice on the use of NDAs in March 2018.

“The suppression of fact that is in the public interest in an information-soaked world is unsustainable”

Professor Richard Moorhead, the Chair in Law and Professional Ethics at University College London, Faculty of Laws published a report on professional ethics and NDAs in 2018. He identified some of the key areas where lawyers were acting unlawfully by inserting clauses that were not legally enforceable including, “blanket confidentiality provisions and clawback provisions, as well as restrictions on reporting potentially criminal behaviour to the police or making any “protected disclosures” under whistleblowing legislation.”

There were also instances of unethical professional conduct including clauses that place limits on the ability of the individual party to “seek professional advice or counselling after entering into the agreement because the confidentiality agreement is too stringent” or even “restrictions on the party keeping a copy of the agreement”.

Given the nature of NDAs, we won’t know how bad this practice has become until people start seeking further advice on the confidentiality agreements they have signed. Unfortunately, this advice is expensive, and not covered by legal aid or undertaken by many pro bono legal organisations.

The suppression of fact that is in the public interest in an information-soaked world is unsustainable, especially where that fact relates to wrongdoing. The public expect that the rule of law is about moral purpose not commercial fairness. Victims of sexual harassment, criminal acts and whistleblowers should expect lawyers they deal with to play fairly.

Sashy Nathan is Director of Advocacy at 89up. He is a civil liberties lawyer with a background in defending activists and politically-sensitive criminal cases at Bindmans LLP.

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