March 2024
The Non-Disclosure Agreement: To Regulate or Not to Regulate
Though a 20th century invention, non-disclosure agreements (or NDAs) have, for better or worse, become extremely common across both the public and private sectors. Through their depiction in pop culture and reports of public figures such as Harvey Weinstein using such agreements routinely as a means of silencing victims of abuse, NDAs have, in recent years, developed a questionable reputation as a tool of suppression.
Whilst it is important to note that NDAs are deployed for a wide variety of reasons, the vast majority of which are perfectly valid, it is not possible, nor ethical, to ignore the growing misuse of NDAs.
A recent study, conducted and published by the Legal Services Board (the LSB), uncovered evidence of a developing theme of those in positions of power increasingly using NDAs to conceal, minimise, or otherwise obfuscate instances of potentially illegal misconduct. In their findings, the LSB also suggested tactics of intimidation were used in accompaniment with such NDAs so as to strong-arm parties into signing.
Whilst the LSB’s findings are, at this point in time, very much in the embryonic stage and have yet to find conclusive proof that regulatory intervention was required to reverse the direction of the tide, the suggestion alone is concerning enough.
Indeed, NDAs are, by their very nature, intended to be secret and so gathering evidence as to their misuse was always going to be a difficult task. Then again, we are only as fast as our slowest person and, where there exists a gap to be exploited, it is an unfortunate but undeniable fact of life that it will be so exploited.
In light of the LSB’s, there will certainly be growing calls for increased regulatory oversight on the use of NDAs. However, as with all things, there are two sides to this particular coin. Overly restrictive regulations over NDAs would have sweeping effects on the sector, and not all effects would be borne evenly.
Indeed, the vast majority of NDAs are put in place for perfectly valid reasons and such restrictions would significantly tighten the wheels of a previously fluid area of practice. Whether this is a bad thing or not, will depend on who you ask.
Detractors of additional regulation would, rightly so, question what such regulation would even look like. Potential regulators could easily find themselves between a rock and a hard place – seeking at once to seal off avenues of the oppressive misuse of NDAs whilst attempting to maintain the necessary secrecy of NDAs as a whole.
Here at Cook Corporate, we are very interested to see how this area of the law develops. We are frequently instructed on the drafting of non-disclosure agreements and are very experienced in their negotiation and execution.
If you have been asked to sign an NDA, or would like one drawn up, please do not hesitate to contact us and we would be delighted to assist.