Loose lips sink settlements.
In the age of social media, people are known for oversharing. But when it comes to bragging about a legal settlement that has a confidentiality clause, oversharing can cause more than awkwardness or embarrassment. It creates headaches for attorneys and costs a lot of money for their clients—and, potentially, attorneys themselves.
Attorneys are used to advising their clients not to tell their best, bar, book club or church friends about their settlement windfalls. But with social media as ubiquitous as it is, a simple few words can spell big trouble, particularly when someone has hundreds or thousands of “friends.”
“If a family member slips up and tells a friend, as a practical matter, it’s probably no big deal,” said Bert Louthian, an attorney in Columbia. “But if they put it on social media or that friend says something about it on social media, the odds are high that it would become an issue.”
Case in point: Ashley Campbell, the director of Campbell University’s Blanchard Community Law Clinic in Raleigh, cites a notorious 2014 case. A former headmaster of Gulliver Schools in Miami, Patrick Snay, filed an age discrimination lawsuit after the school didn’t renew his contract.
He settled with the school for $80,000. The settlement had a confidentiality clause, and his teen daughter was not one of the people whom he could tell about it.
But he did.
And his daughter immediately told her 1,200 or so Facebook “friends.”
“Mama and Papa Snay won the case against Gulliver,” she wrote. “Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT!”
“Papa Snay” didn’t collect his $80,000, after a Florida Court of Appeals panel found that he did, indeed, violate the settlement agreement. (His daughter, according to reports, didn’t get that trip to Europe, either.)
‘Take my name off of it’
It seems pretty simple: advise the clients on the terms of the confidentiality clause and who they can discuss the settlement with—typically, their spouse, attorneys, and financial advisers.
The terms also depend on what is laid on the agreement. For example, a plaintiff may be free to talk about the case, but cannot divulge who they settled with, or for how much. Each clause is unique.
One of Campbell’s clients, for instance, recently posted a note on Facebook, thanking her for efforts that resulted in a settlement.
“I immediately emailed her and said ‘Take it down, take my name off of it,’” Campbell said. “The client thought that since she didn’t post the amount, the note was fine.”
But she should not have even alluded to the settlement, per the confidentiality clause in the particular case.
“You have to carefully advise your clients, and social media presents a big option to violate the rules,” Campbell said.
Where there is a confidentiality provision in a settlement, the restrictions on who can be told about the settlement are typically spelled out in the agreement, Louthian said.
“The one I’m looking at right now limits those individuals to the attorneys, financial advisors, or immediate family members provided these individuals agree to keep the terms confidential,” he said. “I have never seen a confidentiality agreement where the plaintiff was allowed to reveal the terms of the settlement to close friends. The person bound by the agreement is implicitly charged with exercising good judgment as to the individuals they choose to tell about the settlement.”
Jeremy Summerlin, who practices employment law with the Horton Law Firm in Greenville, said that employers almost always require confidentiality clauses in settlement.
“No employer wants to pay a settlement to resolve a case only to have the employee go around telling other people, especially current or former co-workers, how much money he or she got,” he said. “Otherwise, the employer risks inadvertently incentivizing employees to contact a plaintiff’s employment lawyer like me for any sort of employment issue.”
Summerlin said that in more serious cases, particularly harassment—when the employer’s conduct is blatantly retaliatory or otherwise illegal—employees are more opposed to agreeing “to what is essentially a gag order.”
“They often feel like the employer is trying to buy their silence and sweep the matter under the rug, and that could lead to the same thing happening to other people, which is exactly what it is in most cases,” he said. “This becomes especially true when the confidentiality clauses are working in combination with a non-disparagement provision.”
Such a provision not only prevents the employee from discussing the facts of the case, but also prevents the employee from saying anything even slightly negative about the employer, he said.
Keep it zipped
If a client breaches a confidentiality clause and loses the settlement money, whether their attorney loses out financially depends whether the attorney is working on an hourly basis or on contingency, Campbell said.
“A contingency agreement is a contract between a lawyer and his client,” she said. “It should govern that distinction, and if the settlement is lost as a result of actions by the client, the question become, ‘Does the lawyer have a cause of action to recover the fees?’ I doubt it.”
That’s because once a settlement is dismissed, the attorney and the client are back to square one. The attorney and client can refile the lawsuit, and settlement negotiations can resume.
Afi Johnson-Paris of Ward Black Law in Greensboro recently defended a woman who was sued by another woman for alienation of affection. That settlement came with a confidentiality clause. Johnson-Paris was also representing the woman in her divorce, and the woman’s soon-to-be ex-husband was in contact with the woman who sued his wife.
“I didn’t want the two lawsuits to be bleeding over into each other,” she said. “I know that before we reached the settlement they had already shared some information with each other.” The confidentiality clause ostensibly prevents them from talking further about the cases with each other, so they can’t exchange financial or other information about their respective spouses.
Johnson-Paris has this piece of advice for her clients, per her father, who told her this long time ago:
“If you can’t keep your own secret, don’t expect anyone else to.”
Follow Bill Cresenzo on Twitter @bcresenzosclw