The ABA expressed support this month for a Department of Labor (DOL) proposal to rescind key changes the department made last year to the “Persuader Rule” that would have required many labor lawyers and law firms representing employers to report confidential client information to the government.
The 2016 changes to the Persuader Rule, which were blocked by a permanent injunction issued by a U.S. district court in Texas last November before they could go into effect, were intended to narrow the department’s longstanding interpretation of the “advice” exemption under Section 203 of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).
Section 203 requires employers and their labor consultants, including lawyers, to file extensive periodic disclosures with the department when they engage in certain activities or enter into agreements or arrangements to persuade employees on union formation or membership issues. However, Section 203(c) of the act has long been interpreted to exempt lawyers from the rule’s reporting requirements when they merely provide advice or other legal services directly to their employer clients on these unionization issues but have no direct contact with the employees.
The 2016 rule would have required lawyers who provide both legal advice to employer clients and engage in any persuader activities to file periodic disclosure reports even if they have no direct contact with the employees. These reports would have included disclosure of a substantial amount of confidential information, including the existence of the lawyer-client relationship and the identity of the client, the general nature of the legal representation, and a description of the legal tasks performed. The reports also could have compelled disclosure of a great deal of confidential financial information about clients that is unrelated to persuader activities that the LMRDA is intended to monitor.
In a Aug. 4 letter to the department, ABA Governmental Affairs Director Thomas M. Susman included a 2011 comment letter submitted by the ABA opposing the department’s then-proposed rule and the ABA’s statement for the record of an April 2016 hearing that the House Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions held regarding the final 2016 rule.
In his letter, Susman also urged the department to narrow the scope of Form LM-21 (Receipts and Disbursements Report) so that when a lawyer engages in persuader activities that are not subject to the advice or attorney-client communications exemptions under Sections 203(c) and 204 of the LMRDA, disclosure would be required only for receipts and disbursements that relate directly to the employer clients for whom persuader activities were performed, not for the lawyer’s other employer clients.
Susman emphasized that the ABA was not taking sides on a union–versus management dispute, but has the sole objective of “defending the confidential client-lawyer relationship by reversing a rule that imposes unjustified and intrusive burdens on lawyers, law firms and their clients.”