Government to consult over improper use of NDAs
The Government has confirmed that it intends to legislate in relation to NDAs in light of increasing concern regarding “unethical” use of such workplace agreements.
The consultation: “Confidentiality clauses: measures to prevent misuse in situations of workplace harassment or discrimination” will close on 29th April. Its aim is to look at how confidentiality clauses work in practice and what changes need to be made to safeguard individuals.
It asks whether limitations should be placed on confidentiality clauses in employment contracts and settlement agreements and whether disclosures made the police should be excluded from such clauses.
Yesterday, Professor Richard Moorhead, professor of law and professional ethics at University College London, gave evidence to the Women and Equalities Committee of the House of Commons. He said that some lawyers do not properly balance their legal duties, placing their clients’ interests over the public interest. He suggested that some are at risk of perverting the course of justice if NDAs dissuade individuals to speak to the police or regulator.
Why it matters
Both the Law Society and SRA have published practice notes and warning notices on the inappropriate use of NDAs. They emphasise the need for solicitors to remember their duties do not begin and end with acting on client’s instructions. We are officers of the court and have a duty to uphold the rule of law and proper administration of justice.
In addition to the legal work arising out of NDAs, solicitors are also employers. The rise in sexual misconduct cases before the SDT has risen considerably throughout 2018 in the wake of #metoo. The SDT has already indicated to the LSB that its annual budget would need to increase as a result.
Enforcement was highlighted as being key by Professor Moorhead, and the SRA has indicated that it is committed to thoroughly investigating any complaints received in relation to improper drafting of NDAs. It is highly likely therefore that we will hear about even more prosecutions.
NDAs will still have their place. However, the profession must not be drawn into facilitating the abuse of power.
GDPR consent advice: negligent?
The Gazette has published an interview with Brian Rogers of Riliance, who is warning firms that they may have given clients the wrong advice in the lead up to and wake of GDPR.
The main concern highlighted was the issue of the consent, one of the lawful bases for processing personal information. It is claimed that some lawyers gave incorrect – or at least over-cautious – advice on the requirement to obtain customer consent. (Consent is not necessarily required under GDPR).
Mr Rogers suggested that firms who gave advice to business clients in the lead up to GDPR should review their advice.
Why it matters
You might recall that last year we were emphasising that consent was but one lawful basis under the GDPR. The ICO guidance is clear that consent is not required if there is another lawful basis for processing personal data.
It may well be that some lawyers were overly cautious and advised clients to obtain consent, when it may not technically have been required. However, it is worth remembering that a lot of guidance issued at the time also hammered home the consent mantra. (We found that Lexcel certainly appeared to fall into that camp.)
And is cautious advice really negligent? That seems like a big leap. Impractical, maybe.
Government issues renewed no-deal Brexit risk outline
The Government has issued an updated no-deal Brexit risk outline. It should be read in conjunction with other recently published updated guidance from the MOJ.
Essentially, the risk outline highlights the areas of contingency planning that remain unresolved and the likely impact upon business and trade in the event of a no-deal Brexit.
This should come with a health warning: it does not make for pleasant reading. It indicates that, at the date of publication, trade deals have only been made with Switzerland, Chile, the Faroe Islands, members of the Eastern and Southern Africa (ESA) Economic Partnership Agreement, Israel and the Palestinian Authority.
What the government describes as “intensive discussions” are still ongoing with SACU+M, EEA EFTA countries, Canada and South Korea. Bridging mechanisms are being looked at for other countries with which agreements are not on course.
There is also a potential gap with regards to the flow of data. The EU has indicated that it will not make adequacy assessments in respect of data flow until the UK becomes a third country, ie. after it leaves the EU. There will therefore be a gap in terms of the lawful free flow of personal data. The government has advised that businesses will have to reach arrangements with their EU counterparts with regards to what legal basis they will rely on for the flow data.
In terms of legal services, in a no deal scenario, UK lawyers would be treated in the same was as third country nationals with regards to recognition of their professional qualifications. This would mean the loss of the automatic right to provide short term ‘fly in fly out’ services, as the type of work lawyers can do in each individual member state may vary, and the loss of rights of audience in EU courts.
The MOJ has also provided lengthy guidance in addition to the Law Society about the implications for UK law firms, which is particularly relevant to:
- European lawyers practising in the UK
- Solicitors and other legal professionals practising in the EU (including EFTA countries)
- Law firms operating across European jurisdiction
UK lawyers who have ownership interests in EU law firms need to take advice from local regulators as there is no guarantee that EU jurisdictions will permit ownership from “third country” lawyers which UK lawyers would become. Each Member state has their own rules regarding ownership.
We have highlighted below more guidance that has been issued by the Law Society this week in relation to potential implications for consumer law and criminal justice.
New tax evasion self-reporting advice
The HMRC has helpfully issued guidance for businesses that need to report themselves for failing to prevent the facilitation of tax evasion.
The corporate ‘failure to prevent’ offence was introduced by the Criminal Finance Act 2017. Solicitors firms may therefore fine themselves criminally liable for the actions of its employees and any third parties (“associated persons”) who provides services on behalf of or for the firm.
Why it matters
It is worth noting that self-reporting does not guarantee that the firm will not be prosecuted. However, it may be taken into account by prosecutors or reflected in any penalties that may be imposed. Always seek independent legal advice before contemplating self-reporting.
Reviewing the extremely useful updated Law Society practice note on the Criminal Finance Act is important. As is taking practical steps, such as having a policy and training staff, much like you will have done for the Bribery Act in 2010.
Practice Notes and Guidance
Anti-money laundering – Reporting your concerns – very helpful Law Society guidance
EU list of “high risk third countries” – always useful to remain up to date for AML purposes however it doesn’t appear to include Saudi Arabia.
No-deal Brexit – Consumer Law – highlighting changes to consumer law
No-deal Brexit – Criminal Justice and security co-operation – advice in relation to potential implications post no-deal Brexit.
Disciplinary decisions
- Alan O’Doherty has been struck off for having practised in a firm he knew was not authorised
- Jeffrey Alan Jackson has been fined £3,750 for having failed to secure 4000 client files after the closure of his firm
- Lee Robert Lipson has been struck off for having failed to disclose to drug related offences.