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Confidentiality Agreements in Personal Injury

Are Confidentiality Agreements Necessary?
Confidentiality Agreements

Confidentiality agreements in personal injury settlements are often proposed by those who have been sued.  Such agreements can be enforced, even if it is a bad idea.

Confidentiality provisions require non-disclosure of the terms of the agreement, or sometimes even to the fact of settlement itself, by the parties.  Such provisions can require penalties such as requiring paying back the settlement if the settlement is disclosed.  Non-disclosure is often proposed in settlement of products liability, medical malpractice, toxic tort, and other complex cases where corporations or others are alleged to have committed wrongdoing.

Confidentiality Agreements as Release Provision

Personal injury cases are settled with a release.  This brings a full final termination of the claim, in exchange for payment of settlement funds.  Confidentiality provisions are injected with specific language in the release, setting out the requirement of non-disclosure, and also the penalty provisions.

Confidentiality agreements must be negotiated.  In other words if settlement is proposed, and a non-disclosure clause slipped in at the last moment, attorney and client need to step back and insist that the additional requirement of confidentiality be accompanied by additional settlement proceeds.

Issues posed in Confidentiality Agreements

Non-disclosure agreements pose policy problems.  If a product is defective, and the manufacturer insists upon confidentiality, others will never know that a claim was settled as to that defective product.  While court pleadings, documents filed in the courthouse, are available for public view, settlement agreements most often remain confidential.

While defendants may insist that parties keep a settlement confidential, demanding that the attorney observe absolute non-disclosure raises ethical dilemmas.  Prior restraint against advice to current and future clients interferes with the attorney’s duty to fully, fairly, zealously represent the client.

Confidentiality Can Present Options

Confidentially agreements do have their place and should not be entirely rejected without analysis.  For example, in a case in which my office was involved, there had been several other similar cases tried and lost by other attorneys.  A fairly substantial settlement was proposed, including a non-disclosure agreement.  Balancing the risk of a trial and rejection of the claim by the jury, against the certainty of a settlement including the confidentiality agreement, all terms were accepted.

Scope of Confidentiality Agreements

Specific terms making up confidentiality agreements can vary.  Often, insurance companies and their attorneys insist upon non-disclosure of the settlement amount and terms of the agreement.  Others require more, that the nature and all details of the dispute be included.  Liquidation clauses spell out the penalty to be paid upon breach, often the entire amount.  So, it is crucial that non-disclosure agreements, where accepted at all, be written clearly and concisely.

What can happen where confidentiality agreements are breached: click here.

3 thoughts on “Confidentiality Agreements in Personal Injury”

  1. Had a divorce come up after a medical lawsuit was won. Filed by her and needless to say she is going after my annuity to which she named the parties in a lawsuit where both of us were given a settlement. Are either of us liable

  2. Had a divorce come up after a medical lawsuit was won. Filed by her and needless to say she went after my annuity to which she named the parties in a lawsuit where of us were given a settlement. Are either of us liable?

    1. Anthony;
      I am not a family law attorney so it is crucial for you to obtain advice from a family law attorney licensed in your jurisdiction.
      As a personal injury attorney who has represented many accident clients, I can tell you that yes a personal injury settlement is in fact an asset that would be subject to potential division depending on all of the circumstances. This would be true of the personal injury settlement whether it was pending, disbursed into a trust or annuity, subject to a confidentiality agreement or otherwise. Best wishes.

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Attorney Myers is a member of the American Trial Lawyers Association, Massachusetts Academy of Trial Lawyers, and New Hampshire Trial Lawyers Association. The Law Offices of Andrew D. Myers offer a broad range of legal services in personal injury cases in Massachusetts (MA) and New Hampshire (NH) areas.

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