Disclosure of confidential information

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Disclosure of confidential information

Our client faced disciplinary proceedings brought by his professional regulatory body after his unauthorised disclosure of confidential information. Our client faced the issue of having his reputation tarnished for future employment.

How we addressed the issue

We were instructed by the individual, and:

  • Reviewed the evidence and put forward arguments on behalf of the individual.
  • Liaised with the regulatory body and brokered a settlement agreement, whereby the claim was dropped.
  • Preserved our client’s costs and sought a contribution from the regulatory body.

We enabled our client to avoid incurring liability for the body’s legal fees and settled matters on a confidential basis.

How the confidential information was disclosed

Our client was a member of a regulatory organisation for finance professionals. He was employed as a branch office secretary. He became concerned that senior management were imposing detrimental organisational changes without properly consulting the organisation’s membership.

Competing interest causes an issue

He sought guidance from a friend, who had once been a manager in the regulatory organisation. His friend now worked for a competitor who provided courses that competed with the regulatory organisation’s commercial division.

Our client emailed his friend relevant correspondence, which included:

  • Entire e-mail string;
  • Commercially sensitive information, albeit inadvertently;
  • Some of which was marked “confidential”.

The regulatory organisations’ response

The body’s manager visited our client. The manager handed our client a letter stating:

  • That our client was responsible for the unauthorised disclosure of confidential information;
  • Threatened to take injunction proceedings in respect of which he would be liable for costs;
  • He should undertake that he would no longer divulge confidential information, and deliver up all company property and documentation in his control;
  • That he was suspended from work pending a disciplinary hearing at which he risked being dismissed for gross misconduct.

Regulatory proceedings

Without first taking legal advice the client agreed to the requested undertakings, without reservation. His manager suggested that if he accepted his culpability and resigned his employment then this would be the end of the matter. Again, without taking legal advice, he did so.

This emollient approach was unsuccessful. He received a letter from the organisation in its regulatory capacity stating that he had acted in breach of its rules regarding professional conduct. Although he had resigned his employment,  he was now subject to a quasi-judicial disciplinary process.

Risk of losing professional accreditation

Our client risked losing his professional accreditation. In addition, the disciplinary rules stated that if the complaints against him were upheld, then our client would bear the legal costs of the proceedings. The legal costs would be substantial.

Our response to the unauthorised disclosure

Our client approached us, and we first identified grounds upon which we could defend his position. However, given the past admissions he had made, we could offer no comfort that the complaints against him would not be upheld.

Our usual approach is to negotiate a settlement, so that neither side incurs significant legal costs. In this case, our client was nearing retirement. He was willing to resign his professional membership. He wanted the matters brought to a conclusion, without the risk of incurring the costs of the proceedings.

Settling the matter out of court to preserve costs

The regulatory organisation rebuffed our attempts to settle. In our view, the regulatory organisation wanted to pursue matters, to use the requirement to pay costs as a disciplinary sanction.

We checked the organisation’s constitution. The constitution imported rules governing procedures in the civil courts. We argued that pursuing matters was entirely improper, and the organisation would be liable for our client’s wasted costs.

On a without prejudice basis we stated that if matters were not settled now:

  • Our client would claim his costs;
  • In future, he would publicly air his views as to the organisation management’s improper conduct, in respect of  the organisation’s treatment of him and the membership; and
  • Invited a confidential settlement.

The result

Our research and robust response brought the regulatory organisation to its senses:

  • Our client resigned his membership;
  • Without liability for costs;
  • With an agreement that the circumstances of his departure be kept confidential.

General advice

This case illustrates it is important to take advice at the earliest opportunity when faced with any legal proceeding. Otherwise you may lose the chance to properly defend your position, or achieve a binding settlement on reasonable terms.

Helen Curtis heads the commercial team at Gannons. Do get in touch with Helen if you wish to discuss a matter further.