Ron Burdge on the Problems with Secret Settlements

Clients often object to confidentiality because they are frustrated and angry about what has happened to them and what the defendant did,” Burdge wrote. “Defendants want confidentiality often because of the feared perception of guilt that accompanies a settlement. The secrecy itself, on the other hand, may be adverse to public policy and protection of the public – in short, it can allow wrongful conduct to continue.”
“Confidentiality prevents the public from knowing about systemic wrongful conduct. It can also prevent regulators and government agencies from performing their duty to enforce the law and protect the public. The purpose of the court is to evenly administer justice to all so that all are protected by the law. When violations are hidden by confidentiality, the legal system itself is thwarted from fulfilling one of its fundamental purposes: to protect the citizenry from wrongful conduct.”
“Just as important, the legal system is funded by the citizenry. The use of government employees, monies, and buildings entitles the public to openness in all aspects of the legal process, including settlements that are achieved through use of the court system.”
“Society itself might be better off if all settlements were public knowledge. Wrongful conduct would be exposed not just for the economic justice of the victim, but for the broader societal purpose of curbing such wrongful conduct. Lawmakers and the public can see where problems exist, both in products and service suppliers, and act appropriately.”
In the United Airlines case, the world knew about the wrongful conduct – just not about the amount of the settlement.
Why is it important that the amount of the settlement be made public?
“It’s the amount that teaches both the corporation and the public how such conduct is going to be curbed in the future,” Burdge told Corporate Crime Reporter in an interview last week.
“When you keep the amount of the penalty private, other wrongdoers have no knowledge of what the cost can be and so they have no incentive to curb their own activity,” Burdge said. “There is a reason why punitive damages exist in most of the laws of the United States. It is not just to seek compensation that is fair. A penalty, whether punitive damages from a jury or a substantial settlement that a wrongdoer privately pays, teaches others in its industry that there is a price to pay for such outrageous conduct.