The SRA has warned of a ‘fundamental imbalance’ over non-disclosure agreements being drafted by lawyers on behalf of companies.

A thematic review of the issue revealed that employers will generally dictate the terms of any agreement, sometimes before or without an employee speaking to a lawyer of their own.

Many firms also used their own standard templates which took no account of the individual circumstances of a given case.

In some cases the SRA found NDAs that could result in preventing disclosure of information, but the regulator made it clear there was no evidence of clauses intentionally added to suppress reports of wrongdoing.

Juliet Oliver, general counsel of the SRA, said: ‘From employees having insufficient access to independent legal advice, to employers imposing tight time limits and a sense of urgency to complete settlements, the report also found significant imbalances in power between parties signing NDAs.’

NDA

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The issue of NDAs has come into the spotlight since the #MeToo movement and high-profile investigations involving allegations of sexual harassment in the workplace. Solicitors’ role in drafting agreements between employers and employees has been criticised in some quarters for helping to prevent criminal conduct from coming to light.

The SRA issued a warning notice to the profession on the use of NDAs in 2018 which prompted a rise in reports about their improper use. A review of the sector followed, which involved surveying 150 firms providing employment services, interviews with 25 firms and visits to 13. The Advisory, Conciliation and Arbitration Service (Acas), Junior Lawyer Division and the whistleblowing charity Project were also consulted.

The SRA detected a number of problems which might inadvertently contribute to firms helping to suppress inappropriate behaviour. Only a quarter of firms had questioned a client on whether inclusion of an NDA was appropriate when they were asked to prepare one. The vast majority used templates to draft agreements and only 12% provided specific training on NDAs.

The risk of helping to cover up misconduct was ‘routinely underestimated and rarely explored’, with firms focusing far more on the nature and extent of any possible financial settlement, rather than the specific clauses within any agreement.

More than a third of firms were not aware of the 2018 SRA notice and even among those who had seen it, knowledge on the issues covered was fairly low.

The SRA intends to do more to raise awareness among their profession of their obligation to challenge and report unacceptable NDAs or behaviours.

‘What is clear is that solicitors acting for employees need to be explicit with clients about the extent of the advice they can provide where the budget is limited, and be satisfied that they are able to carry out their role to a competent standard in the time provided,’ concluded the review. ‘This is particularly important as many employees will have limited influence, knowledge, and resources to challenge employers without support.’

 

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