Role of lawyers in misuse of NDAs to be examined by UK regulator

A legal regulator is to examine the role of lawyers in the misuse of so-called gagging clauses in England and Wales as it considers whether stronger regulation is needed.

The Legal Services Board, an independent body that oversees the legal services sector, will on Tuesday issue a call for evidence amid growing concerns that non-disclosure agreements are being used to silence victims of workplace misconduct.

Concern over the misuse of NDAs has risen in the wake of the #MeToo movement which exposed how powerful individuals and companies use these agreements to conceal unlawful activity, such as discrimination, sexual harassment or abuse.

The regulator will focus on the role that lawyers play in the misuse of NDAs and whether regulation should be strengthened. It is calling for information from the legal profession as well as people who have been subjected to exploitation of such agreements.

The LSB has the power to influence or even require other legal regulators to make changes to professional codes of conduct or training for lawyers.

NDAs are legally enforceable agreements created to keep information confidential. They are routinely used by companies to protect intellectual property or commercially-sensitive information.

In recent years high-profile cases have raised awareness of the issue, such as that of Zelda Perkins, a former assistant to disgraced film producer Harvey Weinstein, who broke the terms of her agreement in 2017 to detail claims that Weinstein had harassed her and assaulted a colleague.

The misapplication of NDAs has increased scrutiny on lawyers who are responsible for advising on or drafting these agreements.

The LSB, which oversees several legal regulators such as the Solicitors Regulation Authority, is seeking to understand the scale of misuse and why some lawyers might fail to keep to their professional ethical obligations when drawing up NDAs.

LSB chief executive Matthew Hill said he recognised that NDAs had legitimate uses but wanted to ensure they were used properly. “There have been a number of high-profile instances where NDAs have had an adverse effect on people . . . lawyers acting for those people who have been harmed . . . have been content to let those NDAs come into force,” he said.

“Lawyers are there to play a part in society helping us all get fair outcomes in disputes. They are not there to help the rich suppress the weak” he added.

Dozens of universities, backed by the government, last year pledged not to use legally binding NDAs against students and staff who come forward to report abuse, following concerns that victims were being pressured into signing agreements.

The House of Commons women and equalities committee in 2019 reported on the widespread use of NDAs to settle discrimination cases. Meanwhile, the government has committed to changing the law to ensure that individuals signing NDAs can make disclosures to the police, health and legal professionals.

The LSB’s call for evidence runs from May 2 to July 14. Its findings are expected later this year.