Time’s Up for non-disclosure agreements

The days of using non-disclosure agreements to hush up sexual assault and harassment in the legal profession are rapidly drawing to an end.

Non-disclosure agreements are repeatedly being used in New Zealand following allegations of inappropriate behaviour by senior lawyers to interns and female lawyers.

When a complaint is made to a law firm, it is typically dealt with by drawing up an agreement requiring secrecy.

The documents are extremely wide in scope and have very similar wording - along the lines of the following:

“All circumstances, discussions and correspondence leading up to and including this Agreement and the existence of the Agreement itself shall be confidential to the Parties and their advisers unless otherwise required by law. The Parties agree that there shall be no publication by any means (oral, print, electronic or otherwise) of the details of this Agreement.”

There is no broad disclosure of what has happened and no steps are taken to prevent the behaviour from being repeated, either by the perpetrator or by others within the organisation.

The firm does not recognise or acknowledge a firm-wide issue and does not implement specific policies about sexual assault and harassment.

The partners also do not report the matter to the New Zealand Law Society, despite each of them being specifically obliged by Rule 2.8 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 to do so.

The rule applies to all lawyers and obliges us to make a confidential report to the Law Society at the earliest opportunity when we have reasonable grounds to suspect that another lawyer has been guilty of misconduct.

Secrecy means that each assault is treated as a separate and unique event. Victims do not know that the same behaviour has been perpetrated against other lawyers and interns, and cannot draw strength from sharing experiences.

The perpetrator might leave the firm, but his name will be secret and he will go on to a similar position elsewhere or become a barrister. The firm will commonly provide him with a reference, which does not disclose the sexual assault and/or harassment. 

The perpetrator’s reputation and income-earning capacity will be undiminished.

The victim is also likely to exit the firm - either immediately or after a time – and many young lawyers leave the legal profession altogether.

The victim will generally receive a payment on signing the non-disclosure agreement and uses this for expenses associated with the trauma of what has been done to her, and for living expenses while changing jobs or careers.

There are a number of problems with these agreements. The key issue is that they prevent perpetrators from being brought to account and fail to ensure that their behaviour is stopped.

When the conduct involves physical contact with the young woman, that is the criminal offence of assault. Some of the behaviour involves the most serious sexual assault.

That is usually dealt with by our legal system and involves the laying of criminal charges. However, there have been no charges laid over assaults in the legal sphere.

Some perpetrators engage in serial assault and harassment. Secrecy means that each assault is treated as a separate and unique event. Victims do not know that the same behaviour has been perpetrated against other lawyers and interns, and cannot draw strength from sharing experiences.

The security of knowing that sexual harassment and assault will not be made public means there is less incentive for law firms to do anything to combat it. 

Many perpetrators are high fee earners for their firms, and partners sometimes decide to protect the organisation’s income stream, rather than end harassment.

In one American case involving a workplace which was not a law firm, as soon as a non-disclosure agreement was signed, the company promoted the perpetrator.

Secrecy also hides the scale of the problem and allows people to say that sexual assault and harassment in the legal profession – and elsewhere - are rare.

Clients who might want to make their disapproval of the conduct plain cannot do so, as they are unaware that the lawyer they have engaged is a perpetrator.

Firms may go on to hire lawyers who have engaged in illegal conduct, as they are unaware of it.

Secrecy also hides the scale of the problem and allows people to say that sexual assault and harassment in the legal profession – and elsewhere - are rare.

The agreements pre-suppose that a settlement is being negotiated between equals, but in fact there is a massive power imbalance.

On the one hand there is a young, traumatised victim at the very start of her legal career and terrified that her years of study will be rendered worthless if she acquires a reputation as a troublemaker.

On the other side is the might of a powerful law firm with huge financial and legal resources, and every incentive to keep matters quiet to protect its income stream.

For these reasons, steps are being taken in other countries to ban or limit the use of non-disclosure agreements to hush up sexual assault and harassment.

In the United States, the state of California Senate in May approved legislation banning the use of secret settlements in cases of sexual assault, sexual harassment and sex discrimination.

The law change does not prevent the parties from mutually agreeing to settle, but bars perpetrators from requiring victims to remain silent about the harassment or assault as a condition of settlement.

The bill was passed with bipartisan support and will apply both to public and to private sector employers.

Similar measures are in the pipeline in New Jersey, New York, Pennsylvania and Washington.

The high-earning perpetrator is of far more value to the law firm than the victim is.

