Challenging secret settlements as legally unethical

Every week seems to bring headlines of another rich and powerful man brought low by revelations of long-hidden sexual misconduct.

Time and again, the evidence spills out despite the commonly-used legal tool of a financial payoff with a legal confidentiality agreement.  Typically — and most dramatically in the case of adult movie actress Stormy Daniels and President Donald Trump — the financially compensated party promises to keep quiet forever, unless actually forced by court order to provide testimony.

Prof. Jon Bauer

Most people, and most lawyers in particular, have seldom thought much about whether confidentiality agreements might be inherently unethical.  Until last year they were instrumental in holding back the wave of public outrage now known as the “Me Too” movement.

One Connecticut legal ethics scholar, Prof. Jon Bauer of the University of Connecticut School of Law, has made an in-depth study of secrecy agreements that impede disclosure of evidence in future cases. He concludes they violate the ethical rules of the legal profession.

In “Buying Witness Silence: Evidence-Suppressing Settlements and Lawyers’ Ethics,” Bauer goes back to the early drafters of the ethics code.  They viewed the litigation process as a truth-finding exercise requiring unfettered access to potential evidence.

A 1935 ethics opinion the ABA, No. 131,  held: “It is improper for an attorney … to influence persons, other than his clients or their employees, to refuse to give information to opposing counsel which may be useful or essential to opposing counsel in establishing the true facts and circumstances affecting the dispute…. All persons who know anything about the facts in controversy are, in simple truth, the law’s witnesses.”

Lawyers are also officers of the court, and are not permitted under Rule 8.4 to engage in conduct that is prejudicial to the administration of justice, Bauer notes in his Buying Silence article, which was published in the Oregon Law Review in 2008.   More specifically, he also focuses on Rule 3.4(f), which says attorneys can’t ethically ask people to keep quiet about legally relevant information. (The rule excepts the lawyer’s client, and the client’s family and employees.)

To the extent lawyers’ secret settlements keep relevant evidence hidden, Bauer writes, they undermine “the integrity of adversarial adjudication.”

All persons who know anything about the facts in controversy are, in simple truth, the law’s witnesses.”  American Bar Association Ethics Opinion, 1935

State ethics boards are starting to agree with Bauer. There have been ethics opinions in the past few years by the Chicago bar ethics committee and the Indiana state ethics committee that accept Bauer’s argument that lawyers, as officers of the court, should not be negotiating legal agreements that prohibit disclosing relevant evidence to other parties.

Another sign of the changing attitudes is buried in the new Federal Tax Bill.  It now prohibits businesses from writing off the cost of settlements in sexual misconduct cases with confidentiality provisions. (see:

“It’s an interesting incentive,” said Bauer in an interview.  “But when push comes to shove, the prospect of not being able to take it as a tax deduction won’t prevent people and companies from entering into secrecy agreements, if they think it’s in their interest.”

Bauer became interested in the ethical issue of secrecy provisions after a client of his legal clinic brought the issue into real life focus.

Machine operator “Felicia Martinez” was abruptly fired for speaking Spanish in her English-only workplace and brought a federal discrimination claim.  Her case concluded with a pre-trial settlement and confidentiality provision.

If Martinez spoke of her case to others, she’d be liable to repay half the settlement amount.

Months after the settlement, she came to Bauer, distraught.

A co-worker with a similar discrimination claim wanted a witness statement from Martinez to help in pursuing a workplace discrimination claim.

Due to the settlement terms, Martinez had to refuse to help, at least until she was subpoenaed. The co-worker never pursued her claim, and Bauer could not keep from wondering whether the secrecy clause had prevented the co-worker from mounting a separate, meritorious case.

In some cases, it’s the repetitive nature of the wrongdoing that is at the heart of the scandal, and that is when secrecy agreements have proven particularly pernicious, Bauer notes.

“When you think of the victims of pedophile priests in Boston and other places, many of them settled with confidentiality agreements.

“Later, when they heard of other allegations against the same priests, they were not able to come forward and share highly relevant information with the people who had been victimized the same way,” he said.

Individuals with new claims often would not know who to contact. “They could, in theory, take a deposition of the person, but first they would have to decide to file suit, which you need to do before you can take a deposition.

“It may be hard to get a lawyer to take their case,” Bauer concludes, “if the lawyer is not able to establish that there have been prior similar complaints.”