Can you keep a secret?

Can you keep a secret?

As #MeToo and #TimesUp gather pace, what role have settlement agreements played in keeping abusive behaviour quiet for too long?

It seems that not a week has gone by in 2018 so far without another high-profile scandal relating to sexual harassment, #MeToo, or #TimesUp. Many headlines have involved the same people or the same organisations, suggesting long-term patterns of abusive behaviour that has been allowed to go unchecked. The accountancy sector has not been immune of course, with several cases underway and stakeholder scrutiny increasing.

The question often asked is: how did businesses get away with this for so long?

The answer, at least in part, may lie in the numerous pay-off arrangements which have come to light, all of which required the accuser to remain silent and never repeat their allegations.

All sorts of disputes are resolved through settlement agreements, and it is usually the expectation of all parties that confidentiality of the amount paid and of the underlying dispute goes with the territory – “let bygones be bygones and we’ll all go on our way”. However, is such an approach legitimate where the allegations being covered-up and paid off are made by David against Goliath, and where Goliath is a serial offender?

This issue has, understandably, come under the microscope of late. Earlier this year, the Women and Equalities Committee gathered evidence about the use, and potential misuse, of confidentiality obligations in settlement agreements, or non-disclosure agreements (“NDAs”). In particular, they looked at examples of where big and powerful employers had disposed of allegations of sexual harassment using a settlement agreement which bound the accuser not to repeat their allegations.

The various allegations raised against Hollywood producer, Harvey Weinstein, for example, have pointed a spotlight into to the dark and murky corners where copies of old settlement agreements can be found, apparently struck over the years to keep his alleged victims quiet. One high-profile witness before the Women and Equalities Committee was Harvey Weinstein’s former assistant, Zelda Perkins. She gave evidence of having raised sexual harassment complaints back in 1999 and of having entered into a settlement agreement with one of Weinstein’s companies, Miramax.

The details she shared about that agreement demonstrated that its terms were extreme; it not only required her to keep the agreement and her allegations confidential, but went further by requiring her to notify Miramax’s lawyer “before making any disclosure” if “any criminal legal process” involving Harvey Weinstein or Miramax required her to give evidence. Moreover, in the event her evidence was required, she was required to “use all reasonable endeavours to limit the scope of the disclosure as far as possible”. Controversially, Perkins was not even allowed to keep a copy of the agreement.

There has been significant press coverage and criticism of the role that professionals can play in preventing allegations being reported to the appropriate authorities. Solicitors, for example, have been issued a “warning notice” by the Solicitors Regulation Authority (“SRA”) making clear that NDAs should not be used “as a means of improperly threatening litigation or other adverse consequences, or otherwise exerting inappropriate influence over people not to make disclosures which are protected by statute, or reportable to regulators or law enforcement agencies”.

Accountants are under their own professional obligations which require careful thought in this context. For example, the CIMA Code of Ethics has “professional behaviour” as one of its fundamental principles, and states that “you should avoid any action that could negatively affect the reputation of the profession”. Would taking steps to cover up allegations of sexual harassment within your own organisation amount to something which “an informed third party … would be likely to conclude adversely affects the good reputation of the profession”? Arguably, it would.

As a firm which represents many businesses in the professional services sector, we have seen a huge increase in the number of independent investigations into serious allegations taking place, and firms are more prepared than ever to tackle employees, partners and members who are not behaving in accordance with their values, or their legal obligations. Settlement agreements are still being used, but they might expressly set out what action is being taken to deal with the underlying allegations, and will make expressly clear that the alleged victim is able to seek help, and refer the matter to regulators and the police if appropriate.

Accountancy firms, big and small, are now starting to accept the role that they can play in ensuring that their workplace, and their profession, is free from abusive behaviour of any kind against anyone. Avoiding the understandable impulse to close down complaints and make them go away quietly is a significant first step towards changing both behaviour and attitudes.

Karen Baxter is an employment partner and head of professional services team at law firm Lewis Silkin.

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