On NDAs And Conflict Of Interest: The Stuff That Dissolves The Glue of Governance
The Philip Green case is, indeed, “not as simple as it seems’, as the media solicitor and FT contributing editor David Allan Green explained to us in an opinion piece in the Financial Times a few days ago.
As a member of the legal profession, he wrote about power, privilege, and responsibility. “A non-disclosure agreement, like any legal instrument, is neither a good thing nor a bad thing” he wrote. But that assumes, surely, that it is being made between equals.
All the evidence from the ongoing #MeToo movement suggests that gender equality is an elusive thing.
In the United States, when Stormy Daniels broke her NDA with Donald Trump to speak out, Harry Litman, the former United States attorney for the Western District of Pennsylvania and deputy assistant attorney general in the Department of Justice, wrote on CNN: “Donald Trump's favorite hammer in his bully-boy toolbox is the nondisclosure agreement, backed by million-dollar penalties for each violation. His legal team uses it to cow less sophisticated or less wealthy adversaries into silence.”
Since then, the air on both sides of the Atlantic has been filled with the sound of NDAs being shattered by those who perhaps should never have been asked to sign them.
And if gender equality is elusive, the question of racial equality is one that Britain’s top echelons are only now willing to begin to handle, with care. That’s obvious on many fronts - including the slow but steady emergence in the UK media of allegations of racial, as well as sexual discrimination. There is always strength in numbers. Once one person speaks up, taboo and fear around an unvoiced subject dissipates, and encourages another to do the same.
Isn’t that the same argument we have used to bolster our corporate governance and regulation around the protection of whistle-blowers ?
In Britain we have chosen (rightly, in my view) not to give financial incentives for whistle-blowing. Money is deemed best left out of it, in case it muddles the ethics. Yet NDAs are defended all the time as being an appropriate way to handle financial “settlements” of grievances, including allegations around unequal treatment.
Not being a lawyer, I had a Google to see what the thinking was around their use, and found this UK government guidance from the Intellectual Property Office (2015). It sensibly says: “The best way to keep something confidential is not to disclose it in the first place. If you do need to share information you should use a non-disclosure agreement (NDA).”
“An NDA is a legal contract. It sets out how you share information or ideas in confidence. Sometimes people call NDAs confidentiality agreements…..A good NDA restricts the use of the ideas and information to a specific permitted purpose.”
The language used there is very clear, and you don’t need to be a lawyer to understand it. because the purpose of NDAs should be to share innovative ideas, and to protect confidential information. But while that may be the purpose of an NDA stripped down to its core, it has clearly evolved into a tool that can be used by those with power to reinforce and maintain that power.
Where there is great economic inequality, financial incentives given to sign an NDA are deeply questionable. Lawyers like to talk about “the law” as something immutable. But we create our own laws, and the world is changing fast - even if the majority of those in positions of power and privilege are still male.
It is a great shame that the “mother of all Parliaments” has rejected calls to allow a parliamentary debate on non-disclosure agreements (NDAs) after two separate petitions demanding a change to the law between them secured 250,000 signatures.
"Perhaps Parliament would be better placed to challenge this abuse of the law if it weren't also caught up in the use of NDAs" wrote Maria Miller MP on the Commons' own use of NDAs, on which it spent £2.4million between 2013 and 2017.
Conflict of interest is the stuff that dissolves the glue of governance - as I noted in my latest Governance Watch.