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The ‘Sunshine in Litigation Act’ is the best of disinfectants

ConfidentialLouis D. Brandeis, prior to his time on the Supreme Court, wrote a series of articles in Harper’s Weekly regarding banking interests that had, in today’s parlance, become “too big to fail.” In doing so, he famously wrote that “sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” The context for this quote was in his push for understandable disclosures from those selling securities relating to the commissions and pay they were to receive in the sale. That disclosure, he argued, would help investors judge the risk of specific investments as well as adjust downward excessive commissions taken by issuing banks. Transparency in the process was to be championed as a means for individuals to make informed decisions about issues of significance to their (financial) well-being.

For those of us who believe in the free flow of information, we must admit that the legal profession has, at times, been complicit in the march toward increased secrecy in the context of litigation. Many of us routinely enter into confidentiality agreements that allow our opponent to claim that many or most of its business-related documents must be shielded from the eyes of anyone not involved in the litigation.

Further, when it comes time for a case to “resolve” — that is, settle with the payment of money flowing from one party to the other — we draft a settlement agreement and release. A likely outcome of this process is an agreement in which the paying party admits no wrongdoing and the receiving party promises not to mention the settlement or amounts of the settlement to anyone except their lawyers and accountants without a court order. The paying party may even push for a non-disparagement clause that would prohibit any public discussion of the facts underlying the case.

The confidential-non-disparagement settlement agreement has a disinfecting effect but not the likes of what Justice Brandeis was prescribing. It is not best for society that the misdeeds of others and, in particular, the misdeeds of repeat offenders who regularly injure individuals, be swept under the rug. The catch is that attorneys owe clients a duty to achieve the best result for the client (which means, in my opinion, regardless of whether the attorney dislikes confidentiality provisions).

A good first step to greater transparency and disclosure in the litigation realm is the Sunshine in Litigation Act making its way through the Maryland legislature. House Bill 1460 and Senate Bill 709 declare that provisions of agreements that conceal a public hazard (defined as “devices, instruments, persons, procedures or products or a condition of any of those that have caused or have the potential to cause injury”), information concerning a public hazard or information that may be useful to members of the public in protecting themselves from injury that may result from a public hazard are contrary to public policy and unenforceable. There is even a process by which those substantially affected by a public hazard, including members of the media, can dispute an agreement, order or judgment that provides for improper concealment of public hazards.

The law would be a win for the public in that information about the products that they and their families use and the people with whom they deal is more readily available. The marketplace of ideas would be enriched by greater access to vital information. Attorneys in Maryland would also have the ability to engage in a more strenuous negotiation over the contours of confidentiality in settlement agreements. If concealing a public hazard is against public policy and unenforceable, attorneys will not (and should not) draft overly broad confidentiality provisions.

Finally, to head off any cries that this legislation is the product of liberals run amok, like spring breakers in Daytona Beach, note that various forms of sunshine-in-litigation legislation have been the passed in several states, including the progressive strongholds of Montana, Arkansas and Texas (by way of Supreme Court Rule of Civil Procedure).

Perhaps the time has come for Maryland to join their ranks.

One comment

  1. Very interesting. I had not heard of the pending bills. Confidentiality Agreements are ever-present in my practice and in the right case I do advance them in my client’s interest. Do you know if the MSBA is taking a position on the pending legislation?