Draining the swamp – Do NDAs represent a #MeToo problem for the profession?

A light has lately shone on a legal document which, by definition, should never bask in the sunshine. The saga, which was to trigger reverberations concerning abusive behaviour in many industries – and lawyers’ role in drafting gagging orders – began in October 2017, with disclosures by British producer Zelda Perkins (pictured).

In written evidence to MPs, Perkins called the gagging order she signed nearly 20 years ago with her former boss Harvey Weinstein amid sexual harassment allegations ‘stringent and thoroughly egregious’.

Last autumn Perkins had initially gone to Bindmans head of media Tamsin Allen for advice on going public before she became frustrated with slow progress locating the agreement and pressed on.

‘It’s not about the law firms. It’s about the regulations that weren’t there.’
Zelda Perkins

The terms of that non-disclosure agreement (NDA), which silenced Perkins for two decades in exchange for £125,000, sparked sustained controversy and contributed to a wave of disclosures across many industries. Perkins’ revelations also became the subject of both a parliamentary inquiry and probes by the Solicitors Regulation Authority (SRA), turning an uncomfortable focus back on the legal profession.

The same parliamentary hearings made Mark Mansell, the veteran Allen & Overy (A&O) partner who drafted the settlement for Weinstein and his company Miramax, the unwilling poster boy for the profession’s role as NDA-pushers.

MPs in March accused Mansell of crafting an agreement that not only potentially pushed the ethical envelope but could be read as perverting the course of justice. Opinion in legal circles is far more divided. Meanwhile, through the first half of 2018 a string of disclosures regarding complaints of harassment or unacceptable behaviour at Baker McKenzie, Dentons, and Latham & Watkins highlighted the legal industry’s record in enabling abusive behaviour.

As recently as July, written evidence to the select committee came to light of an NDA between a Magic Circle firm and a former junior lawyer who claims to have been sexually assaulted by a partner in her team.

In August, the SRA kicked off a consultation aimed at ‘providing clarity’ as to when law firms should report a breach of code of conduct, amid indications that firms routinely favour private settlement over notifying their watchdog.

Meanwhile, eight law firms are known to be under some form of SRA investigation related to circumstances surrounding NDAs and harassment, including at least three major firms. Most believe that there are more embarrassing disclosures awaiting the legal profession.

The document was kept in a safe at Simons Muirhead with a post-it note inscribed ‘this must not walk’. All the supporting documents were apparently destroyed in a warehouse fire.

One of us

‘Deeply unedifying’, shudders one employment lawyer at a US law firm in London – a contemporary of Mansell – as they recall watching the hearings. A further cause for professional soul-searching is the high regard with which the A&O partner is held by peers. ‘Mansell is better than most,’ says one. ‘If you want an unethical employment lawyer, I could point you towards many. Mansell is not one of them.’ Another employment law veteran observes, incredulously: ‘He’s one of us.’

If the feeling after the first Women and Equalities Committee meeting on sexual harassment in the workplace on 28 March 2018 was ‘there but for the grace of God go I’, the MPs’ cross-examination of SRA chief Paul Philip at the second evidence session on 25 April hammered it home.

Philip’s sheepish admission that a belated investigation of the Weinstein/Perkins NDA is underway highlighted the potentially high-impact consequences for solicitors of such gagging deals.

Talking to Legal Business, Perkins is adamant that her cause is not a vendetta against A&O or Simons Muirhead & Burton – the firm that represented her at the time. It is focused on the wider culture that the legal profession is a part of: ‘It’s not about the firms. It’s about the regulations that weren’t there.’

That view is a reminder that Mansell was far from the only lawyer involved. Simons Muirhead which, as Perkins’ adviser was directly responsible for guarding her interests, had until recently escaped with little scrutiny or criticism.

Whereas Mansell faced the select committee hearing on 28 March, Simons Muirhead managing partner Razi Mireskandari declined to give evidence. Another partner, Tamara Ludlow, was present instead. However, given that Ludlow had not worked at the firm at the time of the agreement, there were obvious limits to her ability to contribute.

