Irresponsible by Design – NDAs as an example and how SRA ‘investigates’

Watching the Women and Equalities Select Committee evidence this week on NDAs (see here) a couple of thoughts struck me which may be worth mentioning.

Firstly, the evidence of the City partner portrayed an interesting, common attitude among lawyers. The point the Committee was dealing with was that NDA’s often/sometimes are casually/deliberately opaque about the rights of the subject of the NDA; in particular, how public interest disclosures are permitted under the agreement. I would say, some of these NDA’s are irresponsible by design.

The line taken, which was meant as a helpful suggestion, was that someone else ought to provide guidance to complainants, perhaps on a website somewhere, as to what these opaque or deliberately one-sided agreements really meant. It is tempting to add here, that this help should be given on a website, far far away. A second suggestion was that perhaps the regulators, the Law Society, specialist interest groups, or similar, could get together to tell the lawyers what kinds of agreements were acceptable.

Neither of these are terrible suggestions, but they seek to solve a problem rather removed from the origin of that problem and they miss the fundamental point that it is the lawyer who is responsible for the drafting of their own agreement. It is the lawyer who has to make sure that their agreements are lawful and does not take advantage of their opponent. It could very well be the lawyer who is held criminally responsible if a deliberately opaque agreement is likely to lead to the suppression of evidence.

And, in fact, it might be difficult for a regulator, or representative body, to give watertight guidance on such matters because – as lawyers are always fond of reminding us – every case is different. Each context is important. And, in any event, ultimately it is not the regulator or the representative body which interprets legality or professional misconduct, it is the Solicitors Disciplinary Tribunal or the courts. The SRA, for understandable reasons, is taking a line that says it is better that the professionals get used to taking and accepting the responsibility which is properly their own. They could take another line which is to try and regulate with much more detail. I will leave it to the reader’s own imagination as to how the lawyers would respond to that kind of detailed intervention. Ok, here’s a hint: creative compliance and lots of complaining.

The second point is that Paul Philip, CEO of the SRA, I think indicated in his evidence that any allegation about a suspect NDA which is put to them will be investigated. This is not normally how the SRA deals with complaints. As I understand it, they do not investigate every complaint that is made, even if on its face it, such a complaint may contain a well-founded allegation of misconduct. They prioritise according to the nature of the allegations and the evidence before them as well as the risk posed by the behaviour alleged. It is an interesting question as to which approach is the right one. The hearing provides some uncomfortable viewing for the SRA, particularly the admission that they did not seek a copy of the nondisclosure agreement from Allen and Overy when they met with them to discuss the Zelda Perkins case. Mr Philip properly accepted that this was an error. Such errors are likely born of a flexible approach to investigation.


9 thoughts on “Irresponsible by Design – NDAs as an example and how SRA ‘investigates’

  1. Well – about time someone said this. Academic = who gives a fek frankly… it’s the thought that counts 🙂

  2. Philip’s evidence and response to the Committee was poor to say the least. His response to the investigation concerning Zelda Perkins was particularly troubling and I think he was let off by the Chair even before he had a chance to answer the question put to him about the failure to deal with and investigate the conduct of the Partner at Allen & Overy. What concerns me though is the ethics of the profession. I mean, how can a lawyer feel it appropriate to offer the form of NDA to Ms Perkins’ team and feel that that is morally let alone legally acceptable? For my part, I would have advised Ms Perkins to refuse to sign the same and to take her chances in any future litigation. PS. I did also read your submission to the Select Committee which I found very helpful.

  3. I have rarely heard of a worse idea than criminalising unenforceable agreements. Why bother with the middle step and not just lock us up right now? Few other than lawyers would think it injustice or care. The far bigger problem is the erosion of “ conscious impropriety” (as we must now call it) as a relevant distinction in our treatment. It’s great. Ie as we throw the book at the wrongdoer of the moment. It’s rather less so when the actual fraudster or rapist passes himself as one who made a mistake (as one fancies they’ll be quite good at). What makes NDAs different is:
    (a) the fact that the party which something which would never get in court – parties therefore put their mistakes behind them and make a fresh start – even if few could afford as many as Weinstein;
    (b) how little focus they get compared to the issue cared about – the cash. I’ve almost had rolled eyebrows for making the point they were giving something they could never get – and I’d always rather suspected there were subject to an unwritten “down the pub” exception should the subject of their former employer come up. Certainly in this case I would hope that had anyone run into a friend excited by the prospect of a job working for HW the terms of the agreement would have been given the respect they deserved. Technical enforceability doesn’t come into it.

  4. “It is the lawyer who is responsible for making sure that the agreement is lawful and does not take advantage of the opponent”. Is it – particularly where the opponent is legally represented?

    What do you mean by “lawfulness”. Just because an agreement may not always be enforceable, does not make it “unlawful”. And enforceability is not always straightforward – particularly if the law is developing or for other reasons uncertain. Take the example of restrictive covenants given to the buyers of a business by the sellers – it is usual (and proper) for the sellers to agree that – having sold a business – they won’t then set up a new business in competition with the business that they have sold. But defining the scope of those restrictions is notoriously difficult because of fundamental principles of English law. It is not uncommon for the scope to be drawn widely, even though there is a risk that in consequence the restriction may be unenforceable. But, providing the buyer has been properly advised, there is nothing wrong or unprofessional in seeking broadly drawn restrictions in these circumstances.

    And I question whether a lawyer (or his or her lay client) has any general duty “not to take advantage” of their opponent. Of course there are always exceptions – for example where the opponent is vulnerable and unrepresented. But in circumstances where the opponent has competent legal representation, why should a lawyer acting for one party owe any duty of care to the other party?

    1. Thanks for the comments. If you look at the other blogposts I have done on this you’ll see where I am coming from.

      If you are a solicitor questioning whether you have an obligation to not take advantage you need to read your code of conduct. Outcome 11 I think from memory.

      1. O(11.1) provides that you must not take “unfair advantage of third parties”. And the point to be stressed here is the reference to “unfair”.

        The associated indicative behaviours give examples of cases where taking advantage would be unfair – and of these IB(11.7) is particularly apposite – “taking unfair advantage of an opposing party’s lack of legal knowledge where they have not instructed a lawyer” – and my original post flagged the situation where an opposing party was unrepresented.

      2. Yes, but the rule is general and the IB is not. Representation does not automatically render unfair advantage fair. It an interesting might in certain circs and that opens the door to an interesting question as to what fair advantage taking is but if you read the SRA’s warning notice you’ll see they seem to accept my point.

      3. the question you need to consider is whether a (hypothetical) claimant obtains an “unfair advantage” by using her opponent’s fear of publicity to obtain a financial settlement greater than the one she would have otherwise obtained in court – and whether her agreement to keep the settlement confidential would be inappropriate in all of these circumstances?
        Whilst I have sympathy in the case of a vulnerable unrepresented party – I don’t in this case.
        Is the real issue here the fact that the law is only as accessible as the Ritz Hotel – and recourse to the courts is not in practice available to those of modest means? Wealth is an enormous advantage when it comes to resolving any legal dispute. But that is another question altogether …

      4. Well, that’s a hypothetical. But it’s not the question in the Weinstein case on the evidence that is public.

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