Chancery Lane issues practice note on non-disclosure agreements
The Law Society has published a practice note on non-disclosure agreements and confidentiality clauses in an employment law context.
It said the practice note should be read by all solicitors who draft non-disclosure agreements and confidentiality clauses in an employment law context, whether that is for their own firm or for a client.
Chancery Lane said: “There are often legitimate reasons why parties want to enter into confidentiality arrangements. Confidentiality clauses, which may include terms commonly referred to as non-disclosure agreements, within settlement agreements are used to stop commercial information from being shared inappropriately and to avoid reputational damage.”
The practice note focuses on 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 for which he or she works.
Amongst other things, the practice note says that when drafting NDAs, solicitors need to consider the SRA Code of Conduct, which sets out 10 mandatory principles. “Solicitors have a duty to act in their client's best interests. That duty is subject to their duty to the court and to the administration of justice.”
The practice note adds: “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 says that before drafting confidentiality clauses, solicitors should also familiarise themselves with the SRA's Warning Notice on the use of NDAs. “Though the Notice does not trump the Code, it does indicate how the SRA may apply the Code towards the drafting of confidentiality clauses in employment situations.”
The practice notice covers:
- Introduction: Who should read this? What is the issue?
- Regulatory duties
- Reporting illegal activity
- Whistleblowing
- Considering whether NDAs and/or confidentiality clauses are understood
- People who the employee may need to speak with
- Protecting confidentiality of and from other employees
More information on the practice note can be found here.