It has since come to light that Simons Muirhead is now also under investigation by the SRA after pressure from Perkins.

Yet the SRA’s treatment of the case has also attracted much criticism, given it only issued a warning notice on 12 March regarding the misuse of NDAs, more than four months after the original Weinstein disclosures.

Paul Philip (pictured) was reduced to making explicit the passivity of the watchdog’s wait-and-see approach to enforcement.

Such scrutiny has, of course, only highlighted how well established the use of highly-restrictive NDAs had become. ‘Everyone was sailing close to the wind,’ Perkins says of the lawyers involved with her case all those years ago.

And although it became a focal point of the hearings, Perkins’ evidence was nearly omitted from the select committee enquiry. The process came after a 2016 investigation into discrimination against working mothers and pregnant women found widespread use of NDAs.

Committee chair Maria Miller MP stresses the wider context of the committee’s work: ‘I thought long and hard about whether to include Zelda Perkins in the enquiry. Forty percent of women have experienced sexual harassment at work; it’s not just something that affects those in the film industry.’

Reflecting on Mansell’s performance in front of MPs, Miller gives him a backhanded compliment: ‘I was surprised and delighted when [Mansell] showed up at the select committee evidence session. That he agreed to show up suggested a lack of understanding about the severity of the situation.’

The only option

The non-disclosure commitments at the heart of the Weinstein case are part of the settlement signed on 23 October 1998 in A&O’s London offices (then at One New Change). Perkins worked for Weinstein as his aide in London and Europe from 1995 to 1998. She resigned at the age of 24 when she learned of allegations that the film mogul had sexually assaulted and attempted to rape one of her colleagues in Venice. (Though currently facing criminal charges in the US on three separate cases of sexual assault, the producer has pleaded not guilty and consistently denied all claims of non-consensual sex.)

Perkins went to the US shortly after the Venice trip and saw Anne Vladeck, a prominent New York employment attorney at Vladeck, Raskin & Clark, on a personal recommendation. Vladeck was unable to represent Perkins for jurisdictional reasons but gave guidance on clauses that could be used in a potential settlement. Says Perkins: ‘Anne planted the idea of the HR clauses [to prevent Harvey Weinstein from potential future misconduct]. But at this point, I didn’t know what was going to happen – I thought the case would go to court.’

Returning to London, Perkins went to employment lawyers at Simons Muirhead as it was closest to her office in the West End. There began a process that Perkins recalls with horror. She and the colleague whom Weinstein allegedly attempted to rape wanted to prosecute but were advised against it by Simons Muirhead. ‘Firstly because the incident had not happened in the UK, it was not under UK jurisdiction; secondly, because of the disparity of power between the two parties. And because, as we had no physical proof, if we did go to the police in the UK or we tried to take it to court, we would be utterly crushed,’ Perkins told the select committee.

Perkins’ suggestion of going to Miramax’s parent company, Disney, because she believed the company with its Christian ethos ‘would be horrified to be employing a potential rapist’ was, she recalls, met with derision.

‘We were again advised that we would run the risk of our reputations and our families’ being publicly and financially destroyed by both companies, made to look like unreliable witnesses, liars, mentally unstable, and have our personal and family histories dragged through the papers.’

With a damages claim framed as the only option, Perkins’ lawyers told her that the maximum she could expect would be a year’s salary (£20,000), advising that asking for anything more could be seen as unreasonable and jeopardise the whole settlement.

‘Lawyers get so used to doing stuff for clients without considering their obligation to protect the rule of law.’
Richard Moorhead, UCL

Another questionable development came when Perkins’ case was handed over by then partner Mireskandari to Sarah Ricca, then a three-year-qualified junior lawyer and now one of the founding partners at Deighton Pierce Glynn. Perkins believes that Ricca, while able and diligent, was out of her depth against the heft of the Weinstein camp.

