Confidentiality Clauses in Settlement Agreements and How to Just Say No

In an April/May CBA Record article written by attorney Dmitry N. Feofanov, the options for agreeing to confidentiality clauses in settlement agreements were explained. Too often confidentiality agreements seem to show up in settlement agreements or release documents when no negotiations have been previously entertained. At the very least, if a confidentiality clause is insisted upon by any party to a settled case, the inclusion should be negotiated as part of the consideration.

Mr. Feofanov’s focus was on the ethics rules of professional conduct. What Mr. Feofanov wrote was that confidentiality clauses should be avoided whenever possible and even with the risk that refusal to include confidentiality clauses to the agreement may undo a settled case.

Mr. Feofanov says he refuses to compromise on confidentiality clauses in any way and would not enter into settlement agreements that contain confidentiality clauses.

Based on the Rule of Professional Conduct 5.6(b), it is stated that a lawyer “shall not participate in offering or making *** an agreement in which the restriction on the lawyer’s right to practice is part of the settlement of a client controversy.” The Chicago Bar Association’s Committee on Professional Responsibility was asked by Mr. Feofanov to weigh in on the ethical ramifications of confidentiality agreements.

According to Rule of Professional Conduct 3.4(f), a lawyer “shall not *** request a person other than the client to refrain from voluntarily giving relevant information to another party” unless that person is a relative or agent of the client and the lawyer reasonably believes that the person’s interest would not be adversely affected by refraining from disclosure. The subcommittee concluded that “when negotiating a settlement agreement, a lawyer cannot ethically request that the opposing party agree that it will not disclose potentially relevant information to another party.” Another party means “more than just the main parties to the present litigation.”

Generally, a settlement agreement may not prevent a party’s lawyer from using the information learned during litigation. The agreement may not prohibit the lawyer from disclosing publicly available information. Rule 5.6(b) would stand for the proposition that a settlement agreement may not prohibit a party’s lawyer from disclosing publicly available facts about the case, “such as the party’s names and the allegations of the complaint” on the lawyer’s website or through a press release.

Mr. Feofanov commented in his excellent article that he never agrees to a confidentiality agreement for another reason that it is hard to draft around the ethical boundaries. He says that the most practical solution to this issue that many of us face in settlements is just to say no. The article is very informative and well worth taking another careful reading of it.

Kreisman Law Offices has been handling nursing home abuse cases, nursing home negligence cases and assisted living facility injury cases for individuals and families for more than 40 years in and around Chicago, Cook County and surrounding areas in Illinois including Bridgeview, Maywood, Melrose Park, Winnetka, Waukegan, Lake Bluff, River Grove, Oak Park, Oak Lawn, Park Forest and Park Ridge, Ill.