A plaintiff's lawyer's dilemma: The ethics of entering a confidential settlement

Georgetown Journal of Legal Ethics, The, Summer 2003 by Waldbeser, Heather, DeGrave, Heather

INTRODUCTION

Many parties to litigation find settlement attractive because it provides a quick resolution to a dispute that could last for years if sent to trial. Confidentiality in settlement negotiations encourages complete disclosure and protects the privacy interests of one or both parties. Plaintiffs, in exchange for greater compensation and increased privacy, are sometimes willing to accept settlement agreements that involve the sealing of court documents. However, the public may suffer from these confidential settlements if a defendant repeatedly causes harm and then covers it up through confidential settlements. In the case of the recent sex abuse cases involving Catholic priests, the widespread incidence of sex abuse was not uncovered until years after the initial abuse because previous litigation had ended in confidential settlement.1 Is it the duty of the plaintiff's attorney, then, to refuse to accept confidential settlements in cases that involve a danger to the public interest?

This Note will argue that it is not unethical for a plaintiff's attorney to agree to a confidential settlement that prohibits the disclosure of information learned during the course of the litigation. Part I will examine the benefits of settlement over protracted litigation and will evaluate the benefits of confidentiality in settlement agreements. Part II will discuss burdens that confidential settlements impose on the public's right to access to the court system. Part III will address the limited guidance that the Model Rules of Professional Conduct ("Model Rules") provide to the question. Finally, Part IV will discuss the proposed Rule 3.2(b), which would have made the confidential settlement agreements that jeopardize public safety unethical.

I. BENEFITS OF CONFIDENTIALITY IN SETTLEMENT AGREEMENTS

Currently, a strong presumption exists in favor of encouraging private settlement. Strained judicial resources may not be able to "bear the increased burden if the settlement rate were to decline, or if settlements were delayed to a significant degree. . . ."2 In addition, poorer litigants may be unable to pay for the cost of lengthy litigation and depend on settlements to receive compensation for their injury. Settlements enable seriously injured plaintiffs in need of compensation to be compensated without the risk or expense of a trial.4 Thus, private settlement furthers the goal of victim compensation without consuming the resources of the judicial system.

Confidentiality is essential to a successful settlement process, because it encourages complete disclosure and candid negotiation in all stages of litigation. It allows for "engaging in complete disclosure during the pretrial process; fully airing all issues at pretrial hearings and during trial; and being willing to negotiate a settlement and doing so candidly."5 The assumption that discovery documents will be kept confidential enables "widespread voluntary compliance" with discovery requests and prevents the discovery process from becoming more "contentious, protracted and expensive" by creating disincentives to produce potentially embarrassing information.6 The ability to seal discovery and settlement documents also protects attorney-client privilege and the work-product doctrine while in pretrial proceedings.7 The discovery process is "designed ... to reveal information that may lead to the discovery of admissible evidence;"8 therefore, unlike documents made public during trial, information in discovery documents may not be admissible or even relevant to the case.9 Confidentiality protects the mental process of the lawyer in preparing for litigation and encourages an open exchange of information between the parties during discovery, a process in which openness is "vital to the attorney's efforts to serve the client's interests most effectively."10

Revealing discovery documents to the public would not only create a disincentive to disclose, but also create a disincentive to settle.11 It presents an opportunity for plaintiff's lawyers to prosecute new lawsuits based on the discovery of the initial suit, creating an incentive to take a chance with litigation rather than to settle a multitude of endless lawsuits.12 Also, if confidentiality is not a condition of settlement, some defendants may be inclined to continue litigation rather than to risk the negative, and often misleading, implications that the public assumes from settlement.13 These potential effects would only contribute to the backlog in the civil court system.14

In addition to protecting the effectiveness of the discovery process, confidential settlements ensure that the litigants' right to privacy, recognized by the Supreme Court with regard to information produced during the discovery process, is fully protected.15 To prevent the sealing of discovery would force defendants to forfeit their right to privacy "merely on the basis of an unsupported accusation before any charges have been proven, any verdict returned, or any judicial decision rendered."16 Therefore, release of pretrial discovery information is "premature at best, and disastrous to a litigant's reputation ... at worst."17 More than half of all defendants win at trial, and those who vindicate themselves at trial cannot restore the damage caused by the privacy forfeited against their will during pretrial discovery.18