Perkins recalls herself taking the lead on certain provisions she wanted in the agreement, which were initially dismissed or resisted by her own lawyers. One, inspired by her meeting with Vladeck in New York, was a clause stipulating that Weinstein must go to therapy; that an HR system must be introduced with three complaint handlers, one of whom had to be an attorney; and if another woman filed a complaint over the next two years, that complaint or Perkins’ own NDA would be shown to Disney or Weinstein would be fired.

Another factor was the level of compensation. A more senior female colleague at Miramax had advised Perkins that – since a settlement was the only option – the damages should fit the severity of the alleged events. Her lawyers strongly advised her not to ask for that amount of money.

The clauses that have caused lawyers and MPs concern over ethics and legality centre mainly on the scope of the non-disclosure terms and, implicitly, what they may have been used to conceal. Mark Stephens, head of media and regulatory at Howard Kennedy, who is currently advising Perkins, describes it as ‘at the extreme end of the spectrum of the severity of NDAs’, even for the time.

Only five pages of the much longer document were published in the inquiry. One clause stipulates that Perkins is not allowed to keep a copy of the agreement; it had to be kept at the offices of Simons Muirhead.

Another states that Perkins must ‘in the case of any civil legal process and where reasonably practicable in the case of any criminal legal process, give not less than 48 hours prior written notice to the company through Mark Mansell at Allen & Overy before making any such disclosure’.

She must also ‘use all reasonable endeavours to limit the scope of the disclosure [and] as far as possible provide reasonable assistance to the company and its legal advisers if it elects to contest such legal process’.

Another clause asserts that if Perkins needed treatment from a medical practitioner in connection with the alleged conduct she should use ‘all reasonable endeavours’ not to disclose the name (of Weinstein or Miramax) and should ‘obtain the medical practitioner’s written confirmation in the form of a confidentiality agreement’. Apart from being heavy-handed, medical professionals are already obliged to maintain patient confidentiality.

Aside from these contractual points, the circumstances of the negotiations that led to the agreement have been called into question. Perkins describes the deal as the culmination of a ‘bewildering experience that was akin to being under siege with gruelling sessions lasting many hours, on one occasion running from 5pm until 5am [at A&O’s offices]’.

‘It might be perceived’

The somewhat unusual negotiations and resulting agreement have led some to question the tactics of Simons Muirhead in representing Perkins. Echoing the views of many lawyers interviewed for this piece, Richard Moorhead, chair of law and professional ethics at University College London, says: ‘It’s pretty concerning that Zelda Perkins’ case was delegated to a junior lawyer. It’s not uncommon for cases to be passed to a lower level, but shocking that a reputable firm would delegate a case like this, which concerned allegations towards the highest levels of seriousness and where the opponent would be expected to be difficult.’

Mireskandari, now managing partner at Simons Muirhead, declined to comment at the select committee hearing and declined to comment for Legal Business.

However, Perkins’ side of the negotiations had a wider bench than has previously been understood. She confirms that Martin Westgate of Doughty Street Chambers, now a QC, was instructed alongside Ricca.

Westgate qualified in 1985 so would have had substantive experience at the time. He took silk in 2010. Westgate and Ricca – who now specialises in police law, civil liberties and human rights at Deighton Pierce – did not respond to requests for comment. Nevertheless, Legal Business has discussed the case on background with one party connected to her original legal team, who notes: ‘[Simons Muirhead] is not a hick firm; it has gone against City firms before. The terms imposed were draconian, but otherwise they [Perkins and her colleague] would have got peanuts. A&O definitely drafted the terms – it was heavy-handed then and more so now. [But] I think A&O acted well within the law. If they were to answer today, they regret it, but as a lawyer you do the best for your client. The worst thing was Miramax not enforcing the part about making sure [Weinstein] didn’t repeat his actions.’

