As we noted in "First Kill All The Lawyers", last November the DOL announced its intention to move forward this month with the Administration's Proposed Rule change which would eviscerate the Advice Exemption to the Persuader Rule . Yesterday, the DOL again delayed its timeline for finalizing the Rule.
In November the DOL's announcement asserted that it intended to publish a Final Rule in March. On March 6, according to Bloomberg BNA, a DOL spokesman asserted that the Proposed Rule would NOT be made final this month. The DOL did not give a new target date for finalizing the Rule, rather it stated it would provide a new date in its Spring Regulatory Agenda which is not scheduled to be released for some months.
The Proposed Rule Would Eviscerate the Advice Exemption and Attorney-Client Privilege
The Proposed Rule radically alters the regulations implementing the “Advice Exemption” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA.”). For over 50 years this Advice Exemption has been properly, effectively and simply administered by distinguishing direct communications with employees from an attorney’s counsel to an employer-client. The existing regulations have provided a clear line of demarcation; as long an employer’s lawyer or consultant did not communicate directly with employees and as long as the employer remained free to accept or reject any draft materials prepared by them (speeches, letters, written communications, etc.), they were covered by the Advice Exemption and not subject to disclosure or reporting by the employer or the counselor.
The Proposed Rule intentionally eviscerates any meaningful use of the Advice Exemption which would be swallowed up by the new expansive definition of persuader activity which could include discussion regarding strategy, reviews of employer drafts and myriad other ways labor attorneys currently aid their clients including essentially any meaningful advice or counsel provided by labor counsel.
Postponement Possibly Prompted By Opposition/Election Concern
The Proposed Rule was originally proposed in June 2011 but drew immediate criticism of everyone from Senators, to both employer and employee rights groups, to the American Bar Association raising serious ethical, economic and practical concerns. Until November the Proposed Rule was seemingly put on the back burner as the President focused reelection and other issues.
As the stated March deadline approached, the opposition intensified with a slew of major employer groups expressing opposition to the Proposed Rule and urging the DOL to withdraw it or in the least postpone it to be considered in conjunction with the potential changes to DOL Form LM-21 (one of the required disclosure forms related to persuader activity). As the DOL has stated it does not plan on making changes to the Form LM-21 until October 2014, the employer groups argued that changes to the Persuader Rule should at least be postponed so it could be considered together with the closely related LM-21.
Though the DOL has yet to confirm, it is possible this opposition has led to the postponement. It is also possible that Congressional and Senate Democrats, under pressure from these employer groups and others, have sought help from the Administration to postpone the controversy until after the 2014 elections. Either way, what seems clear is that while Employers and the traditional Advice Exemption may have a temporary stay, at least for the time being, the DOL still seems intent on "Killing All the Lawyers."
Management Memo will keep readers updated with further developments on the Proposed Rule and will provide Management Missives on how to cope should the Final Rule resemble the Proposed Rule.