Confidentiality provisions restricting the terms and amount of a settlement are standard in civil cases among private parties. With increasing frequency, however, defendants seek to negotiate broader restrictions that prohibit not only plaintiffs-but also their counsel-from disclosing public facts about a matter as part of a non-disparagement clause covering the resolution.
As counsel for plaintiffs in civil-rights and employment-discrimination cases, we hold accountable people who have engaged in bad behavior. When resolving cases for clients by settlement, we are sometimes asked to agree that we will not discuss the litigation's subject matter after the settlement. Such clauses attempt to bind us to broad prohibitions including, for example, not maligning, denigrating, or otherwise speaking ill of the defendant company or its personnel or doing anything that might disparage a defendant's name or reputation.
But what about when the truth hurts?
Is it ethical for defendants or their lawyers to try to prevent plaintiffs' counsel from communicating truthful information about our work on particular matters? Can we as lawyers agree to restrict our ability to communicate about our practice in this way?
No and no.
Here's why: such restrictions make it harder for plaintiffs to locate competent counsel to handle their matters and are thus unethical and prohibited by the ethics rules. Under Ohio Professional Conduct Rule 5.6(b), which governs Ohio lawyers' conduct, an attorney may neither request nor agree to restrictions on the right to practice law as part of settling a case:
A lawyer shall not participate in offering or making ... an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a claim or controversy."
This rule is based on Rule 5.6(b) of the American Bar Association's Model Rules of Professional Conduct. Though the rule's plain language makes clear that a lawyer could not, for example, promise never to sue a defendant again as part of settling a matter, what about indirect restrictions like non-disparagement clauses?
Every jurisdiction to consider this issue has concluded that lawyers cannot agree to indirect restrictions on their right to practice including by limiting their ability to communicate publicly available information about their practice and experience.
For example, the Ethics Committee of the San Francisco Bar Association considered a case where a plaintiff's attorney represented a member of the LGBT community in an employment-discrimination case. As part of the settlement, the employer demanded that the plaintiff's attorneys agree via a non-disparagement clause not to mention in communications or advertising materials that they worked on LGBT cases against the employer or LGBT rights as an area of expertise. The committee found that under the California Rule of Professional Conduct 1-500, it was unethical to demand or agree to such restrictions on marketing an attorney's experience as part of resolving a case:
Defense counsel may not propose, and plaintiff's attorneys may not accept, a settlement provision [that] obligates the attorneys to take actions that will either directly or indirectly restrict their right to practice law. Prohibiting an attorney from disclosing public information regarding the attorney's handling of a particular type of case against the settling defendant is an impermissible restriction on the attorney's right to practice and deprives legal consumers of information important to their evaluation of the competence and qualifications of potential counsel. Prohibiting an attorney from disclosing that he or she has experience in a particular area of the law is also an impermissible restriction on the attorney's right to practice regardless of whether that information is otherwise public.1
Indeed, all jurisdictions to have considered the issue agree that non-disparagement clauses that seek to prevent lawyers from discussing the work they has done on cases are unethical:
· Washington DC: ("A settlement agreement may not compel counsel to keep confidential and not further disclose in promotional materials or on law firm websites public information about the case, such as the name of an opponent, the allegations set forth in the complaint on file, or the fact that the case has settled. Such conditions have the purpose and effect of preventing counsel from informing potential clients of their experience and expertise, thereby making it difficult for future clients to identify well-qualified counsel and employ them to bring similar cases.")2
· Wisconsin: (finding that a non-disparagement clause applicable to plaintiff's counsel in a sexual-harassment settlement agreement violated Wisconsin Supreme Court Rule 20:5.6(b) (which prohibits a lawyer from participating in the offering or making of "an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy.")).3
· Texas: ("solicitation is part of the practice of law and therefore cannot be more severely restricted in a settlement agreement tha[n] it is restricted in the Rules and applicable law...[thus] [a] settlement agreement which exceeds current limitations placed on solicitation would be a limitation on the practice of law and therefore a violation of Rule 5.06(b) of the Texas Disciplinary Rules of Professional Conduct.")4
· North Dakota: ("Under Rule 5.6(b) an attorney may not agree-even at a client's request: ... to keep confidential information that is not confidential client information under Rule 1.6, for example, information that is a pubic record or that the attorney could otherwise obtain through channels, such as discovery, and use in subsequent cases, but for the proposed confidentiality agreement.")5
· South Carolina: ("It is improper for a lawyer to become personally obligated in a client's settlement agreement to refrain from identifying the defendant as a part of the lawyer's business... Rule 5.6(b) protects a lawyer's access to the legal market, and that protection is implicated by advertisements and solicitations equally.")6
· Indiana: ("An attorney must be able to truthfully tell the client or prospective client whether the attorney has relevant experience, and in the course of the representation, the attorney must be free of material limitations on the representation that would prevent the attorney from providing competent and diligent representation.")7
And the New York State Bar Association notes that "[a] settlement proposal that calls on the lawyer to agree to keep confidential, for the opposing party's benefit, information that the lawyer ordinarily has no duty to protect, creates a conflict between the present client's interests and those of the lawyer and future clients...."8
Thus, a settling defendant cannot ask lawyers to keep secret any public information about a matter-such as information contained in publicly filed pleadings-as part of resolving a case. Such broad non-disparagement clauses are unethical to accept-or even to propose .
When lawyers and opposing parties have demanded that we agree to such arrangements, our answer is no. As a result, we are able to share our experience with the public, potential clients, and clients-and practice law without unethical restriction.