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Presidents Club scandal: what is the point of an NDA?

Somebody — probably a lawyer — drafted the non-disclosure agreements (NDAs) thrust in front of 130 young women just before they were instructed to schmooze 360 captains of industry at the scandal-ridden all-male Presidents Club fundraising dinner last month.

But “it wasn’t us, guv”, is the response finally produced by Berwin Leighton Paisner (BLP), the City of London firm revealed as having advised the charity’s trustees for several years.

BLP has been doing its best impression of an ostrich since the scandal emerged. For days it refused to comment on reports that one of its partners attended the dinner, which is clouded with allegations that hostesses were the victims of sexual harassment and in some cases potential sexual assaults.

Eventually it released a statement acknowledging that Graham Shear, the head of the firm’s international and commercial disputes department, was present that night — although there is no suggestion that he participated in or was aware of the alleged behaviour — and that the practice had provided advice to the trustees on a pro bono basis.

And more than a week after the first revelations, the BLP finally issued a blunt statement regarding those non-disclosure agreements. Had it drafted them? “No, we did not.”

Regardless of who crossed the t’s and dotted the i’s, the Presidents Club saga has reignited debate over the morality of heavy-hitting lawyers concocting NDAs for legally unsophisticated punters to initial. The issue cropped up as part of the allegations around the Hollywood film mogul Harvey Weinstein, when it emerged that he instructed the “magic circle” practice Allen & Overy to insist that two women sign an NDA as part of a damages settlement.

At least those two former Weinstein assistants received legal advice. It is understood that the Presidents Club hostesses had a nanosecond to consider their five-page NDAs before being herded into the ballroom at the Dorchester in London, and were not allowed to take a copy with them.

Ironically, it could be argued that the organisers might as well have not bothered. NDAs, says Michael Edenborough, QC, of Serle Court, “cannot be used to prevent the disclosure of illegal happenings, such as insider dealing or sexual harassment”. However, he acknowledges that in practice, the value of NDAs — especially those signed by people not used to dealing with legal niceties — “is that they deter disclosure even when they cannot be enforced”.

Louise Skehan, a partner at McCarthy Denning, points out that NDAs are legitimate commercial legal tools that “come in all shapes and sizes”. Indeed, it is relatively routine for staff working at dinners where commercially sensitive information is discussed to sign confidentiality agreements.

However, says Skehan, those “are usually limited to commercially confidential information. It is very unusual to have such agreements at a charity dinner where there would be no restrictions on who could attend. In the absence of independent legal advice for the worker, it is not possible in law to use a NDA to settle any discrimination claim.” Importantly, NDAs cannot be used to stop a whistleblower.

Lawyers argue that if a client insists on an NDA, the agreement should be drafted clearly and precisely to provide the greatest protection. David Israel, a partner at Royds Withy King, maintains that an ethical lawyer will not agree to the misuse of NDAs. “If the solicitor knows that the NDA is to be presented to individuals with no legal knowledge and will be required to sign without legal advice, then the solicitor when drafting should be cognisant of their obligation not to take unfair advantage of such a person,” Israel says.

There is also a distinction between NDAs signed before any harassment or other misdeeds take place and one signed afterwards. The latter, explains Sarah Chilton, a partner at CM Murray, “will often be signed as part of a wider settlement of a legal claim against an employee and/or a harasser”. Those are far more likely to be signed after the layperson has received legal advice. That contrasts starkly with NDAs signed before harassment takes place, with documents presented without time for consideration and often without access to legal advice.

Chilton agrees that lawyers acting for employers are under professional obligations “not to take unfair advantage of third parties”. “Therefore consideration has to be given as to the lawyer’s role when dealing with third parties, particularly those who are unrepresented and especially if any pressure is put on an employee to sign an NDA.”

Domonique McRae, of SA Law, says that while NDAs are common practice in business, they have been less frequently invoked in circumstances such as charity dinners. Although, she adds, “they do appear to be gaining popularity” at this type of event.

McRae concedes she is uncertain of what the Presidents Club organisers were attempting to achieve with their NDA. “It is unclear what information was subject to restriction and therefore it is impossible to determine whether that information is truly confidential,” she says. “It is hard to imagine what information the hostesses might have been exposed to which would not be publicly available — which raises the question, were the NDAs necessary?”

Sarah Chilton, published in The Times

By Jonathan Ames