Department of Labor reverses course on ‘persuader rule’ change after ABA lobbying
Changes to a long-standing U.S. Department of Labor rule that the ABA warned would have seriously undermined attorney-client confidentiality and the fundamental right to effective counsel have been rescinded.
Section 203 of the Labor-Management Reporting and Disclosure Act of 1959 contains a section known as the “persuader rule.” The rule requires employers and their labor consultants to file 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, the department has long interpreted Section 203(c) of the act to exempt lawyers from the rule’s reporting requirements if they have no direct contact with the employees and merely provide advice or other legal services directly to their employer-clients on these issues.
Changes to the persuader rule intended to take effect in 2016 would have narrowed the department’s interpretation of the “advice” exemption, forcing many management-side labor lawyers and firms to report confidential client information to the government. These reports would have disclosed extensive 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 unrelated to the persuader activities the LMRDA is intended to monitor.
The ABA has opposed measures such as the 2016 rule changes since 1959, when it adopted policy urging that any proposed legislation in the labor-management field preserve the confidential attorney-client relationship and not require reporting or disclosure of any confidential client information.
The ABA first challenged the proposed rule changes in 2011, when ABA President Wm. T. (Bill) Robinson III urged the Labor Department to reconsider the proposal because the required disclosures would be “unjustified and inconsistent with a lawyer’s existing ethical duties under Model Rule 1.6 (and related state rules) not to disclose confidential client information absent certain narrow circumstances not present here.”
The association continued its push against the proposed changes in 2016, with ABA President Paulette Brown reiterating its concerns to a key House subcommittee. Brown emphasized that the 2016 changes would “seriously undermine both the confidential lawyer-client relationship and employers’ fundamental right to counsel.” She also urged Congress to keep to the department’s previous interpretation of the advice exception.
In June 2016, a federal district court in Texas granted a nationwide preliminary injunction against the new rule, quoting extensively from the ABA’s previous comments. The injunction was made permanent in November 2016. In June 2017, the department issued its formal proposal to rescind the 2016 changes, based in part on comments filed by the ABA and other stakeholders.
The ABA expressed support for rescinding the changes in an August 2017 letter to the Labor Department, but emphasized that it was not taking sides in a union-versus-management dispute. The ABA explained its sole objective is “defending the confidential client-lawyer relationship by reversing a rule that imposes unjustified and intrusive burdens on lawyers, law firms and their clients.”
The department published its final rule in July, formally rescinding the changes.
The department said it found the ABA comments persuasive and emphasized that the duty to safeguard client confidences has long formed the bedrock of the attorney-client relationship.
It agreed with the ABA’s view, on which the Texas district court relied, that the 2016 rule could very well have discouraged many employers from seeking needed expert legal representation.
This article was published in the November 2018 ABA Journal magazine with the title "Effective Persuasion."