Improper acts

Feature | 24 August 2011
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Michelle Chance, a partner at Kingsley Napley, discusses how UK firms can limit their liability for sexual harassment by fee-earners and clients

 

Many sexual harassment cases involve senior male partners in their late fifties and early sixties who have not grown up with the culture of political correctness which now prevails.

But we only need to recall David Cameron’s recent “calm down dear” comment and watch Jennifer Anniston in the movie Horrible Bosses to realise the problem isn’t always confined to that cohort.

Sexual harassment often arises in traditionally male-dominated practice areas, which can be pervaded by a macho culture involving male-orientated bonding events and corporate hospitality.

In 2008, for example, Shearman & Sterling dismissed an associate in London after a vacation student made a formal complaint that she was taken to a strip club by him and sexually harassed.

It is likely that an employment tribunal would have found that the act of taking the student to the strip club would, in itself, have constituted sexual harassment and that the firm was vicariously liable for the associate’s actions, as the incident could well have been deemed to have happened during the course of employment.

Complaints also commonly arise when victims feel sexual rejection has impacted upon their career progression. White & Case’s Los Angeles office faced such a claim six years ago when a gay associate claimed he was sexually harassed by two male partners. He rebuffed their advances and subsequently found himself relegated to the of counsel track, rather than making partner.

A standard definition of sexual harassment is unwanted conduct of a sexual nature which has the purpose or effect of violating the victim’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for the victim.

Telltale signs of sexual harassment which management should be alerted to include where a solicitor has previously been heavily involved in the firm’s social events and recruitment activities and then, for no apparent reason, withdraws from these activities (in order to avoid any contact with their harasser outside of the office).

As a matter of course, firms must ensure that all members of staff clearly understand what constitutes sexual harassment and have clear policies and training in place, as well as a strong support system for victims of sexual harassment.

It is also important to incorporate anti-harassment training in partners’ leadership training programmes. Clearly, partners are in a position of power and authority which must not be abused to sexually harass their subordinates.

Anti-harassment training and one-to-one tailored coaching can help to change ingrained behaviour, increase understanding of the risks involved and enable the firm to rely on the statutory reasonable steps defence. 

Compensation for harassment is currently unlimited. Awards may range from £30,000 for injury to feelings to hundreds of thousands of pounds if the victim suffers serious psychological problems and is out of work for a significant period of time. The victim could also bring a personal injury claim or a claim under the Protection from Harassment Act, for which there is both criminal and civil liability.

 

The firm’s liability

A firm is vicariously liable for anything done by employees in the course of their employment, regardless of whether their actions were undertaken with the firm’s knowledge or approval.

The Shearman & Sterling case mentioned above highlights some of the risks here. The dividing line becomes blurred with conduct outside the office and out of normal working hours, particularly at social gatherings such as team bonding events, client hospitality, practice development initiatives and recruitment drives.

Some situations will automatically be considered an extension of employment, for example a colleague’s leaving party or informal drinks with colleagues immediately after work. Many claims stem from inappropriate behaviour during drunken nights out with colleagues (see box ‘Case study: Gossip and rumours’).

There is a defence available to the firm if it can show that it took all reasonable steps to prevent the employee from doing the discriminatory act. An employment tribunal typically takes a two-stage approach:  

  1. what steps the firm took; and
  2. whether there were any other reasonable steps that the firm could have taken.

It is not enough merely to have an anti-harassment policy, the firm must also ensure employees and partners are aware of it, that the procedures outlined in the policy are followed consistently and that practical steps are taken to implement the policy.

Firms should avoid having blanket policies whereby a victim is moved to a different department or floor from the harasser or asked to work from home during the investigation. If the victim is a junior female, this could amount to indirect sex discrimination.

Internet and email policies should also be consistent with the relevant provisions of the firm’s anti-harassment policy. A number of cases have involved law firms in which sexually explicit emails were forwarded globally, resulting in the employee’s dismissal. Such emails potentially constitute sexual harassment, not only of the individual described in the email, but can also create an intimidating, offensive environment for employees who receive the email.

