New Zealand Law Society - Non-disclosure and confidentiality agreements – lawyers’ reporting duties and suppression of professional complaints
We are aware of concerns raised by lawyers about the impact of confidentiality clauses/“non-disclosure” agreements (NDAs) on their professional obligations. Examples of issues we have seen include lawyers believing they are constrained from reporting unacceptable conduct by other lawyers or from participating in a complaints process as a witness.
This issue is not unique to New Zealand. Overseas regulators of lawyers have also raised concerns about these types of agreements and, in some cases, issued warnings.1
The starting point is that lawyers cannot contract out of their professional and regulatory obligations. In this context they cannot simultaneously agree to suppress a professional complaint or a mandatory reporting obligation and, at the same time, fulfil their fundamental obligations and professional duties as lawyers.
The New Zealand Law Society Te Kāhui Ture o Aotearoa provides this note to give guidance to lawyers in New Zealand about their professional obligations in circumstances where:
Rule 2.8 prescribes lawyers’ mandatory reporting obligations where there are reasonable grounds to suspect that another lawyer may have engaged in misconduct2. This obligation applies despite the lawyer’s duty to protect confidential nonprivileged information (r 2.8.1) and is subject to only limited exceptions:
Another important exception for the purposes of this guidance is that that a lawyer who is a victim of the suspected misconduct is not required to make a mandatory report.
The report must be made “at the earliest opportunity”.
There are often good reasons to include confidentiality provisions in settlement agreements so that people can constructively move forward after a dispute. However, such an agreement or clause should not be structured in such that they appear to override a lawyer’s professional obligations and/or could impede the progress of complaints and disciplinary processes.
Any attempt by a lawyer to suppress a complaint or confidential report is contrary to the public interest and to the fundamental obligation of all lawyers to uphold the rule of law and facilitate the administration of justice under s 4(a) of the Lawyers and Conveyancers Act 2006 (LCA). 3There is a compelling public interest in the maintenance of professional standards, through the complaints and disciplinary framework. This is vital to ensure trust and confidence in the legal profession is preserved and inappropriate use of non-disclosure or confidentiality clauses must not undermine this.
A term in an agreement that amounts to an attempt to supress a complaint is likely to be clear enough, involving an agreement in which the lawyer offers a concession in exchange for the other party’s agreement not to make a professional complaint. A term that has the effect of supressing a confidential report may be more subtle. An example would be where a confidentiality term purports to be binding on other lawyers associated in practice with the subject lawyer, potentially constraining their reporting obligations (or the discretion to report) under rr 2.8 or 2.9 of the Conduct and Client Care Rules (Rules). In the view of the Law Society, such an agreement is likely to be unlawful and unenforceable.
In the context of an employment dispute, the Law Society is aware that parties can enter into a “record of settlement” per section 149 of the Employment Relations Act 2000 and agree to terms including confidentiality, non-disparagement of each other and full and final settlement. To avoid issues about disclosure arising a later date, considering professional obligations early and getting advice is key for both parties to the agreement.4
A lawyer should use their best endeavours to make a report to the Law Society before they enter into a final and binding record of settlement.
If a lawyer intends to make a mandatory report after signing a record of settlement, they should make this clear to the other party when negotiating the record of settlement, and include as an exception to any agreement on confidentiality “so far as the law allows”. To avoid a breach of good faith requirements, the possibility of making a report after signing a record of settlement, mandatory or not, should also be noted in the record of settlement itself.
Reliance by a lawyer on a non disclosure or confidentiality clause which has the purpose or effect of suppressing a complaint or a mandatory reporting obligation may itself potentially breach one or more of the following rules:
Lawyers also have obligations to provide information as part of investigations under the LCA complaints and disciplinary framework and regulatory bodies have powers to require the provision of information. A failure to comply with this may become a complaints and disciplinary matter or an offence under the LCA.5
Lawyers may agree with clients or other parties to resolve complaints or disputes – and the Lawyers’ Complaints Service encourages both parties to settle their differences constructively – but any such agreement should not include a term that purports to suppress a complaint or reporting obligation.
Considering professional obligations before entering an agreement and seeking advice is key.
If a lawyer is in any doubt or has concerns about their professional obligations or the legal consequences of discharging these, they should take independent advice or seek guidance as soon as possible. There is assistance available and talking to a trusted colleague or member of the National Friends Panel can be a good starting point to access support.
The Law Society also operates an Ethics Committee that is available to provide guidance in response to requests from lawyers about the application and interpretation of the Rules. For more information see Ethics Committee – providing guidance on the Rules of Conduct and Client Care.
1See: Solicitors Regulation Authority (UK)
2The obligation to self-report is also relevant. Lawyers are obliged to report, and not suppress, their own conduct which meets the threshold for reporting by other lawyers under r 2.8. Regulation 8 of the Lawyers and Conveyancers Act (Lawyers: Practice Rules) Regulations 2008 may also be relevant, in which all lawyers have a continuing obligation to disclose information to the Law Society which might affect that lawyer’s continuing eligibility to hold a practising certificate. In other words, information calling into question their status as fit and proper persons to practice law.
3See also s107 of the LCA.
4The Law Society’s Independent Working Group on unacceptable conduct in the legal profession, chaired by Dame Silvia Cartwright expressed significant concern over the use of NDAs in the context of bullying, discrimination and sexual harassment allegations – see: 0007-129922-Report-of-the-NZLS-Working-Group-December-2018.pdf “Concealing serious professional conduct issues by these means is not acceptable. The consequences of this are that perpetrators are not held to account and can simply “move on”, potentially placing other people at risk”
5For example, see s.147 of the LCA and ASC 1 v Kwon [2024] NZLCDT 44 at para 8