Troubled water: The legal risks of LinkedIn for UK law firms

 

The online networking tool LinkedIn is used by over 200 million professionals worldwide to facilitate the exchange of business-related information. It is a valuable resource that allows individuals to 'connect' with one another to aid business development and can help to build the profiles of both the individual and firm alike.

However, there are also inherent risks to law firms as employers in the usage of such social media platforms and particular issues that arise in a legal services context.

The increasing prevalence and ever-evolving nature of social media usage in the workplace means that firms should ensure they are sufficiently protected, through policies and procedures, in the event that an employment dispute arises. Social media should therefore be considered when drafting contracts of employment, compromise agreements and the firm's social media policy.

This article looks at four key issues for law firms:

1. do you have rights in relation to your employees' LinkedIn contacts?

2. post-termination restrictions and LinkedIn;

3. employer liability for an employee's activities on LinkedIn; and

4. client confidentiality and LinkedIn.

It then provides recommendations for creating a social media policy.

1. Employees' LinkedIn contacts

The advance of social media in an employment context has created complex legal issues. If an employee took or copied out a hard-copy list of the firm's client details, the ownership of that list is unlikely to be a matter of debate. If compiled by the employee during the course of his employment for the benefit of the firm, it would be deemed to belong to the firm. However, the law is less clear-cut on how such principles apply to social media.

An employee who, during the course of his employment, builds up 'connections' on LinkedIn with clients of the firm may believe that these contacts are his. The firm, however, may claim that these contacts should be treated in the same way as a hard-copy list of contacts. The firm would argue that these are contacts made during the course of the employee's employment, and thus any list of these contacts on LinkedIn belongs to the firm.

However, where an 'open' privacy setting has been used, the employee may argue that these details are not confidential - and the water is often muddied further where there are contacts known to the employee in both a professional and personal capacity.

In the 2007 case of Pennwell Publishing (UK) Ltd v Ornstein [2007] EWHC 1570 (QB), the court held that a contact list stored in an employer's IT system, such as Outlook, belonged to the employer. The court deemed these contact details to be akin to databases of contact lists and thus relied on the Copyright and Rights in Databases Regulations 1997. These regulations state that a database made by an employee in the course of his employment, unless there has been an agreement to the contrary, is to be regarded as the property of the employer.

If an employee exports contact details from his firm's IT system and subsequently invites these contacts to connect with him on LinkedIn, the firm may therefore have a strong case to assert ownership. However, it is not yet clear whether the Pennwell principles are entirely applicable to the ownership of LinkedIn contacts built up by the employee in a more piecemeal fashion. Would these constitute a database? It is likely that this will become an increasingly important subject of future litigation, and clarity would be welcome.

A further complication is that LinkedIn itself has its own rules, listed in its User Agreement, as to who is deemed to own the information contained on its site. These state that the account holder is the owner of such information. The rules go on to add that, by providing LinkedIn with the information, the account holder is warranting that they are not in violation of any "contractual restrictions or other third party rights".

2. Post-termination restrictions

LinkedIn also raises several potential difficulties for firms on termination of an employee's employment, particularly with regard to the application of restrictive covenants.

Restrictive covenants in contracts of employment and compromise agreements take many forms but commonly seek to protect firms, during a restricted period, from the departing employee:

• soliciting clients of the firm; and

• dealing with clients of the firm.

Any modification to an employee's LinkedIn profile will cause an email notification to be sent out to all of their connections, informing them of the change. An employee's motive in updating their employment information on LinkedIn may well be innocent. Indeed the employer often requires this update, whether expressly or implicitly (it is not uncommon, for example, to prohibit the ex-employee from holding himself out as still employed by the firm). But, could this amount to a breach by an employee of a restrictive covenant?

It could be argued that sending this notification should be construed as an attempt to solicit clients of the former firm. Such a notification could be regarded as similar to sending an email or letter to clients, informing them of the new job and new contact details, with an implicit invitation for clients to get in touch. That scenario (in the context of a letter rather than LinkedIn) was upheld as being in breach of a standard non-solicitation clause in Taylor Stuart & Co v Croft (7 May 1997 HC).