‘The negotiations were not about money. They were geared towards Harvey Weinstein’s lawyers trying to find out who we had told.’
Zelda Perkins

Perkins notes that Westgate was present for the duration of the negotiations, including the 12-hour overnight session. ‘The negotiations were not about money. The compensation had been agreed almost straight away, contrary to what my own lawyers said would happen. The negotiations were mainly geared towards Weinstein’s lawyers trying to find out who we had told [about the sexual misconduct claims] and negotiating the obligations we wanted in place for him. I refused to name the individuals I had told as I feared repercussions for them personally from Miramax. In the end I managed to get away with only describing the category of person they were, like “a close family member”.’

Stephens says his client bears no hard feelings against Ricca, who was struggling with a difficult challenge. He also concedes that Ricca benefited from advice from Michael Seifert, a veteran lawyer who fought in the 1980s as a lawyer to the National Union of Mineworkers in repeated clashes with the government and worked as sole practitioner at the offices of Simons Muirhead during the 1990s. He died in 2017. ‘[Seifert] was a good, hard negotiator who gave Sarah [Ricca] advice. Whether she sought it or Seifert recognised she needed it, he advised.’

Despite having more experience to hand than immediately apparent, there are still some questions around Simons Muirhead’s handling of this case and why the firm consented to some of the agreement’s more restrictive provisions.

‘One of the most pernicious things about it was Simons Muirhead signing a solicitor’s undertaking confirming that the women shouldn’t have a copy of the contract,’ says Stephens, echoing the sentiment of many lawyers interviewed.

Tamara Ludlow told the select committee in March: ‘I have never, in any firm I have worked in, had a situation where the individual for whom I was acting did not have a copy of the agreement.’ While Ludlow came short of classing that as unlawful, she did concede that not letting the client have a copy of the agreement was ‘probably’ unethical.

Miller comments: ‘Did [Perkins’] solicitors have her best interests at heart? You have to question that, but it was the NDA itself we [the select committee] were interested in.’

The document was kept in a safe at Simons Muirhead with a post-it note inscribed ‘this must not walk’. All the supporting documents – including the evidence given by Perkins and her colleague – were apparently destroyed in a warehouse fire.

When asked to verify these details, a spokesperson for Simons Muirhead said: ‘We do not comment on any client-related matters.’

At the very least, having to go to her solicitor every time she wanted to look at the document could be considered impractical and unreasonably rigid. ‘Why didn’t they let her have a redacted copy of the agreement? Surely that would have been more sensible?’ notes one employment lawyer.

A report issued in July drawing on 464 responses from the Employment Lawyers Association (ELA), found ‘less than 1% of respondents’ confirmed that they had ever advised on a settlement with a requirement that the employee could not keep the agreement (it is unclear if more simply they did not specify such terms in the survey).

Nevertheless, most veteran lawyers back the basic negotiating position of Perkins’ camp in pursuing an out-of-court settlement rather than a lengthy, expensive and distressing court battle.

The £125,000 settlement for the time would have been viewed as a substantial sum for a young woman who could realistically expect a year’s salary (£20,000) and a nominal injury-to-feelings claim at the most.

One employment specialist cites the mood of the 1990s for context: ‘At that time, sexual harassment cases were par for the course, even when there was no misconduct. People made the claims because compensation was uncapped, unlike in an unfair dismissal claim.’

Suzanne McKie QC, a sex discrimination and harassment specialist and the founder of Farore Law, observes: ‘The best advice is often to settle out of court. Because, as any lawyer knows, the process of litigation is stressful and costly.’

Opinion is more divided on the ethics and enforceability of the clause that restricts Perkins from discussing what passed between Weinstein and herself with a doctor, counsellor or another lawyer without them first signing an NDA.

Samantha Mangwana, employment partner at CM Murray, says: ‘Restrictions like these are not the norm and could be seen as taking away what could be beneficial for the individual to get on with their life. There is normally a carve-out that enables the person to discuss with other professional advisers with a duty of confidence, like medical professionals.’

