03.28.2016 1

March Regulatory Madness

By Nathan MehrensPaperWork Law

In typical pre-holiday fashion, the Obama Administration last week released several controversial regulations, among them the long-anticipated “persuader” regulation from the U.S. Department of Labor. This 127,000 word regulation deals with reporting requirements for employers and attorneys and other consultants who assist employers on workplace matters, including issues surrounding unionization campaigns.

While the final regulation is slightly better than what was originally proposed, it is still bad, will lead to fewer employers seeking legal advice, and will reduce the number of law firms that are able to offer legal advice in these situations. The reason for this is that if a law firm engages in any activity under the Department’s widely-expanded definition of “persuasion” then the law firm has to disclose information on all of their other clients for which they provided labor-relations services. This requires a fundamental breach of the centuries-old attorney-client privilege which protects from disclosure client confidences and secrets, absent client consent.

When you meet with an attorney regarding a problem you do so with the understanding that the attorney-client privilege protects from disclosure these confidences and secrets. The privilege is important because it allows a client to tell everything they know to the attorney and it also allows the attorney to give frank advice without fear of that advice being used against the client later. As stated by a Yale law professor in 1978:

“The attorney-client privilege may well be the pivotal element of the modern American lawyer’s professional functions. It is considered indispensable to the lawyer’s function as advocate on the theory that the advocate can adequately prepare a case only if the client is free to disclose everything, bad as well as good. The privilege is also considered necessary to the lawyer’s function as confidential counselor in law on the similar theory that the legal counselor can properly advise the client what to do only if the client is free to make full disclosure.”

It is this relationship that the U.S. Department of Labor has seen fit to trample.

This is mission creep of the highest order, something that unfortunately has become standard operating procedure of this Administration. The state bars and not the Labor Department should be determining the rules concerning the attorney-client privilege.

Despite being presented with clear evidence that the ethics requirements of the state bars prevent the disclosure of much of the information that would be required due to the change in definition of what is persuasion, the Department merely kicks the can down the road by promising to take a look at that in a future rulemaking. That is little help for those who are now in the position of having to determine just exactly what their recordkeeping requirements are and cold comfort because the Department may very well do nothing to alleviate the problem, even if it does manage to complete another multi-year regulatory action. Remember, that this one has taken over five years.

Other additional problems are present in the persuader regulation. For instance, while the Labor Department’s regulations concerning union disclosures provide a confidentiality exception where necessary to protect the health or life of an individual, the Department expressly declined to include such an exception here. The Department in so doing is valuing some lives higher than others, telling the regulated community that the life of a union organizer is more valuable than the life of a consultant who works for an employer. This is patently ridiculous, but ridiculous is what we’ve come to expect from this administration’s regulations.

Nathan Mehrens is President of Americans for Limited Government Foundation and previously served in the U.S. Department of Labor’s Office of Labor-Management Standards.

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