Settle Smart series part three: Non-disclosure agreements – are they still effective in the post #metoo era?

Our series focused on the settlement of disputes considers issues encountered by practitioners across a range of dispute resolution specialities. This blog explores the ongoing debate surrounding non-disclosure agreements (NDAs) and their effectiveness in the post-#MeToo era.

The use of non-disclosure agreements (NDAs) continues to attract media attention and not usually for positive reasons. Whilst their use in the media and entertainment industry has been the subject of criticism since the start of the #MeToo movement in 2017, when used correctly, NDAs can be a useful tool in achieving successful settlements for parties in a wide range of commercial, employment and personal disputes.

In its thematic review of NDAs published in August 2023, the Solicitors Regulation Authority (‘SRA’) found that in the vast majority of cases, NDAs provide a “legitimate legal means for protecting the interests of a business or individual” by ensuring that the disclosure of specific sensitive, commercial or confidential information is restricted. When NDAs are used properly and legitimately, they can be of mutual benefit to all parties.

In March 2018, the SRA published a warning notice on the use of NDAs. The need for this notice arose following the exposure of high-profile NDAs preventing victims of sexual harassment from making reports to relevant authorities.  The warning notice has been updated since then, most recently in August 2024. Whilst there are no published regulatory decisions of action taken against solicitors for breaching the warning notice, the recent updates suggest that the SRA is still closely monitoring the use of NDAs and solicitors’ handling of them.

In the latest version of the warning notice, the SRA reiterates the circumstances in which it considers an NDA would be improperly used. This includes as a means of preventing, or seeking to impede or deter a person from:

• co-operating with a criminal investigation or prosecution;
• reporting an offence to a law enforcement agency;
• reporting misconduct, or a serious breach of our regulatory requirements to the SRA, or making an equivalent report to any other body responsible for supervising or regulating the matters in question; or
• making a protected disclosure under the Public Interest Disclosure Act 1998.

In addition, the SRA considers that an NDA is improper if it is used to:

• influence the substance of such a report, disclosure, or co-operation;
• prevent any disclosure required by law; or
• prevent proper disclosure about the agreement or circumstances surrounding it to professional advisers, including medical professionals and counsellors, who are bound by a duty of confidentiality.

There has also been a push politically to ensure that NDAs do not prevent victims of a crime from reporting relevant crimes and accessing support or advice. The Victims and Prisoners Act 2024 (‘VPA’) received royal assent in May this year and will come into force when effected by the Secretary of State. Section 17 of the VPA makes confidentiality provisions void if they prevent the making of a relevant disclosure by a victim of crime. A relevant disclosure includes to: law enforcement, a lawyer for the purpose of seeking legal advice, victim support services, regulators and certain family members of the victim.

The focus on NDAs does not appear to be dying down and their use will only continue to receive scrutiny from the media and in political spheres. It would therefore, be prudent to consider the following when deciding whether to include an NDA in a settlement offer or agreement:

1. Assessment of necessity: the SRA advises against using NDAs or confidentiality clauses as a matter of routine and best practice is to consider whether such clauses are required on a case by case basis and record the decision making process.
2. Should not be used to prevent reporting: the main focus of the new regulations is that NDAs should not be used to prevent reporting to relevant authorities and such clauses should not be included in NDAs whatsoever.
3. Clarity on what disclosures are permitted: where appropriate, clarify what disclosures can be made and to whom e.g. co-operating with a criminal investigation or prosecution, reporting an offence to a law enforcement agency, reporting misconduct or a serious breach of regulatory requirements, or making a protected disclosure. Ensure that the terms are clear and relevant so each party understands what they can and cannot do.
4. Time limits: the SRA warns against imposing undue time pressure or artificial deadlines on a party to agree on the terms of an NDA. Consider what timing would be reasonable in the circumstances, particularly if the other party is unrepresented and needs to seek independent legal advice.
5. Funding of advice: particularly in circumstances where the other party has limited financial resources, consider offering funding for independent legal advice. It is important to be clear on the extent of any funding offered.

The SRA makes clear that the use of NDAs is not prohibited and when used properly, NDAs can be a valuable tool to protect commercial interests and sensitive information in settlement agreements. However, there are a number of considerations and various uncertainties surrounding the use of NDAs, therefore it is important to seek legal advice to ensure that any such agreement is lawful and enforceable.

Further information

If you have any questions or concerns about the content of this blog, please contact Jessica Cattrall. 

About the author 

Jessica is an associate in the Dispute Resolution team and assists on a broad range of disputes, with a particular interest in privacy, reputation and media matters.