Secrets can Be Dangerous with Confidental Settlements

Settlements are a big part of any litigator’s work these days. And, unfortunately, a big part of settlements are the confidentiality clauses that the defense counsel often seem to want as a condition of settlement. It’s not an atypical scene during the settlement negotiations: everything has mostly been agreed upon, the end is in sight, and then defense counsel wants that one last little clause, the one that bars the plaintiff and the plaintiff’s lawyer from talking publicly about the facts of the case.

As an attorney, it’s awfully hard to say no. In the first place, confidentiality clauses have become fairly standard and saying no takes some guts. Making it even more difficult are the interests of your client: their case is about to come to a close and they are finally about to see some recovery for their suffering. Turning down the confidentiality clause could unravel the whole settlement and send you back to square one.

Despite these difficulties, I have long advocated in favor of plaintiff’s attorneys to stand up to defense counsel and reject confidentiality clauses. You can read about some of the arguments on Don Keenan’s trial blog. It is time for settlements to stop being shrouded in secrecy because it is good for plaintiffs and plaintiff’s attorneys. Not only does it make sense, but confidentiality clauses run up against ethical rules that seek to promote public knowledge about experienced attorneys.

A 2009 ethics committee opinion from the New Hampshire Bar Association supports the position that confidentiality clauses might run afoul of ethics rules. The rule in question in New Hampshire is one that prohibits an attorney from offering or making a settlement agreement that restricts the attorney’s right to practice. The question being, does this rule prevent a defense attorney from demanding a settlement clause which prohibits the plaintiff from disclosing publicly available information about the case?

Rules against restricting an attorney’s right to practice have multiple goals, but one of them is to ensure that future clients can “identify and hire qualified counsel whose judgment and expertise remains free from restrictive, private settlement agreements.” But, if a highly-qualified plaintiff attorney’s work has all been done behind the curtain of these confidentiality clauses, then how is any potential plaintiff supposed to know that they are qualified? How would a plaintiff ever be able to compare the attorney who has never been through a settlement negotiation to an attorney who has been through dozens, but all of them are sealed? And, how is an experienced litigation and settlement attorney supposed to promote their own work and expertise if all of their accomplishments have to be kept secret?

The ethics opinion out of New Hampshire found that it might be okay for settlements to have confidentiality clauses limited to specific types of information contained in the settlement—such as the amount or existence of the settlement. But when it comes to publicly available information, a confidentiality clause could violate the ethics rules which protect an attorney’s right to practice. Specifically, such a clause “might well result in limiting an attorney’s ability to disclose his or her expertise, thus limiting the public’s ability to identify and obtain the most qualified counsel.”

The biggest take-away point from this case—and from the arguments that I’ve made before—is that plaintiff’s attorneys don’t have to accept these confidentiality clauses and shouldn’t do so automatically. Just like every other clause of the settlement, they should be negotiated and plaintiff’s attorneys should be wary of selling away their right to speak about the case. If enough of us start saying no to these blanket confidentiality clauses, then we have a shot at changing the standard practice of incorporating them, which is good for everyone in the long-run.