Best practice might be where partners and employees are required to re-read the firm’s anti-harassment policy on an annual basis, perhaps when receiving their annual salary review or bonus, and to sign confirming that they have re-read the policy. As and when there are significant new harassment cases, updated refresher training should also be given.

 

Case study: Gossip and rumours

In Nixon v Ross Coates Solicitors UKEAT/0108/10, SJ Nixon was the subject of office gossip following the firm’s Christmas party, at which she was seen kissing an employee who was not her boyfriend and later entering a hotel room with him.

When she informed her employer that she was pregnant, this led to workplace gossip about her child’s paternity.

Nixon took time off work due to being distressed by the gossip and raised a grievance, which the firm did not deal with properly. She subsequently requested relocation to a different office, which was refused. The firm also did not pay her for her time off work.

The Employment Appeal Tribunal found that gossip about the paternity of Nixon’s child constituted sexual harassment. It also found that the firm had discriminated against her by not allowing her to work at another office.

As soon as Nixon raised a grievance about the harassing nature of the gossip, the firm’s management should have put steps in place to prevent the gossip from continuing. The employees concerned should have been warned that they would face disciplinary action if they persisted in spreading rumours about the paternity of Nixon’s child.

 

Harassment by partners

It should be noted that the reasonable steps defence only applies to the actions of employees. Many salaried partners and some fixed-share equity partners are in effect employees, so firms may be able to rely on the defence if the harassment is perpetrated by such a category of partner.

However, where full equity partners have joint and several liability for wrongful acts, firms should look carefully at how the indemnities in their partnership agreement would work in a harassment case.

With limited liability partnerships (LLPs), it is arguable whether members are genuine partners or more akin to employees. If they are actually deemed to be employees, then the firm may be able to rely on the statutory reasonable steps defence, although this is unlikely to be the case in practice.

Members of LLPs are agents of the LLP and their actions during the ordinary course of business will usually bind the LLP. The wording of indemnities in favour of members in LLP agreements will need to be carefully drafted to exclude cases of harassment.

Also, if the firm would like to instruct external counsel to investigate claims of partner harassment, the LLP agreement may need to be revisited to prevent the investigated partner from seeing the legal advice received.

 

Harassment by clients

Law firms are not only liable for the actions of their partners and employees, but also for harassment by clients.

Under the Equality Act 2010, a firm will be treated as harassing an employee where a third party, such as a client, harasses the employee in the course of the employee’s employment (for example at a client meeting) and the firm fails to take reasonable steps to prevent the third party from doing so, knowing that the employee had been harassed during their employment on at least two other occasions by a third party (regardless of whether the third party was the same person on each occasion).

An example would be where a fee-earner received an unwanted gift from a client which made him/her feel uncomfortable and which was followed by a request for dinner with the client. Once the firm is made aware of both events, it is under a duty to ensure that no further such harassment takes place.

Firms should ensure their anti-harassment policies enable employees to complain about harassment by clients. Staff should be reassured that raising such complaints in good faith will not lead to them being victimised and that they will be treated seriously, regardless of how much the client generates for the firm in fees and whether it is a key client.

Consider including a term in client engagement letters or terms and conditions of business regarding the firm’s policy on harassment and requiring clients to adhere to it. The wording should clearly state that if a client fails to adhere to the firm’s policy on anti-harassment, the firm may end its retainer or relationship with that client.

 

Firm incentives

There are many reasons why firms should take sexual harassment seriously. Many organisations, particularly US-based ones, often ask about law firms’ internal diversity, equal opportunities and anti-harassment policies to ensure their partner firms have values consistent with their own.

Stamping out harassment may not only help firms to win instructions from new clients, but can also make them more appealing to lateral hires and prospective merger partners.

An effective policy can also ensure complaints are taken seriously and do not evolve into full-blown litigation claims.

The author gratefully acknowledges the assistance of David Rowntree with this article.

mchance@kingsleynapley.co.uk

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