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D.C. Narrows Scope of Confidentiality Provisions in Settlement Agreements

The District of Columbia Bar Legal Ethics Committee recently published an opinion prohibiting settling parties from agreeing to keep confidential information already in the public record. (D.C. Bar Opinion 335). The Committee’s decision is based upon D.C. Rule of Professional Conduct 5.6(b), which prohibits lawyers from participating “in offering or making: … (b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a controversy between the parties.” (Maryland Rule 5.6(b) is identical except that it is phrased in terms of the “settlement of a client controversy.”) The Committee noted that the Rule is commonly understood to prohibit agreements which prevent plaintiff’s counsel from representing other persons. The new opinion, however, goes much further.

The inquiry before the Committee concerned the settlement of litigation which was not filed under seal and had already received substantial media attention. The proposed agreement would require the plaintiff’s attorney to keep confidential not only the terms of the agreement, but also the fact of settlement, the defendant’s identity and the allegations of the complaint. In addition, the agreement would also require the plaintiff’s counsel to remove information about the case from the firm’s web site and promotional materials.

The Committee held that “the confidentiality of otherwise public information cannot be part of a settlement agreement, even if the lawyer’s client agrees that such a provision be included.” Such agreements, the Committee opined, have the effect of preventing “other potential clients from identifying lawyers with the relevant experience and expertise to bring similar actions.” Although recognizing that such confidentiality clauses impose no direct limitation on the lawyer’s ability to bring subsequent actions, the Committee held that the provisions do “restrict his ability to inform potential clients of his experience.”

The type of “public” information specifically contemplated by the new opinion includes the name of the defendant, any public allegations as well as the fact of settlement. However, the opinion may raise more questions than it answers by blurring the line between information clearly in the public domain, such as unsealed pleadings, and information which might only be inferred from the public record. For example, the Committee opined that “the fact of settlement” is “rarely” confidential, because even if the public record does not reveal the reason a case was dismissed “the voluntary dismissal will alert most knowledgeable persons that there has almost certainly been a settlement” and others, like witnesses, may have been told about the settlement. Beyond inflating the concept of what information is “public,” the Committee leaves open issues, such as how its expansive reading of Rule 5.6(b) will effect the settlement of matters which may have received some media attention, but have not yet have been litigated.

The Opinion acknowledges that parties are free to agree that non-public information be kept confidential, and noted that if a client withholds permission from her lawyer to disclose even public information about the case, the lawyer must follow his client’s direction and keep the information secret pursuant to D.C. Rule 1.6.

The Maryland State Bar Association’s Ethics Committee has not extended Rule 5.6(b) in this manner. In its one decision dealing with a similar question, the Committee held that plaintiff’s counsel in an employment discrimination matter could agree not to disclose the existence of a “smoking-gun” memorandum to any third party without violating Maryland Rule 5.6(b). (MSBA Ethics Opinion 98-10). The opinion did not indicate, however, whether the dispute or the memorandum had become a matter of public record.


November 30, 2006




Bacharach, Charles R.