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Non-disclosure agreement cannot prevent complaints to Law Society

15 January 2019

The New Zealand Law Society says it believes that settlement or non-disclosure agreements between law firms and employees cannot prevent a person from making a complaint to the Law Society.

“An agreement which seeks to prohibit a person from exercising their right to complain to the Law Society in return for a sum of money or some perceived advantage or concession could be unenforceable, against public policy and could breach a lawyer’s obligation to uphold the rule of law. It could also foster corrupt practices and abuses of power,” the Law Society says.

The Law Society has reiterated its views on such agreements following release by the Law Society of England and Wales of a practice note for all solicitors who draft non-disclosure agreements and confidentiality in an employment law context, whether for their own firm or for a client.

The UK practice note states that, in any conflict of principles, the public interest in the proper administration of justice must come first. It draws a distinction between “appropriate and lawful clauses” aiming to protect trade secrets and “situations in which confidentiality provisions are aimed at preventing disclosure of conduct or other circumstances which, for example, may have led to a dispute or to the breakdown of the relationship between an individual and the business.”

The practice note says solicitors must remember that the UK Solicitor Regulation Authority Code of Conduct says their duty to clients is subject to a duty to the court and to the administration of justice.

“Where two or more mandatory principles come into conflict, the principle which takes precedence is the one which best serves the public interest in the circumstances, especially the public interest in the proper administration of justice. It is unlikely to be legitimate to ask a person to sign an agreement in which they agree not to disclose an unlawful act that has not yet happened, as the chances of such an agreement being legally enforceable are slim.”

The New Zealand Law Society says confidentiality provisions are often sought by both parties in a dispute and are beneficial in many cases. However, lawyers should not be able to “buy off” complainants. The Law Society says this has been endorsed by the Legal Complaints Review Office, which is the statutory appeal body for lawyer complaints, and this has been the Law Society’s position in the past.

“A confidentiality or non-disclosure clause does not absolve a lawyer from the obligation to report misconduct under rule 2.8 of the Rule for Conduct and Client Care. Failure to report the matter when required to do so could result in disciplinary action being taken against the lawyers who were a party to the agreement,” the New Zealand Law Society says.

The Law Society’s independent working group which considered the regulatory processes for unacceptable behaviour specifically examined the use of non-disclosure agreements and a lack of clarity in the scope of the Lawyers and Conveyancers Act 2006 as a mechanism to regulate their use.

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Last updated on the 15th January 2019