The Ethics of Buying Silence

In this column, we examine the ethics of lawyers using such nondisclosure agreements (NDAs). We conclude both that it currently is and should be unethical for a lawyer to use the sort of agreements revealed in She Said.

Lawyers’ Role

Concern about lawyers both failing to prevent and enabling serious misconduct is not new. The question “Where were the lawyers?” has reverberated in public discourse in recent decades. The financial scandals associated with the savings and loan crisis, Enron, and Tyco are examples. The sexual abuse scandal involving Roman Catholic priests is another. The sexual misconduct that generated and resulted from the Me Too Movement has again raised the issue of where the lawyers were. She Said makes plain where the lawyers were in the Harvey Weinstein scandal. They were hard at work counseling, drafting, negotiating, and accepting agreements in which Weinstein bought the silence of witnesses—the women who were the victims of the misconduct.

Nonlawyer reviewers of She Said describe the lawyers in the book as “bad guys” who were “rabidly fierce” in insulating and enabling Weinstein. We understand and have written about the critical importance of a lawyer’s duty to provide appropriate representation to an unpopular client. Nonetheless, we found it difficult to read She Said without avisceral negative reaction to the work lawyers performed that enabled decades of egregious misconduct.

From a more rationalized and pragmatic perspective, a powerful argument against the use of NDAs is that jettisoning them would help deter sexual misconduct in the workplace by lowering some of the barriers to the enforcement of the laws that prohibit it.

There are a number of ways to frame the tensions that underlie the use of NDAs and have made them the source of continuing controversy. One is as a conflict between a client’s interests and the interests of “third parties” (i.e., other past or potential future victims) or the public interest. A second way to see the underlying tension is as a conflict between a lawyer’s duty to serve her client’s interests and a lawyer’s duty to the functioning and integrity of the legal system, often captured in the phrase “officer of the court.” On this view, the underlying tension is similar to the one that has fueled debate and an evolution of ethics rules regarding client perjury.

The Model Rules and NDAs

In a thoughtful and persuasive article, Professor Jon Bauer argues that NDAs violate both the letter and spirit of Model Rule 3.4(f), which, with limited exceptions, prohibits a lawyer from requesting someone other than a client to refrain from voluntarily giving relevant information to another party. Jon Bauer, Buying Witness Silence: Evidence-Suppressing Settlements and Lawyers’ Ethics, 87 Ore. L. Rev. 481 (2008). He examines the language of the rule and concludes that the use of NDAs falls easily within the text of that prohibition. Those who argue that NDAs are not unethical tend to ignore the language of Model Rule 3.4(f). They appear to rely on the notion that an implied exemption from Model Rule 3.4(f) exists for the use of NDAs regarding witnesses, even though neither Model Rule 3.4(f)’s language nor its accompanying Commentary support such an exemption.

Professor Bauer traces the long history of the view that it is improper for a lawyer to interfere with another lawyer’s access to witnesses and other evidence. The “spirit” or purpose behind Model Rule 3.4(f) is that access to information is essential to the proper functioning of the justice system. This rationale supports what Model Rule 3.4(f)’s language makes clear: the use of NDAs by lawyers, such as those who represented Harvey Weinstein and other prominent men, runs afoul of the lawyer’s duty not to undermine the effective functioning of our adversary system of justice, under which the search for and presentation of evidence, including the testimony of potential witnesses, is left to each party.

What about lawyers on the opposite side of negotiating an NDA, those representing victims? Should proposing or accepting an NDA in order to increase the amount received by the victim be treated as unethical? There are several ways such a victim’s lawyer could and should, in our view, be treated as acting unethically.

First, such a lawyer is assisting the unethical conduct of another lawyer in violation of Model Rule 8.4(a), which states that a lawyer must not “knowingly assist or induce” unethical conduct by another lawyer. Second, as Professor Bauer argues, the actions of such a lawyer, because they promote and enable the silencing of witnesses and victims, is also “prejudicial to the administration of justice” in violation of Model Rule 8.4(d).

Finally, the fact that “selling” such silence is often enormously lucrative to a victim’s lawyer, typically working on a contingent fee, raises a significant concern about conflict of interest under Model Rule 1.7 due to the significant risk that a lawyer’s judgment and advice may be improperly influenced by the lawyer’s own financial interests. In one case discussed in She Said, for example, the perpetrator settled with a victim for $100,000 without an NDA. Later, the perpetrator offered $1,000,000 in exchange for an NDA. Although this offer was refused, it indicates the magnitude of the financial implications and temptations an NDA may have for the victim’s lawyer because the amount of the settlement and, thus, the lawyer’s fee can increase enormously by selling the client’s silence. In the case mentioned above, the NDA would have increased the lawyer’s fee tenfold, creating a serious temptation to oversell an NDA to a client. In another case, the reporters describe a victim who recounts her lawyer “walking away with $1,000,000” from a workplace sexual misconduct settlement that included an NDA. The magnitude of such fees, in our view, also raises the issue of whether such contingent fees are unreasonable under Model Rule 1.5(a).

