Disclosure of confidential information

Gannons supported a client who faced legal proceedings after disclosing confidential information.

Our client was a member of a regulatory organisation for finance professionals. He was facing disciplinary proceedings brought by his professional regulatory body after his unauthorised disclosure of confidential information. Our client also faced the issue of having his reputation tarnished for future employment.

Handling the case

After being briefed by our client, we reviewed the evidence and put forward arguments on his behalf. We then liaised with the regulatory body and brokered a settlement agreement, whereby the claim was dropped. We also preserved our client’s costs and sought a contribution from the regulatory body. Finally, 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 employed as a branch office secretary for the regulatory organisation. 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 forwarded the relevant internal correspondence to his friend. This included an entire e-mail string, which contained commercially sensitive information, some of which was marked “confidential”. Our client had inadvertently included the sensitive and confidential information.

The regulatory organisation 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. They threatened to take injunction proceedings in respect of which he would be liable for costs.

The letter further ordered that our client would no longer divulge confidential information and deliver up all company property and documentation in his control. It also informed our client that he was suspended from work pending a disciplinary hearing. He risked being dismissed for gross misconduct at this hearing.

Regulatory proceedings

Without first taking legal advice our client agreed to the requested undertakings unreservedly. 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 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 and 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. Therefore the organisation would be liable for our client’s wasted costs.

On a without prejudice basis we invited a confidential settlement, stating that if matters were not settled now our client would claim his costs. Furthermore, 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 – thereby tarnishing their reputation.

The result

Our research and robust response brought the regulatory organisation to its senses. Our client resigned his membership without liability for costs and 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.