NDAs and ethical boundaries

Lord Chancellor, Alex Chalk MP

Last week, the Lord Chancellor, on behalf of the UK Government, announced that new legislation will provide a “crackdown on ‘gagging orders’ to protect victims’ ability to access support”. The press release is here: https://www.gov.uk/government/news/crackdown-on-gagging-orders-to-protect-victims-ability-to-access-support

According to that press release, the legislation will provide that:

NDAs cannot be legally enforced if they prevent victims from reporting a crime and will ensure information related to criminal conduct can be discussed with the following groups without fear of legal action:

• police or other bodies which investigate or prosecute crime
• qualified and regulated lawyers
• other support services such as counsellors, advocacy services, or medical professionals, which operate under clear confidentiality principles

This is good news, but it is not enough to prevent inappropriate terms in non-disclosure agreements (NDAs) in cases of harassment and similar conduct.

1. The legislation will be introduced “as soon as parliamentary time allows”. Will that be before the upcoming General Election, which the Conservatives are predicted to lose?
2. Having access to legal advice is only part of the picture. In the famous Zelda Perkins case, Ms Perkins had legal advice, but was still pressurised into accepting restrictive terms: https://www.legalbusiness.co.uk/blogs/a-morally-lacking-agreement-on-every-level-ao-squirms-as-parliamentary-committee-turns-up-pressure-on-ndas/
3. Part of the purpose of “extreme” NDAs is to apply psychological pressure on the person who signs it, to make them think they are powerless to deal with their opponent. Even if they can access legal advice (i.e. post-signing), they may not be able to afford it, or they may be hopelessly outgunned by the legal resources of their opponent.

In Zelda Perkins case, she was apparently persuaded to agree to the following terms, among others:

‘if any criminal legal process involving Harvey Weinstein or Miramax requires [Perkins] to give evidence she will give 48 hours’ notice to Mark Mansell, a lawyer at Allen & Overy, before making any disclosure’.

‘[i]n the event her evidence is required, you [Perkins] will use all reasonable endeavours to limit the scope of the disclosure as far as possible’ and she will give ‘reasonable assistance to Miramax if it elects to contest such a process.’

IP Draughts also recalls hearing about NDAs that included terms where the ex-employee was not even allowed to retain a copy of the NDA, or where the ex-employee was required to give an unlimited indemnity against the employer’s costs and other losses arising from breach.

In IP Draughts’ view, none of the above terms is ethical, even if they may be argued to be lawful. Others may have a different (and bona fide) sense of where the ethical boundary lies. We need detailed guidance from our professional bodies on this issue, so that we are all singing from the same hymn sheet. It may not even be a matter for the Solicitors Regulation Authority. The Law Society could and should provide its own guidance, which might be stricter than the SRA’s rules.

Finally, IP Draughts should mention his book, Drafting Confidentiality Agreements, published by the Law Society. Last published in 2015 (3rd edition), it makes no mention of this type of NDA. They weren’t a live, political issue nine years ago. See https://bookshop.lawsociety.org.uk/p/drafting-confidential-3rd-edition-paperback-cd/