Drop Rule That Hassles Business Lawyers

The U.S. Labor Department has proposed a new rule that would have the effect either of requiring attorneys to disclose confidential information about their clients, or deprive business — especially small business — of the ability to hire attorneys to advise them on labor-management issues. It's another assault on business and should be junked.

Since 1959, the federal Labor Management Reporting and Disclosure Act has required businesses to file a report when they hire an outside firm to engage in what are known as persuasion services on union organizing issues. Typically, this involves giving talks to workers, or mailing them materials from the employer's point of view. The shorthand for this regulation is the "persuader rule."

But for years, the Labor Department has exempted lawyer-client advice from the persuader rule — as long as the lawyers themselves don't have any direct contact with their clients' employees.

Now, the Labor Department wants to change this interpretation of the persuader rule to bring labor relations lawyers within the scope of the regulation. The proposed expansion of the rule would not merely require businesses to disclose that they have hired attorneys to advise them on labor-management issues during a union organizing drive. It would also require the lawyers to disclose when they have been hired to advise firms on how to deal with organizing issues and also to reveal to the Labor Department the nature of the legal tasks they have been hired to perform.

The proposed regulation would also require lawyers to reveal their payments for advice on all labor relations issues for all of their clients, regardless of whether or not the advice involves persuasion activities in a union organizing drive.

This puts the lawyers in a bind.

As an American Bar Association protest to the Labor Department points out, it requires the lawyers to violate the client confidentiality requirements of the ABA model ethics code and many of the state legal ethics rules that are based on the ABA model code.

The practical result, as the National Federation of Independent Business noted in its protest to the Labor Department, would be that it will become very difficult for businesses to hire attorneys to advise them on labor relations issues. And as Charles Owens, the head of the Michigan chapter of the NFIB has pointed out, it would have a particularly hard impact on small companies, which can't afford to keep staff attorneys on their payrolls, but have to hire outside lawyers on a case-by-case basis.

The ABA agreed, saying the rule could well deprive businesses of "their fundamental right to counsel."

Whatever the pro-business rhetoric from the White House, agencies of the Obama administration have mounted a relentless attack on business. The National Labor Relations Board notoriously told Boeing that it wouldn't be allowed to open a second assembly line for one of its new aircraft in right-to-work South Carolina; the National Mediation Board has reversed a 75-year-old rule on union organizing in the airline industry and now the Labor Department wants to make it very hard for businesses to receive advice on labor-relations issues.

This record is unacceptable — and Congress should say so.

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