Regulators urged to shore up NDA guidance

Professor Richard Moorhead has criticised the Law Society’s guidance on the use of non-disclosure agreements describing it as “disappointing” and lacking “ethical leadership”. 

Moorhead’s remarks were submitted in oral evidence to the House of Commons’ women and equalities committee on 13 March, as part of its inquiry into the use of NDAs in discrimination cases.

Summarising the approach of the regulators Moorhead was least critical of the Solicitors Regulation Authority (SRA).

He said it had “acted quickly to tackle the problems first emerging with NDAs in harassment cases” but that there was room for improvement to their warning note on the matter.

However, he added that guidance from the Law Society was “inadequate” and described the Bar Standards Board’s decision not to publish guidance as “regrettable”.

Describing the Law Society’s practice note, the professor of law and professional ethics at University College London said: “Consideration of the public interest is most politely described as muted. Whilst it reminds solicitors of the SRA’s warning notice, it also runs the risk of diluting or confusing the messages in the SRA’s notice. 

“It is a sign of what can be expected if calls for ‘the profession’ to be allowed to deal with this problem on their own are accepted: they are likely to put a particular view of the profession’s interest before the interests of the public.”

He stopped short of calling for a ban on NDAs, arguing that “any ban is likely to lead to avoidance behaviour whereby lawyers seek to work-round bans for their client”.

However, he suggested that regulators take steps to mitigate the risk of NDAs perverting the course of justice, including lawyers being under an obligation to “draft disclosure restrictions as narrowly as possible” and creating “standard NDA clauses, and explanations of rights under the agreement”.

His suggestions revolved around limiting the risk of lawyers “drafting opaque clauses” in a bid to cover all bases if a future claim were to arise.

“I am confident from my discussions with employment lawyers that this kind of obfuscation is a reasonably common practice designed to strengthen the hand of employers and accused executives benefiting from such agreements”, he added.

In oral evidence to the committee earlier in the month, Moorhead described the Law Society’s guidance as “one-sided” and “weak” and said they should “withdraw it” or “certainly revisit it”.

He also said: “not enough lawyers understand they have to balance the public interest in the administration of justice and the protection of the rule of law, with their clients’ best interests”.

He said lawyers had a tendency to put the best interests if their clients first and, in doing so, were liable to draw up clauses that “improperly stifle the revealing of misconduct by employers and organisations”.

Copyright & permissions