However, McKie maintains that these types of restrictions in NDAs concerning sexual harassment cases are not as unusual as some have claimed. ‘I understand why Mark Mansell put that clause in. When it’s somebody famous, people chat – people aren’t always discreet at dinner parties or in pubs. I can see what he was trying to achieve – it’s Zelda Perkins’ need versus the client’s need. However, I don’t agree that such provisions should be enforceable – the individual who has suffered harassment needs to be able to access medical care or therapy. And lawyers have ethical duties as well as duties to their clients.’

Most legal commentators agree that the most questionable provision is the clause that demands Perkins give 48 hours’ notice in the event of a criminal legal process and to limit the extent of her disclosure.

Even Mansell was forced to admit to MPs when asked if these provisions could be seen as perverting the course of justice: ‘Yes, I can see why people might view it that way.’

One employment partner agrees. ‘This seems to me potentially to go too far and contravene important principles of public policy, including that of open justice. If this is being used as a cloak to disguise a crime, that is utterly contrary to public policy and also an attempt to scorn a witness.’

Says McKie: ‘The 48 hours thing is most concerning. Why is that in there? What did Mark Mansell intend to do in that 48-hour period? The worry would be that his client might try to prevent her from talking or try to influence the police in advance of Zelda talking to them. I think that clause is probably unenforceable’.

The negotiations through the night until 5am were also unusual in a harassment case, especially where the financial settlement had already been agreed, being more fitting in a commercial merger with fixed deadlines.

‘As the claimant’s lawyer, you would have to take a view on whether the questions are in good faith or whether they are designed to gather information or intimidate the claimant,’ adds McKie.

Allowing Weinstein to be in the meeting with the alleged victims at the end – reportedly according to his own request – is also unusual and flagged by even some battle-hardened employment lawyers as an issue.

Says Perkins: ‘I don’t remember my lawyers advising me that Harvey shouldn’t be in the room, but we were all exhausted by that stage. He basically apologised at that meeting. Sarah Ricca wrote down the apology but wasn’t allowed to leave the room with the piece of paper.’

The SRA’s warning notice – its list of ‘don’ts’ when drafting NDAs – is so similar to the provisions in the Weinstein contract that it is an apparent reaction to that document, coupled with the realisation that the watchdog had received hardly any complaints of sexual misconduct. Paul Philip told the select committee that the SRA could only find three cases of NDAs that ‘might not be appropriate’ over the last seven or eight years.

With that in mind, there has been much focus on the SRA’s initial decision not to pursue an investigation into A&O last November, when the regulator met with the firm but decided against further action despite never having even seen the document.

Philip Davies MP scorned the relationship between the SRA and the City giant as a ‘cosy old boys’ network: when you’ve got here [the Weinstein NDA], the clearest example of the things that breach your warning notice – that you’ve said yourself is professional misconduct?’

At a hearing on 25 April, Philip was reduced to making explicit the passivity of the watchdog’s wait-and-see approach to enforcement, noting of its stance in November that the regulator had ‘decided at that point in time we would wait to see what further information came to light. Further information subsequently came to light and we opened the case’.

While attempting to defend the SRA’s November position and citing that A&O ‘very usefully gave us lots of information about the types of procedures you would expect to be in place at a large law firm in relation to this type of thing today’, even Philip conceded the regulator should have initially asked to see the NDA.

‘We were concerned as a committee that A&O was not subject to a full investigation. The cosy fireside chat approach has passed its sell-by date, yet appeared to be the way the SRA did business.’
Maria Miller MP

Ironically, the 12 March warning notice regarding NDAs, which came amid embarrassing disclosures related to such agreements at Baker McKenzie (see box below), was to warn against the kind of terms Perkins’ agreement included that potentially strayed into limiting disclosures to police or regulators.

While the SRA refuses to comment on individual cases, Legal Business understands that the regulator over the summer launched an investigation into Simons Muirhead relating to the Perkins NDA. The SRA also confirmed in August in research for this article that the number of current cases ‘involving sexual misconduct as reported to us where an NDA has been mentioned’ has grown to eight, against the three Philip cited in April to MPs. A&O and Baker McKenzie have already been confirmed as facing such enquiries.

