Representing Celebrities Or Not, Lawyers Should Consider These Issues Of Confidential Settlements

Confidentiality clauses—discussed in news reports of recent celebrity sex harassment scandals—have become a standard provision for parties entering settlement agreements. Attorneys routinely advise clients on the pros and cons of confidential settlements and whether confidentiality should be an essential term or a "deal breaker" for a particular settlement.

A client may prefer a confidential settlement for a variety of reasons. For example, a defendant may seek confidentiality to avoid the perception of the settlement as a "win" for the plaintiff. With public disclosure of a settlement, other potential claimants could be encouraged to bring suit without bearing in mind the facts and issues particular to their claims. A plaintiff, on the other hand, may prefer a confidential settlement as a means to prevent the release of private information, such as any personal or sensitive facts underlying the plaintiff's claims.

Attorneys handling confidentiality clauses in settlement agreements encounter unique risks, both for themselves and their clients. By taking these considerations into account, attorneys can take steps to preserve confidences in settlement while still meeting their obligations under the rules.

Policy Considerations for Client

The specific circumstances of the settlement may guide the attorney and the client when considering the scope or application of any confidentiality provision as a requisite for settlement.

Confidentiality clauses in settlement agreements can include a range of restrictions. On one end of the spectrum, the clause may attempt to preclude disclosure of the nature of the dispute, the facts underlying the claims and any discovery exchanged. This type of clause may be less effective if litigation has already commenced and publicly available pleadings and documents disclose the parties' dispute. On the other end of the spectrum, the confidentiality language may refer only to the terms of the settlement itself. This may bar a settling party from divulging the amount of any settlement payment, or it may cover all issues discussed in negotiations.

The recent celebrity scandals involving confidential settlements that purportedly concealed wrongdoing for many years have caused some to question whether confidential settlements strike the appropriate balance between the interests of the settling parties and the public's right to information identifying potential wrongful actors.

However, in most circumstances...