Confidentially speaking: Do confidential settlements protect clients, or hide their secrets?

People are talking about not talking.

“Last year alone we probably settled close to $40 million of settlements that were confidential, and it’s become more of an issue,” said Adria E. Mossing of Mossing & Navarre. “This was not happening 20 years ago — you may have had to negotiate a few, but it was very infrequent. Now, frequently, at mediation in particular, the issue of confidentiality comes up.”

Confidentiality agreements are designed to prohibit the parties to a settlement from disclosing the settlement terms and other details. Confidentiality presents numerous challenges for both the legal profession and society as a whole. For instance, how much of a right does the public have when it comes to knowing details of a medical-malpractice case? Or a case involving sexual abuse or harassment? And how much does keeping details secret handcuff attorneys who may be handling similar cases down the road?

Mossing, who began her career defending hospitals and doctors against insurance claims, now works on behalf of injured parties in complex medical-malpractice and personal-injury cases. Last year, her firm obtained settlements totaling more than $42 million, of which more than $35 million were confidential. She said that as the number of confidentiality settlements has risen, so too has her concerns that transparency at medical institutions is being eroded.

“The public needs to know when doctors and institutions do harm,” Mossing said. “Even if you don’t give the name of the institution, getting information out there about the settlement and the facts of the case at least gives patients the opportunity to ask their providers, ‘Is this something I should be concerned of? Do you have policies in place to handle this?’”

She added: “When a case is settled it’s important to be able to tell the public, ‘This catastrophic event happened at this hospital. But now, because of this terrible situation and our efforts to protect the family, now the public is more protected. Policies have changed.”

Med-mal balancing act

But do confidentiality agreements brokered by personal-injury attorneys help defendants sweep big problems under the rug? Do hospitals use nondisclosure agreements to ignore systemic issues at their institutions? Or are attorneys just protecting their clients?

On the other side of the issue, Diane E. Webster, a partner with Hinshaw & Culbertson, a civil defense attorney in the health-care arena, said that confidentiality agreements, at least when it comes to cases against doctors, aren’t really that powerful a factor in changing policies since doctors usually don’t settle.

“Those are the cases that typically don’t settle, in particular with physicians,” she said. “They have to report settlements — their reputations are at stake, and their premiums can go up.”

Michael P. Cogan, a partner with Cogan & Power, mostly represents victims of personal injury, medical negligence and wrongful death. According to Chicago Lawyer magazine’s 2018 Settlements Report, his firm recovered almost $46 million in settlements between July 1, 2017, and June 30, 2018. He agreed that there aren’t many incentives for doctors in Illinois to settle malpractice cases.

“When a case settles against a doctor, the carrier for the doctor is under legal obligation by both statute and case law to report that settlement to both the Illinois Department of Professional and Financial Regulations and the National Practitioners Data Bank,” Cogan said. “This is irrespective of whether there’s a confidentiality clause or not, so if there’s an iron-clad confidentiality clause, their obligation is the same. They have to report the settlement, details of the settlement and the physician’s name to the Illinois department.”

Moreover, Cogan said there are much more powerful ways to encourage change at medical institutions.

“If someone were to say to me, ‘Well, isn’t a lack of confidentiality important in order to cause changes in broken systems in hospitals?’ I would respond that it’s not the publicity that causes changes. It’s the filing of the lawsuit — being aggressive and taking depositions and forcing them to the negotiating table — and the process that goes into play after that happens. And I will tell you, I’ve had cases where hospitals have been dramatically changed, not as a result of bad publicity they got after the fact because there was no confidentiality, but because no hospital wants to defend a malpractice case and hire lawyers that they will probably have to pay a couple hundred thousand dollars to if the case goes all the way up to a jury trial.”

Secrecy in the #MeToo era

The issue of confidentiality agreements brokered in settlements is not just an issue in medical-malpractice cases. In recent years, numerous public figures — Hollywood celebrities, politicians and business executives — have wielded nondisclosure agreements to keep sexual misconduct hidden from the public view. As the public continues to demand accountability in the era of #MeToo, many have called into question whether confidentiality agreements negotiated in settlements help these predators conceal their wrongdoings.

Lyndsay A. Markley of the Law Offices of Lyndsay A. Markley represents minors who were victims of sexual and physical abuse. In the past two years, she has settled numerous cases with the Chicago Archdiocese worth more than $5 million, primarily involving the sexual abuse of minors by defrocked priest Daniel McCormack.

“The Archdiocese of Chicago has a standing policy against confidentiality,” she said. “When the [settlement] number can be released, especially in a case like this, it can be positive to some degree.”

