Over the past year, the #MeToo movement has empowered millions of people to come forward and break the silence about their experiences of sexual harassment. Many public figures have been thrust into a harsh spotlight, accused of abusing their power and influence. While reports of sexual harassment in the entertainment industry have dominated the headlines, no sector is immune to this massive cultural shift and, as such, we need to discuss the potential impact #MeToo could have on private equity.
That’s why PER hosted a workshop last month led by CM Murray Partners Samantha Mangwana and Zulon Begum. With their wealth of experience dealing with sensitive partnership and employment issues, Samantha and Zulon were ideally placed to introduce the key concerns surrounding sexual harassment law to our audience of private equity professionals.
Defining sexual harassment

Proceedings began with the definition of harassment from the 2010 Equality Act. The definition is broad in order to capture the enormous variation between the nature of the alleged conduct in each case, so it’s important to understand the core issues at play.  Two key things to consider when interpreting the legislation are intention and impact. What a person meant to convey or communicate through their actions or language is not the crucial consideration in determining whether conduct could be construed as sexual harassment. Instead, the impact of the behaviour is paramount; if someone feels threatened or offended, the behaviour can be interpreted as sexual harassment. Additionally, the complainant need not be the person directly affected by the incident in question. It may be that bystanders report the incident for creating a threatening or negative atmosphere.

Prevention is better than cure

Once you have a clearer understanding of what sexual harassment is, Samantha and Zulon advised that the focus should be on reducing risk by developing a workplace that acknowledges that the risk exists and puts in place practices that make clear what behaviours are unacceptable. In private equity firms, for example, it might be important to consider features of the industry, such as long hours of working and the consumption of alcohol at internal and external events. One way to identify particular risks in your firm is to circulate anonymous surveys to see how people feel about the level of risk of sexual harassment in their working environment. This data can be used to create tailored policies that team members understand in detail. The conversation about the policies in place should be led from the very top of the organisation, so that team members understand what’s been put in place to protect them, feel comfortable about coming forward and understand how to recognise where the line is between acceptable and unacceptable behaviour.
Ensuring policies apply to all

Generally, in private equity firms, Partners are not employees. That means any sexual harassment policies that are put in place within a firm won’t automatically include them. CM Murray advised that policies should be incorporated into the LLP agreement, ensuring that the partnership could impose appropriate sanctions for all members of the firm. Important decisions may need to be made, for example, about what happens to equity in the event of a partner being removed as a result of a sexual harassment claim that has been upheld.

Another part of the LLP agreement that can often be overlooked when claims emerge is the automatic right that partners have to access the legal advice provided to the LLP. This means that documents related to a sexual harassment claim could potentially be accessed by the accused or the complainant, which may hamper the investigation. Firms should make sure this right is removed for sensitive scenarios such as sexual harassment claims.

Avoiding discrimination

An audience member questioned whether the focus on prevention and awareness could lead to men keeping the women they work with at a safe distance. The fear was that men may wish to avoid lunches and dinners with women, or even sitting next to a female colleague on a plane, for fear that an allegation could arise. Samantha and Zulon were very clear that any such strategy would be construed as unlawful discrimination.
When the issue of gender discrimination arises, it’s important to note that sexual harassment does not only affect women. A #MenToo movement has emerged to make sure male victims are duly recognised in the conversation.
Encouraging reporting …

Reporting should be encouraged. Some firms appoint trained internal advocates that team members can go to with concerns. To prevent escalation, this reporting should happen even with minor reports of misconduct. Office environments are increasingly taking the lead from the education sector, where teachers are required to report even nagging concerns so that patterns can be identified and issues addressed early.

Some firms have encouraged open discussion of unwanted behaviour by introducing terminology that’s safe to use in the workplace. For example, one law firm has adopted the use of a phrase that people can use to call out questionable behaviour: “That’s not cool”. This strategy has had a positive impact according to employee surveys.

… but don't promise anonymity

It may be tempting to promise claimants or witnesses anonymity to encourage people to come forward. However, a full investigation can only be conducted if the main parties are identified. At the first instance of reporting, claimants and witnesses should be made aware by the firm that their identities can’t be protected.
Technology offers some interesting ideas to boost reporting and avoid awkward conversations between colleagues. One innovation is Talk To Spot, an app that uses a chat bot to find out the details of an instance of sexual harassment, time stamps the evidence and can even transfer the information to a relevant third party such as an HR contact.Technology offers some interesting ideas to boost reporting and avoid awkward conversations between colleagues. One innovation is Talk To Spot, an app that uses a chat bot to find out the details of an instance of sexual harassment, time stamps the evidence and can even transfer the information to a relevant third party such as an HR contact.

Issues to consider of a claim does arise

Once an incident has been reported, there are some difficult decisions to be made about how to keep the complainant and the accused apart until an investigation has been conducted and the situation resolved. Unlawful victimisation must be avoided at all costs; this means that the person who has reported the claim should not be adversely affected. Samantha and Zulon advised against the dangers of suspension for either party. They suggested home working or a change of reporting lines during the investigation period, especially if one party has any power over the other’s compensation or career progression.

Another issue that deserves careful consideration is who should conduct the investigation. Potential bias is a danger if someone from within the organisation is used, so many firms will hire in outside help from lawyers. However, it’s important to note that legal privilege does not necessarily apply just because a lawyer carries out the investigation – if it is a purely fact-finding exercise, privilege will not apply to the investigation report produced.

A good start

During a packed, hour-long discussion, Samantha and Zulon certainly covered a lot of ground, however, they only scraped the surface. This is because sexual harassment is a complex personnel issue that requires thought, time and training to ensure the right safeguards, policies and procedures are in place. Our breakfast event raised the profile of an issue that we may once have protested didn’t exist in private equity, but one that we can no longer ignore. It also highlighted the specific risks that make the industry vulnerable to sexual harassment cases and complex grievance processes.

Going forward, we should be prepared for the government to act on this issue, introducing more stringent regulation and legislation around sexual harassment in the workplace. Thanks to Samantha and Zulon’s awareness raising, perhaps private equity will lead the way in financial services.  

Debbie Eidelman
Principal Consultant, Head of Investor Relations