Confidentiality agreements, also known as non-disclosure policies, outlines confidential material or information that both parties wish to restrict access to by third parties. These agreements are a type of contract which two or more parties agree to that ensure certain information will remain confidential. In personal injury cases this can include the settlement amount or other terms. Confidentiality agreements may seem straightforward but can actually raise some complex issues.
Should I Consider a Confidentiality Agreement?
Many people are against confidentiality agreements. Some people do not like the fact that they must remain mute and cannot discuss the case or settlement. Plaintiffs are often angry and want what the defendant did to be made public knowledge. The confidentiality agreement may protect the individual’s actions from becoming public knowledge, but it could also cause failure to protect public rights by not making the defendant’s actions known. If the case was against a large corporation, for example, the plaintiff would not be able to share what was learned in the course of the case with others who may have been similarly injured.
There are some instances when a confidentiality agreement could be beneficial to the litigation process. Personal injury cases rarely make it to the court room and are usually settled between the two parties privately. In some instances, the other party is only agreeable to settlement if they can include a confidentiality agreement. Here you must weigh the risks of going to trial against the certainty of a settlement including the confidentiality agreement.
Knowing When to Sign a Confidentiality Agreement
To know if a confidentiality agreement is right for you or not, consider the information that the other party has included in it. A confidentiality agreement often includes keeping the settlement amount private. In other cases, defendants and their attorneys want to prevent evidence, like witness statements or documents, from being accessible to future plaintiffs and to discourage other potential lawsuits. In many circumstances, the plaintiff also has a preference for maintaining their own privacy. Generally this is an acceptable condition to which you can agree.
However, be wary if the other party attempts to institute a broad framework of confidential information, such as the nature and details of the entire case. Confidentiality agreements should be negotiated just like any other part of the settlement until an acceptable agreement has been reached by both parties.
Every confidentiality agreement should provide a list of the categories of confidential information to be protected in the agreement. The purpose of this is to establish the boundaries of the disclosure without actually disclosing any confidential information. If you do decide a confidentiality agreement is acceptable for your case, ensure that the breadth of confidentiality in the settlement is clearly laid out and as narrow as possible. This compromise can protect the rights of both the defendant and the plaintiff if done right.
When confidentiality agreements are reached they will include liquidation clauses that define the penalty to be paid upon breach of the agreement. This is often the entire amount of the settlement, but could include other penalties. It is crucial that confidentiality agreements are written clearly and concisely, and fully agreed upon by both parties before being signed.
Tax and Confidentiality Agreements
Normally the compensation paid in a personal injury claim is not taxable under IRS section 104(a)(2). After the settlement of the case Amos v. Commissioner of Internal Revenue, however, any compensation for agreeing to a confidentiality agreement is taxable.
Obtaining Legal Aid When Facing a Confidentiality Agreement
Personal injury cases, especially ones that include confidentiality agreements, need the attention of an experienced personal injury attorney. Personal injury attorneys are hired to aid victims of accidents in receiving their just compensation for the damages they received. This can include medical bills, loss of income, and even pain and suffering.
Even before the issue of confidentiality arises when negotiating a settlement offer, you should already have a personal injury attorney on your side. It is essential that you consult with a lawyer about your case as soon as possible to ensure you reach a fair settlement or have proper representation if you go to trial. If you or a loved one have been injured due to the negligence of another person, seek the help of an experienced personal injury attorney today.
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