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Firms fight proposal that would require union-related disclosures

July 25, 2011
Washington Post
Catherine Ho

Law firms and trade associations are fighting a proposed change to federal labor law that calls for stricter reporting requirements for companies and the lawyers they retain for advice on bargaining, strikes and union elections.

The proposal, introduced by the Labor Department last month, deals with what’s called the “persuader activity” rule, in Section 203 of the Labor-Management Reporting and Disclosure Act. Under the current law, employers and outside labor consultants — including law firms — do not have to report legal advice attorneys give employers as long as lawyers don’t communicate directly with workers to persuade them about their rights not to unionize.

The proposed rule would change that, requiring companies and law firms to publicly disclose a wide range of legal work done for company managers if it’s used to persuade workers on union activity — as well as how much law firms are getting paid for it.

That could include drafting speeches, reviewing election documents, advising strategy, holding training sessions for managers on union organizing, and creating fliers or pamphlets for employers.

The public comment period for the proposed change ends Aug. 22. It was floated at the same time as the National Labor Relations Board introduced a controversial change that would shorten the period between when a union files an election petition and when the election is held, from an average of 38 days to as few as 10 days.

The Labor Department said it’s important to report agreements between employers and consultants because it helps workers understand where union-related materials and information from their employer is coming from.

While employers hire outside consultants for about 2,600 of the roughly 3,500 union election petitions each year, the Labor Department on average only receives reports from consultants for 190 cases. Under federal law, unions must disclose how much they spend on outside consultants, who the consultants are, and what the fees are for, in annual financial reports to the Labor Department.

“The department views reporting of persuader agreements or arrangements as providing employees with essential information regarding the underlying source of views and materials being directed at them, as aiding them in evaluating their merit and motivation, and as assisting them in developing independent and well-informed conclusions regarding union representation and collective bargaining,” John Lund, director of the Office of Labor-Management Standards, said in a statement.

Major unions including the Service Employees International Union, support the proposal, saying employers should have to disclose relationships with consultants if they are persuading workers against joining unions.

But law firms and business interests say the change could be a huge blow to labor law boutique firms and firms with large labor practices that may have to severely limit the advice they give clients if they don’t want to be straddled with the reporting requirements. They also say it could threaten attorney-client privilege by requiring firms to disclose the names of clients for whom they perform that kind of work.

“Any advice given as to how an employer wants to communicate with employees about the union would now be reportable, in detail,” said Mark Theodore, a labor and employment partner at Proskauer Rose, which advises companies in labor matters. “That is something that’s unheard of in any other area. You would never disclose things you talk about with your client. In fact, you’re prohibited from disclosing those things. This [proposal] would make it a requirement to detail that.”

The Labor Department said the rule would not violate attorney-client privilege.

Ultimately, the change would make it harder for employers to seek advice from outside counsel, said Michael Eastman, executive director for labor law policy at the U.S. Chamber of Commerce. The chamber is part of an informal coalition of law firms and business trade groups challenging the rule change, he said.

“This is [an issue] that hits law firms’ bottom line and they’re interested in that, and concerned,” Eastman said. “There are a lot of law firms that don’t want to disclose client names or fees. Fewer law firms will offer labor relations services. That’ll make it harder for employers to find someone to talk to during a union campaign for advice.”

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