Miller tells Legal Business she is in no doubt of the weaknesses exposed in professional regulation. ‘We were concerned as a committee that A&O was not subject to a full investigation when we took oral evidence. It was only after that committee evidence session that it appeared the investigation got fully underway. We felt that there was a big question mark over the process followed by the regulator. The cosy fireside chat approach has passed its sell-by date, yet it appeared from the evidence we heard to be the way the SRA did business. I find it extraordinary that a parliamentary select committee should have to force it into action.’

Indecent proposals

The idea that the Weinstein agreement is so far from general legal norms was belied by reported terms of the NDA used for staff at the notorious Presidents Club dinner this year, where women ‘hostesses’ at a powerful men-only charity function signed away disclosure rights ahead of the event.

It is unclear who was involved in the drafting of that document, with Berwin Leighton Paisner dodging the question by saying it was not the principal adviser to the charity, without denying involvement outright (BLP was cited due to partner Graham Shear’s relationship with The Presidents Club charity).

Mangwana notes that the agreement the women were asked to sign could not be legally binding to settle discrimination and sexual harassment claims because it is necessary for signatories to take legal advice first. ‘The clauses would be void and there would be nothing to stop the women going to an employment tribunal.’

They would also have been protected under whistleblowing legislation that came into force after the Perkins case and that allows employees to make protected disclosures about wrongdoing at work.

Max Winthrop, partner at Short Richardson & Forth Solicitors and chair of the employment law committee of the Law Society, notes that analysing these agreements for legitimacy is difficult because the Weinstein contract has not been published in full and the Presidents Club document has not been published at all.

He says: ‘You cannot contract out of your rights before you have them, whether that is the right to be protected from unfair dismissal or the right not to be discriminated against. Just think about it from a common sense point of view: you have been given a document to say: “You are going to go into an event where you may be harassed sexually, but, by the way, sign this to allow yourself to be harassed.” It is quite extraordinary.’

Winthrop adds that the repealing of section 40 of the Equality Act, which tackled third-party harassment relevant in the Presidents Club scenario, meant that there was no longer ‘a nice, clear message to employers to engage their brains before they put their employees in these situations’.

Daniel Pollard, a partner at GQ Littler, argues that the legal industry has already woken up about NDAs in sexual harassment cases. ‘The scrutiny has caused a sea change in how lawyers are drafting documents, making it clear to alleged victims of their right to report wrongdoing.’

But while there has been much public hand-wringing from employment lawyers, the parliamentary hearings and string of NDA disclosures have illustrated how little critical thought has been given to common legal practice.

In one telling part of the hearings, Miller in March asked what the ELA had done to ‘raise awareness and improve practices by lawyers on the limitations of NDAs, particularly in light of the SRA’s warning notice?’

The response of Gareth Brahams of the ELA makes it clear the answer is very little, before or after the SRA notice: ‘I will raise this at the next management committee meetings and we will try to deal with it through that method. Frankly, people can write articles in the ELA briefing, but that is the extent of it until the law changes.’

Concludes UCL’s Moorhead: ‘Lawyers get so used to doing stuff for clients without considering their obligation to protect the rule of law and administration of justice, which includes obligations to the other party, but their justification is too often flawed. It is for the long-term health of the system that these things are coming to light’.

A potential step in a more robust direction came in July when the ELA issued its report, showing significant support among employment advisers for mandatory wording on confidentiality terms as a condition of enforceability.

Strikingly, the same report found that only 40% of the 464 members felt that the secrecy afforded by an NDA was ‘helpful from a public policy perspective’.

Stephens notes the wider issues facing the legal profession. ‘[Perkins] went to four different lawyers before she came to me. They all got terribly excited at first but then came back with an embarrassed response. They couldn’t advise her because they write similar agreements all the time. It would be seen as a commercial conflict. That has got to be against the public interest.’ LB

nathalie.tidman@legalease.co.uk