In the United Kingdom, the Equality and Human Rights Commission said in March that firms should not use non-disclosure agreements to sweep sexual harassment under the carpet.

The commission called on the Government to pass a law to prevent employers from ignoring sexual harassment and assault complaints to protect their reputations. It also advocated a new legal duty on employers to prevent harassment or victimisation, as well as more protection for victims.

Most relevantly for law firms in New Zealand, the United Kingdom’s Solicitors Regulation Authority in March issued a “Warning notice” about the use of non-disclosure agreements.

It acknowledged there were legitimate uses for the agreements, but said the Authority was concerned to ensure that lawyers did not –

* Use non-disclosure agreements in a way which led victims to feel they could not notify the Authority or other regulators or law enforcement agencies of conduct which might otherwise be reportable;

* fail to notify the Authority of misconduct or serious breaches of regulatory requirements by lawyers or firms, including wrongdoing by the firm, or harassment or other misconduct towards others such as employees or clients; or

* use non-disclosure agreements as a means of improperly threatening litigation or other adverse consequences, or exerting inappropriate influence over people not to make disclosures protected by statute, or reportable to regulators or law enforcement agencies.

The warning followed the use of a confidentiality agreement after an alleged assault at law firm Baker McKenzie in 2012, and publication of a survey by Legal Week which reported that two-thirds of the 100 women lawyers surveyed had experienced sexual harassment at work.
The Authority went on to state that inappropriate use of non-disclosure agreements; failure to report actual or suspected misconduct or other wrongdoing or criminal conduct; or not reporting wrongdoing that was the subject of a non-disclosure agreement might put lawyers in breach of their ethical obligations.

Notably, the United Kingdom has an independent regulator – the Solicitors’ Regulation Authority – to oversee the legal profession.

New Zealand has self-regulation of lawyers by lawyers.

The New Zealand Law Society has issued no firm warning similar to that published by the United Kingdom regulator.

An article in the United Kingdom publication The Law Society Gazette said that the legal profession now faced a period of introspection as it assessed whether enough was being done to ensure that staff were protected, and whether non-disclosure agreements could put firms at risk of misconduct charges.

“The morality of non-disclosure agreements is up for discussion, but for the Solicitors Regulation Authority the issue is non-negotiable: if wrongdoing is happening inside law firms, there is a duty to report it… On the surface, the 21 complaints of sexual misconduct received by the SRA over two years suggests there is no problem. But many within the profession believe a dam is about to burst on revelations about serious misconduct and attempts to hide it.”

New Zealand has self-regulation of lawyers by lawyers.

The Westminster Parliament’s Women and Equalities Committee is inquiring into sexual harassment in the workplace, including the use of non-disclosure agreements and the legal advice given to those who sign them.

However, it is easy to see how powerful a weapon non-disclosure agreements have been until now in keeping victims silent.

A law firm representing United States President Donald Trump in March filed court papers claiming Stormy Daniels, who alleged she had an affair with Trump, was liable for up to US$20 million in damages for breaching a non-disclosure agreement.

Andrea Constand, whose sexual assault allegations led to charges being laid against Bill Cosby, was sued by the comedian in 2016 after reporting her ordeal to law enforcement officials.

She had signed a non-disclosure agreement in 2006. A federal judge later ruled that Cosby could not sue Constand for speaking to law enforcement officials – although the court said she could be sued for speaking to the media and sending tweets.

We can anticipate that more women in the United States will ask courts to rule that non-disclosure agreements do not prevent them from reporting criminal behaviour.

In New Zealand, it could be expected that a court would rule that a non-disclosure agreement which hushed up criminal behaviour would be void as contrary to public policy.

I want to make it clear that I am not criticising non-disclosure agreements which protect victims. Young women at the start of their legal careers are placed in invidious positions when subjected to sexual harassment and assault.

They know that if they complain they might not be believed. Further, our victim-blaming culture is likely to place responsibility for the behaviour on the woman rather than on the senior man.

The high-earning perpetrator is of far more value to the law firm than the victim is.

Being branded a troublemaker or litigious at the start of her legal career will effectively halt that career in its tracks.

The reasons for victims signing non-disclosure agreements are accordingly crystal clear.

However, at present the agreements provide more real protection to perpetrators than to victims, and hush up the full extent of sexual assault and harassment in the legal profession.

Law firms and the Law Society need to find other and effective ways of addressing these issues, or the Government and clients - who do not like what they are seeing - will do it for them.

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