98-F-141 - Settlement Clause restricting right to practice

Formal Ethics Opinion 98-F-141


Inquiry is made about the ethical propriety of certain types of clauses included in releases signed to document settlement of personal injury cases.


The inquiring attorney has encountered certain clauses included in releases prepared for settlement of medical malpractice and other personal injury actions.


The four types of clauses mentioned by the inquiring attorney include confidentiality clauses, clauses requiring plaintiff’s counsel to become a party to a release, clauses releasing the defense attorney in addition to the defendant, and clauses restricting the plaintiff or plaintiff’s counsel from using case information to assist other litigants or claimants.


Confidentiality Clauses


Confidentiality clauses are provisions in a release which provide that the terms and conditions of the settlement are confidential and that the plaintiff and plaintiff’s counsel will not reveal the terms and conditions of the settlement. The inquiring attorney states that confidentiality clauses are usually not negotiated and that they are forced upon the plaintiff after a settlement has been reached. Releases are contracts. Our understanding of contract law is that an acceptance which does not mirror the offer is a counter offer. A prohibition against negotiation of a release containing a confidentiality clause is inappropriate. No disciplinary rule prohibits such clauses.


The inquiring attorney makes a public policy argument supporting a total ban on confidentiality agreements. Those arguments are more properly addressed to the Supreme Court. The function of an ethics opinion is not to make public policy.


Clauses requiring plaintiff’s counsel to become a party to a release


The attorney’s signature on a release should vouch only for the fact that the client releases the defendant. A requirement that a plaintiff’s attorney become a party to a release might create conflict of interest between plaintiff’s attorney and the plaintiff in violation of DR 5-101(A). Therefore, these clauses are prohibited except in cases where the plaintiff’s attorney releases a claim for attorney fees.

Clauses releasing the defense lawyer in addition to the defendant


Just as in the case of a plaintiff’s attorney, defense counsel is not a proper party to a release except as the representative of the client. It is our opinion that plaintiff’s counsel would be justified in  refusing to negotiate such a term in most circumstances. 

Clauses restricting plaintiff or plaintiff’s counsel from using case information to assist other litigants or claimants


DR 1-208(B) provides that:

“In connection with a settlement of a controversy or suit, a lawyer
shall not enter into an agreement that restricts the right to practice
law.”


As to existing clients, inclusion of such a clause in a release could be construed as the settlement of one client’s case to the detriment of another client’s case. Such a clause would constitute representation of differing interests in violation of DR 5-105.


As to future clients, ABA Formal Ethics Opinion 93-371 provides that it is ethically inappropriate to propose as part of a settlement agreement a restriction of a plaintiff’s attorney from representing future claimants against the same defendant. Such clauses are ethically inappropriate.


ETHICS COMMITTEE:


Herman Morris, Jr, Chair
Frankie E. Wade
James M. Glasgow, Jr.


APPROVED AND ADOPTED BY THE BOARD


This 4th day of February, 1998.