NDAs: the role of lawyers in their misuse

The role of lawyers in the misuse of non-disclosure agreements (NDAs) is once again in the spotlight, following the publication of a Report by the Legal Services Board, which gathers evidence on the use of NDAs. It concludes that there is sufficient evidence for it to look again at the regulatory framework, meaning either better enforcement action or further regulation on their use. We can expect to know more about this late in 2024 or early in 2025. One of the key themes that comes across from the report is that whereas it is relatively easy to steer clear of unlawful use of NDAs (such as preventing whistleblowing or reporting to a regulator), there is considerable ambiguity about what unethical use looks like. 

The report does not conclude either way whether misuse is widespread, not least because positive experiences were less likely to be reported by respondents and some who are subject to NDAs did not feel free to give evidence. But whatever the wider societal impact of misuse of NDAs, there is also an important question for lawyers in there, namely what does ethical practice look like when no one is looking? Whose interests do you represent at any one time, your client's, those of a litigant in person on the other side, your firm's, your profession's, your own? The answer may be all of the above. 

For employment lawyers, there are particular constraints and conflicting considerations that will be at play when advising on NDAs, which should be done with regard to the SRA guidance issued in 2018:

• The parties often need to get a deal done quickly.
• For employers these often feel ‘normal’, whereas employees often take a while to process and come to terms with being asked to sign one in the first place. 
• Who is paying the fees? The lawyer acting for an individual in respect of a settlement agreement may have a limited budget (often £250-£750 being paid by the employer) and there is pressure to cover off a lot of issues in little time.
• While repeated use of NDAs to cover up a pattern of sexual misconduct in a workplace is now considered unethical, lawyers advising a client may find it hard to say NDAs are being used in this way, not least because a lawyer is not always best-placed to form a view about the prevalence of a systemic issue.  

While the SRA guidance of 2018 is helpful, and lawyers should familiarise themselves with it, without more, the ambiguity about what constitutes unethical use of NDAs will continue to feel like a bit of a fudge. I tend to agree with what the Bar Standards Board submitted in the LSB report, that “until NDAs are deemed unlawful or their lawful use is further restricted, the BSB’s preference [is] for Parliament to legislate in this the area”.