Markley said that while it’s important that systemic problems be exposed to the public, for example, as with the Chicago Archdiocese, she made the case that confidentiality settlements are mainly beneficial to her clients — the plaintiffs.

“There is still a lot of shame around sexual abuse,” she said. “Much of the time, victims don’t want their abuse to become public knowledge. My main question is, what’s the injury to the plaintiff? How much can the plaintiff take? Can they take a public trial? Can they take public outing possibly of their name and information if they were abused as a child?”

Mutually beneficial agreements

Markley said that coming to mutual nondisclosure agreements is usually in the best interest of her clients. Sometimes they don’t want to share details of their abuse for psychological reasons. Sometimes they don’t want Cousin Pookie coming with his hand out after he learned of their financial windfall.

“I’ve actually gotten those calls. ‘Hey, so-and-so’s my cousin. I heard about a settlement on the news. I think it’s him.’ Well, I can’t answer those questions, but the fact that that call even happens is astounding,” Markley said.

She stressed that there are more effective means of addressing and tackling systemic misconduct.

“There are other ways to encourage change without that settlement number becoming public,” Markley said. “Much of the times in my settlements, we’ll negotiate on other terms that affect public policy. For example, we’ll have a third party come in and review a youth service program to make sure the abuse is stopped. Or establishing some other kind of quality assurance program to make sure widespread problems are addressed.”

Hinshaw & Culbertson’s Webster also stressed the importance of brokering mutually beneficial confidential agreements. Negotiating these deals can help plaintiffs and defendants — as well as still let the public in on important details.

“Oftentimes we are able to come to some kind of compromise where they can disclose the settlement number to the public, but then just won’t list the defendant,” she said.

Retired Cook County circuit judge Lynn M. Egan of Webster Egan Mediations often helps attorneys hammer out confidentiality settlements during mediations. She said negotiating the scope of confidentiality can also keep some details secret while releasing others in the public interest. Rather than establishing strict confidentiality, parties can agree to modified confidentiality, she said.

“Modified could be, ‘Yes, the plaintiff’s attorneys can publicize the amount of the settlement and describe the nature of the case, but they just can’t say the name of the specific defendant.’ So, while they can’t name, for example, Northwestern Memorial Hospital, they can say local-area or Chicagoland-area hospital,” Egan said.

The ambulance-chaser stereotype

Webster said coming to mutually beneficial agreements is also beneficial for plaintiffs’ attorneys.

“Defense, of course, doesn’t want to go to trial, but often the plaintiff’s attorneys don’t want to try, either. They want to settle because it’s good for business; they need to be able to show that they get results by publicly listing all of their verdicts and settlements. Plaintiffs’ attorneys don’t want to be in a situation where they lose out on marketing opportunities.”

However, not all personal-injury attorneys agree that client settlements should be exploited for marketing purposes.

Such as partner Devon C. Bruce, who handles many of Power Rogers & Smith’s personal-injury cases. In 2017, he obtained one of the largest reported medical-malpractice settlements in Illinois, recovering $47.5 million on behalf of his client, a 4-year-old boy rendered a quadruple amputee after a bacterial infection went undiagnosed by medical staff. His firm recovered more than $204 million in settlements last year, topping Chicago Lawyer magazine’s 2018 Settlements Report

Bruce said touting big settlement wins in the general media or marketing on the sides of buses can perpetuate harmful ambulance-chaser stereotypes about lawyers.

“My personal practice is not to hold press conferences or send out press releases to general newspapers and periodicals,” he said. “Holding large press conferences with logos from law firms prominently displayed and widely publishing about victims circumstances in the general news can seem inappropriate and cast a negative light on the practice of law and/or lawyers.”

However, Bruce draws a distinction between publicizing results in the general media like the Chicago Tribune and WGN-TV Channel 9 versus publicizing results in legal periodicals like the Chicago Daily Law Bulletin, which can help provide details to other attorneys who may be trying similar cases. The DailyLaw Bulletin is a sister publication of Chicago Lawyer magazine.

“I think it’s acceptable best practices to publish settlement details in legal periodicals because the legal community has an interest: We want to see, within the legal community which cases are going to trial, which ones are settling, and what are the fact patterns,” he said.

Ultimately, it all comes down to being a good advocate for clients, according to Markley, whose are mainly minors coming to terms with sometimes years of sexual or physical abuse.

“It’s a very powerful thing to be able to show people your resolution,” she said. However, my clients have a lot of incentive to keep a low profile and resolve a case in a very private way,” she said. “It’s a really delicate balance. For me, the most important thing on earth is that my client feel like they were protected and that I did the best that I could by them. In many cases, that means negotiating a mutual nondisclosure agreement where no one talks about anything.”