Thursday, November 5, 2009

Firm Confidentiality Risk -- How hard should you clamp down on internal leaks?

If you’ve ever read a legal tabloid blog, you’re not alone. These sites pride themselves on providing “inside” information on the industry. Their content is often edgy and opinionated, without the filter of the more traditional press. This presents a challenge for law firms, as these sites encourage and post leaks of internal firm information – policy memoranda, strategic plans, compensation details, rumors and more.

When layoffs took place this the year, sites like Above The Law and Law Shucks published information swiftly (much to the chagrin of several firms, especially those attempting "more discrete" personnel adjustments).

In response, today some firms are trying to clamp down. Most recently, rumors circulated about one firm's internal memo (which eventually leaked) that was said to warn of strict penalties to anyone caught leaking. However, the definition of a leak and the complexities raised by such policies may create new risks...

First, "clamp downs" raise the likelihood of causing the Streisand Effect. This is what happens when "...an attempt to censor or remove a piece of information backfires, causing the information to be publicized widely and to a greater extent than would have occurred if no censorship had been attempted."

Furthermore, they’ve raised the hackles of journalists and others in favor of this type of sharing. As one blog commentator noted: blanket prohibition on associates discussing their working conditions may violate federal law, and similar restrictions on the discussion of compensation may be a violation of Title VII and/or the Equal Pay Act (and possible state and local equivalents).

It’s perfectly reasonable for firms to expect and take measures to preserve internal confidentiality. (It remains to be seen what other measures firms might employ to supplement warnings and new policies. Other industries have had mixed experiences clamping down.)

Regardless, with easy communication technologies available and a sometimes weakening sense of associate firm loyalty, this is an issue worth understanding and preparing for, before you read about your own firm on “Page 1” of an internet legal tabloid...

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