DOL proposal could force choice between confidentiality and compliance

The new measure could require outside counsel to disclose fees received from clients in union cases

A proposed rule pending in the Department of Labor (DOL) has the legal community in an uproar. The rule would upend 50 years of precedent that generally exempted lawyers from a law requiring those helping employers deal with unions to disclose those client relationships and related fees. Management-side labor lawyers claim the proposed change would create a Hobson’s Choice: risk censure and possible disbarment for violating attorney-client confidentiality, or risk criminal prosecution for failing to file disclosure reports.

The Labor Management Reporting and Disclosure Act (LMRDA), passed in 1959, requires disclosure of fees paid to and services provided by “persuaders,” consultants hired to influence employees not to unionize. Lawyers traditionally have been exempt as long as they didn’t directly communicate with employees, under a provision known as the advice exemption.

The proposed rule also would greatly expand the reach of the LMRDA, traditionally limited to union organizing and bargaining matters, to include work involving questions of “protected concerted activity” under the National Labor Relations Act. Under the proposed rule, a lawyer who revises an employee handbook or drafts a social media policy could be deemed a persuader.

If a law firm provides “persuader” services to a single client, it would be required to disclose fees received and services provided to every client that received any type of labor and employment services—not only persuasive services—during that calendar year. Failure to file the required forms puts the employer and the law firm at risk for criminal penalties including a jail sentence and a fine of $10,000.

Senior Editor

Mary Swanton

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