Secrecy in settlement negotiations

Secrecy in settlement negotiations

A trial lawyer friend wrote me about my policy of not agreeing to secrecy or confidentiality as a condition of settlement when demanded by the insurance company or defendant. He pointed out a recent ethics opinion in some state that held it unethical to have such a policy in the client fee agreement. I thought I’d share my response with you.

I’ve seen opinions like that, but I believe, short of discrimination, I can decide who to represent and under what conditions so I do not think those opinions are valid. I won’t agree to an insurance company or defendant demanding secrecy as a condition of settlement. Only my client has the right todecide whether to keep it secret or not. Other then the fee agreement issue, what is a far more troublesome situation is that where at the time of the settlement discussion, the client changes his or her mind and insists on a settlement with confidentiality as a condition. At that stage, there may well be valid ethical reasons prohibiting a lawyer from refusing or withdrawing. The other problem would be that a court appointed guardian ad litem would raise the issue, which also presents a potential ethical dilemma. In other words, there is no question but that the client retains the right to determine settlement.

I have experienced so few client control problems over this issue in my settlements duringmy fifty years as a lawyer that I can count them on one hand with less then all five fingers. Non secrecy has been my policy for over twenty five years. Since that time I have always screened my cases carefully to reject cases involving clients who are not going to trust me – even large damage cases. Imake it abundantly clear at the initial conference what my policy is and am diligent in keep the clients awareof it. I also advisethe insurance company well in advance of the mediation of my policy, I haven’t had the problem.

In all cases, I make it clear to the client that if the client wants confidentiality I honor that, but it is the client’s choice and not the insurance company’s choice. One of the reasons I think clients have agreed to this is that I explain why confidentiality is evil and has the ability to hurt other people. By agreeing to keep it secret there is little chance of change by the defendant. Other people who might have been warned are not aware of the problem. Other lawyers who could benefit from our information are denied access to it. Other claimants don’t know how much the defendant is willing to pay in such cases and so on.

A few examples out of thousands why confidentiality is contrary to a plaintiff lawyer’s code of conduct. In one casesome plaintiff’s lawyer let slip at a seminar the amount of settlement which was confidential and ended up being sued. Thirty years ago a young associate in my office settled a small malpractice case and agreed to confidentiality before I had this policy. A year later a lawyer asked if we had any depositions of the defendant doctor and my associatesent the one from this case. We were sued by the doctor for a breach of confidentiality. We got the case dismissed but it went through the appellate courts before it was over.

I had aheart valve case some twenty five years ago. The struts were welded defectively and would break causing death. The company had settled cases all over the country and every one of them was had a confidentiality clause. The FDA wasn’t aware. People were dying. I refused confidentiality in spite of a generous offer and ultimately the settlement and facts were made public, the FDA made aware and the company forced to recall. I’m not alone in these kinds of experiences.

Secrecy is un-American and harmful to the public. It is only our clients who have the right to not reveal a settlement and not the right of the insurance company or defendant who caused the harm, especially when it involves a defective product.

I know other lawyers disagree with me and that some argue ethical reasons, but I think some of these lawyers just take the easy way out to get a settlementand others haven’t thought it through carefully. I will continue to carefully screen my cases regarding this issue, to continually educate my clients about the importance of this issue and to stick faithful to a policy which II believe has helped the public and our tort system for many years.

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