We find Professor Bauer’s position and arguments quite convincing. Accordingly, we urge both the ABA and state and local ethics authorities to issue opinions clarifying that Model Rule 3.4(f) means what it says and prohibits the use of NDAs to buy or sell the silence of witnesses and victims regarding criminal, regulatory, or civil offenses such as the workplace sexual assaults and harassment perpetrated by Harvey Weinstein and other prominent men. Ethics authorities in Indiana and Chicago have already done so. Indiana Legal Ethics Opinion 1-2014;Chicago Ethics Opinion 2012-10. We also urge the ABA and state ethics authorities to amend the language and Commentary to Model Rule 3.4(f) to explicitly ban the use of NDAsboth by lawyers representing perpetrators and by lawyers representing victims.

Public Policy Reasons for Prohibiting NDAs

There are especially compelling public policy reasons NDAs should be unethical in cases involving sexual assault and harassment. Failure to report sexual misconduct is and has been a persistent source of difficulty in enforcing the laws that make it illegal. Victims routinely are very reluctant to disclose to anyone, much less report to enforcement authorities, sexual assault or even harassment. There are a plethora of psychological and practical reasons for this. Victims often engage in self-blaming, thinking that they somehow must have been at fault in “causing” the misconduct. Many also feel a deep sense of shame about having been sexually victimized. A number of practical fears reinforce these psychological reactions. Many victims fear how they may be treated during litigation as well as retaliation, such as being sued for libel or smeared in the press, especially by powerful men. In addition, worries about loss of privacy and the possible impact on future employment opportunities and on family reinforce reluctance to report.

Given these powerful psychological and practical disincentives and the empirical fact that sexual misconduct is underreported, it makes no sense from a public policy or ethical perspective to reinforce the reluctance to report by permitting the use of NDAs that create additional and significant monetary disincentives, as well as the fear of being sued for breach of contract and possibly held responsible for attorney fees and liquidated damages. In the Harvey Weinstein case, when NDAs were added to the already-existing disincentives to disclose or report sexual assault and harassment, a virtually impenetrable wall of silence was purchased, insulating Weinstein from consequences and enabling him to continue to prey for decades on vulnerable young women.

She Said also reveals what might be called a “solidarity effect” in the enforcement of sexual misconduct laws. While a single victim is often reluctant to “go it alone” in taking on a powerful abuser such as Weinstein, multiple victims learning about and communicating with one another increase the likelihood of victims coming forward as a group and breaking the circle of silence that often surrounds a serial predator. This is precisely what happened in the Weinstein case. The use of NDAs extinguishes the possibility of such a solidarity effect by guaranteeing that victims will neither learn about nor communicate with one another.

Arguments against Making NDAs Explicitly Unethical

In this section, we examine what we anticipate may be some counter arguments to our position.

Legislation

Activists have proposed and legislatures across the United States have been considering the adoption of statutes that would make the use of NDAs illegal. Some states have already done so, but most have not.

One might argue that sexual misconduct, as a significant societal problem, should be and has been the focus of legislative action and thus need not and should not be addressed by the bar. If the legislature of a state bars the use of NDAs by statute, then the lawyers in the state would be prevented from using them.

In our view, deferring completely to state legislatures to make NDAs illegal is fraught with problems. First, legislatures have not been eager to deal with NDAs. Only some states have acted, and some of these have enacted very weak statutes. For example, the New York statute has an exception that permits NDAs in sexual harassment matters if “the condition of confidentiality is the complainant’s preference.” This exception swallows the rule by permitting the NDA if the perpetrator offers enough money for the complainant to prefer confidentiality.

Secondly, deferring to legislatures would ignore both the obligation of lawyers to preserve the effectiveness of our civil and criminal justice systems and their expertise in how those systems function. Just as the bar did not treat criminal perjury laws as sufficient to deal with issues of client perjury, it should not treat legislation as sufficient to deal with NDAs.

Line Drawing

Another objection to prohibiting NDAs is that NDAs serve a legitimate and important purpose in some situations. Perhaps the most compelling is the protection of information such as confidential research, trade secrets, and proprietary software. They may also well be appropriate in the settlement of some claims, such as those for breach of contract, whether before or after any legal action has commenced. Undoubtedly, lines will need to be drawn delineating a boundary between ethical and unethical NDAs, and it may be difficult to draw such lines clearly. But such line-drawing difficulty, if it arises, is no reason not to deal with core cases of the sort She Said illustrates so starkly. Many legal and ethical rules require difficult line drawing, but that has not prevented the creation of such rules.

Conclusion

There are many reasons the legal profession should put an end to lawyers’ use of NDAs such as those revealed in She Said. In addition to those described above, the profession needs to keep in touch with the evolving social attitudes, values, and concerns about the treatment of women in the workplace driving the Me Too Movement. It also needs to acknowledge and respond to the reality of widespread sexual misconduct in the workplace. Perhaps most critical, though, is that the legal profession needs to take seriously, and to be seen as taking seriously, its obligation to preserve the fair and effective functioning of our legal system. Allowing lawyers to advise, negotiate, draft, and accept agreements buying the silence of potential witnesses and victims impedes the proper functioning of the criminal, civil, and regulatory facets of our legal system.