13 March 2018

Regulator warns law firms over use of non-disclosure agreements

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NDAs should not be used to cover up the reporting of potential misconduct, law firms are warned.

Allegations of sexual harassment in law firms has triggered a warning from the legal profession's regulator over the misuse of non-disclosure agreements (NDAs). The Solicitors Regulatory Authority has said that NDAs should not be used to prevent a person from reporting misconduct to the police or regulator. In a statement on its website, the SRA said: 'We have warned law firms that non-disclosure agreements (NDAs) should not be used to prevent the reporting of professional misconduct. In a warning notice, we have reminded law firms that potential professional misconduct by a person or firm should be reported to us.This includes sexual harassment or misconduct towards other employees or clients. NDAs are widely used to protect commercial interests, confidentiality, and - in some circumstances - reputation. However, they should not be used to prevent people reporting wrongdoing to the relevant authorities, such as the police or a regulator.'

Cultural issues

The SRA went on to say: 'There is widespread reporting of the perception that NDAs, alongside cultural issues within some firms, are resulting in low levels of reporting of inappropriate sexual behaviour. We have received relatively few complaints about such behaviour. Over a two-year period (November 2015 to October 2017) it received 21 complaints relating to such allegations of inappropriate sexual behaviour.'  Paul Philip, SRA chief executive officer, said: 'The public and the profession expects solicitors to act with integrity and uphold the rule of law. And most do. NDAs have a valid use, but not for covering up serious misconduct and in some cases potential crimes.'