Legal Ethics

Judge blocks new 'persuader rule' requiring disclosure of lawyer advice to employers on union issues

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A federal judge in Texas has blocked a new Department of Labor rule that requires employers and consultants—including lawyers—to report when the consultants give advice to employers about persuading employees on union issues.

U.S. District Judge Sam Cummings of Lubbock issued a preliminary injunction on Monday that blocked the so-called “persuader rule,” report Reuters, the Hill, Courthouse News Service, the Wall Street Journal Law Blog and the Am Law Litigation Daily.

Under the prior rule, there was no mandate to report when lawyers and consultants spoke with employers about opposition to union efforts, as long as the consultants had no direct contact with employees.Under the revised rule, confidential attorney-client information would have to be reported to the Labor Department “and thus the world,” Cummings said in his order (PDF).

Cummings said the Department of Labor likely exceeded its authority in implementing the rule. He also saw a likelihood of success on claims that the new rule violates free-speech and association rights, including the “long-recognized First Amendment right to hire and consult an attorney.”

If the broad disclosure requirements are enacted, “There is a substantial risk that attorneys will cease providing certain advice, including some legal advice, and that employers would cease to seek it,” he wrote. “Such an outcome burdens and ‘chills’ employers’ First Amendment rights.”

The ABA has told lawmakers the revised rule, which was set to take effect on July 1, would negatively affect attorney-client privilege. In written testimony submitted to a U.S. House subcommittee, ABA President Paulette Brown said the new rule departs from legislative intent by eviscerating exemptions for legal advice to employers.

Cummings cited the ABA concerns in his opinion. “Under an attorney’s duty of confidentiality, the identity of the client is confidential, the fees paid are confidential, the agreement or arrangement describing the terms of the engagement are confidential,” the judge wrote. “DOL’s new rule conflicts with the promulgated rules of every state.”

The case is National Federation of Independent Business v. Perez.

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