In what wonderland can NDAs be used to hide CRIMINAL wrongdoing ?
Apparently, some NDAs prevent telling the police they exist - even under caution. I have no idea whether this is true or not. What I would like (in fact I feel a letter to my MP coming up) is a black and white statement that in the event of a police interview under caution, disclosing the presence of an NDA voids any clauses that NDA may have about not disclosing the existence of the NDA to the police.
The Solicitors Regulation Authority issued this back in March ....
Warning notice
Use of non-disclosure agreements (NDAs)
Issued on 12 March 2018
Our concerns
We recognise that NDAs, including with employees, can legitimately be used
to protect commercial interests and confidentiality and in some
circumstances, to protect reputation. Such agreements can operate to the
mutual benefit of both parties. This warning notice, and the Handbook,
should not be taken to prohibit the use of NDAs. However, we are concerned
to ensure that you do not:
use NDAs in circumstances in which the subject of the NDA may, as a result
of the use of the NDA feel unable to notify the SRA or other regulators or
law enforcement agencies of conduct which might otherwise be reportable
fail to notify the SRA of misconduct, or a serious breach of our
regulatory requirements, by any person or firm: including wrongdoing by
the firm, or harassment or other misconduct towards others such as
employees or clients
use NDAs as a means of improperly threatening litigation or other adverse
consequences, or otherwise exerting inappropriate influence over people
not to make disclosures which are protected by statute, or reportable to
regulators or law enforcement agencies.
This warning notice provides a reminder of some of the key issues and
risks that you should be aware of.
Status
Whilst this guidance does not form part of the SRA Handbook, we may have
regard to it when exercising our regulatory functions. This warning notice
is additional to previous warning notices and does not replace them.
Who is this guidance relevant to?
This guidance is relevant to everyone we regulate, and in particular:
managers and employees of law firms
those responsible for managing human resources and complaints in law firms
practitioners advising clients on the use of NDAs.
This note highlights your obligations if your firm is considering an NDA
with someone who has complained. It also sets out your obligations when
advising clients on NDAs with individuals (usually the client’s current or
former partners or directors, employees or workers, collectively referred
to in this note, for ease of reference, as "employee" or "employees").
The SRA Principles
Inappropriate use of NDAs, failure to report actual or suspected
misconduct, or other wrongdoing or criminal conduct, by you or, when
acting on behalf of a client, improperly proposing, or exerting
inappropriate influence on a third party to enter into an NDA either in an
inappropriate manner or with inappropriate content; or failure to report
wrongdoing that is subject to an NDA may put you in breach of one or more
of the SRA Principles 2011 set out below:
Principle 1: uphold the rule of law and the proper administration of
justice
Principle 2: act with integrity
Principle 3: act independently
Principle 6: behave in a way that maintains the trust the public places in
you and in the provision of legal services
Principle 7: comply with your legal and regulatory obligations and deal
with your regulators and ombudsmen in an open, timely and co-operative
manner
Principle 8: run your business or carry out your role in the business
effectively and in accordance with proper governance and sound financial
and risk management principles.
The SRA mandatory outcomes
You should have regard to specific outcomes under the SRA Code of Conduct
2011:
Outcome (10.3): you notify the SRA promptly of…serious failure to comply
with or achieve the Principles, rules, outcomes and other requirements of
the Handbook
Outcome (10.4): you report to the SRA promptly, serious misconduct by any
person or firm authorised by the SRA, or any employee, manager or owner of
any such firm
Outcome (10.7): you do not attempt to prevent anyone from providing
information to the SRA or the Legal Ombudsman
Outcome (11.1): you do not take unfair advantage of third parties in
either your professional or personal capacity.
Our expectations
We consider that NDAs would be improperly used if you sought to:
use an NDA as a means of preventing, or seeking to impede or deter, a
person from:
reporting misconduct, or a serious breach of our regulatory requirements
to us, or making an equivalent report to any other body responsible for
supervising or regulating the matters in question
making a protected disclosure under the Public Interest Disclosure Act
1998
reporting an offence to a law enforcement agency
co-operating with a criminal investigation or prosecution.
use an NDA to influence the substance of such a report, disclosure or
co-operation
use an NDA as a means of improperly threatening litigation against, or
otherwise seeking improperly to influence, an individual in order to
prevent or deter or influence a proper disclosure
prevent someone who has entered into an NDA from keeping or receiving a
copy.
NDAs or other settlement terms must not stipulate, and the person expected
to agree the NDA must not be given the impression, that reporting or
disclosure as set out above is prohibited. It may be appropriate for the
NDA itself to be clear about what disclosures are not prohibited by the
NDA.
Where you find, or have grounds to believe, that a member of your firm has
or may have committed a serious breach of our requirements, we expect you
to report such findings or concerns to us. We may wish to investigate and
we have statutory powers that are not available to you. Failure to report
may be a failure to achieve Outcomes 10.3 or 10.4 and of one or more SRA
Principles.
Any attempt to prevent a person from complaining or providing information
to us will be a failure to achieve Outcome 10.7. Indicative Behaviour
(10.11) cites, by way of example, entering into an agreement which would
attempt to preclude us from investigating any actual or potential
complaint or allegation of professional misconduct. A practitioner who
proposes or uses an NDA or behaves in some other way that is in breach of
Outcome 10.7 is at risk of disciplinary action.
You may also be at risk if you use improper threats of litigation or
improperly influence a party by reference to other adverse consequences of
making such report or disclosure.
Inappropriate or disproportionate threats, including a threat of
defamation proceedings where such a claim is known to be unsustainable1,
may well involve serious breaches of the Principles or Code. These are
likely to breach our requirements, including Principle 1 and 6 as well as
Outcomes (10.7) and (11.1). Taking unfair advantage of an opposing party’s
lack of legal knowledge where they have not instructed a lawyer) is an
aggravating feature of such conduct (see Indicative Behaviour 11.7).
Where the employee is not represented, your obligations will be
heightened, to ensure that there is no abuse of position, or unfair
advantage taken.
If the agreement is or forms part of a settlement agreement under the
Employment Rights Act 1996, you should ensure that you are aware of the
requirements governing those agreements, including for the employee to be
in receipt of independent advice. You will also need to ensure that the
NDA does not include clauses known to be unenforceable.
Enforcement action
Failure to comply with this warning notice may lead to disciplinary
action.