While case law catches up with technology, it is uncertain whether the employee's former firm has a legal remedy in these circumstances. It is however clear that firms should be thinking about how to cover such situations and should consider including appropriate express provisions when drafting their restrictive covenants. These could potentially include a requirement for former employees to delete all clients from their LinkedIn account - although disagreements may arise, for example where ex-employees know a client in both a professional and personal capacity. The firm could perhaps go even further and require the individual to delete his LinkedIn account during the restricted period. Whether the latter is perhaps too onerous to be upheld is to be debated.

Another, and potentially more feasible alternative, would be for firms to strengthen their non-dealing covenants. A strong non-dealing covenant gets around the difficulty of proving solicitation. So long as it is not unduly onerous and hence unenforceable, it will result in the employee being unable to deal with any of his LinkedIn contacts who are clients of the ex-employer, in a professional capacity, during the restricted period.

3. Employer liability

Another issue that needs to be considered as a result of the burgeoning usage of social media in the workplace is an employer's potential liability for an employee's activities on LinkedIn.

The very concept of LinkedIn is to encourage users to share professional information about themselves and their employer, as well as to engage in discussion forums. While it is unlikely that any defamatory or libellous remarks made by an employee on LinkedIn will have been authorised by the employer, the employer may still be vicariously liable for a tort committed by an employee in the course of his employment.

Having a clearly-defined social media policy, containing rules regarding the required conduct of employees while using LinkedIn, would help to minimise such a risk. For example, requiring employees to mirror their LinkedIn profile with their profile on the firm's website, and obliging them to make clear that any views expressed by them on social media sites are their own and not those of the firm, might substantially reduce the risk.

4. Client confidentiality

A specific point to be considered, particularly in the legal profession, is that LinkedIn exposes lawyers to the risk of inadvertently breaching client confidentiality. Chapter 4 of the Solicitors Regulation Authority (SRA) Code of Conduct 2011 emphasises the required duty of confidentiality between a solicitor and his client.

While employees may be keen to expand their network of connections on LinkedIn, asking a client to connect with him may breach the firm's duty of confidentiality to the client. If an employee adopts LinkedIn's default open privacy settings, the result will be that every individual connected with the employee will have full access to his profile. This would in turn enable the connection to see all of the other individuals who are connected to the employee.

One way firms can seek to safeguard their duty of client confidentiality is by clearly specifying rules, in a social media policy, on employees connecting with clients. These could emphasise that employees have a strict obligation to safeguard their duties of client confidentiality in a social media context. One potential restriction could be that employees are limited to only accepting invitations to connect with clients, rather than actively seeking to establish the LinkedIn relationship themselves.

Social media policy

What the above makes clear is that all firms should have a written social media policy in place. Indeed, this is something explicitly recommended by the Law Society of England and Wales.

When creating a social media policy, four key things should be considered. The policy should be:

• clearly communicated - a policy on social media usage needs to be communicated to employees and sufficient training should be provided on not only its content, but also the potential consequences of breaching the rules;

• consistent - definitions and content of a social media policy should be consistent with other employee documents, including restrictive covenants in contracts of employment and compromise agreements, as well as disciplinary procedures;

• flexible - any definition of social media included in a policy should make clear that, as technology is continuously evolving, there can be no finite list of communication platforms covered; and

• regularly reviewed - employers will need to keep abreast of legal developments in relation to social media, alongside advances in social media usage in the workplace.

Fair and proportionate

Two clear themes emerge from recent case law. The first is that a well-drafted social media policy can provide employers with significant added protection in an employment tribunal context.

In the 2011 case of Crisp v Apple Retail UK Limited [2011] ET/1500258/11, an employee posted derogatory remarks on Facebook about Apple. These were drawn to Apple's attention by another employee and Crisp was subsequently dismissed for gross misconduct. Crisp's claim for unfair dismissal was rejected by the tribunal, a key reason being that Apple had a clearly-defined social media policy in place and had provided its staff with clear and thorough training on its content.

The second theme, however, is the danger of employers overreacting. As with all disciplinary matters, firms faced with a social media-related misdemeanour should consider, for example, whether dismissal is a reasonable sanction, or whether a less draconian warning is more appropriate. While it is important that firms treat issues arising from social media seriously, reacting disproportionately to social media transgressions may well backfire, both legally and presentationally.

Anna Gregory is an employment law partner at UK law firm Farrer & Co (www.farrer.co.uk). She gratefully acknowledges the contributions of Alice Yandle to this article.