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Ethics of Settlement
After years of litigation, your client, Widget Manufacturing Co., has reached an agreement to settle Plaintiff's design defect claims relating to Widget's top-selling product. Both sides have devoted significant time and resources to the lawsuit: Thousands of pages of proprietary information have been produced by Widget to Plaintiff's counsel under the terms of a protective order; dozens of witnesses have been deposed, expert reports exchanged; and extensive briefing on the legal issues submitted.
Widget's CEO is happy with the decision to settle, but is worried that this costly litigation arises from nothing more than a personal vendetta by Plaintiff's lawyer, Sue Orbesood. He believes Ms. Orbesood intends to make a career out of suing Widget. Because the desire to get Ms. Orbesood out of its hair was central to Widget's decision to settle, Widget's CEO instructs you to include in the settlement agreement the following provisions:
- Ms. Orbesood will not represent future claimants in product liability cases against Widget;
- She will keep the facts, terms and amount of the settlement confidential;
- She will not advertise the fact that she prosecuted a product liability action against Widget and shall not use Widget's name in any advertising or promotional materials;
- She will not solicit individuals with potential product liability claims against Widget, nor refer them to other counsel, nor share a fee with other counsel in connection with such claims; and
- She will not only return all confidential documents produced during the litigation pursuant to the terms of the existing protective order, but also all of her work product, which she will not use to aid any future claimants.
In return, Widget will reimburse half of Ms. Orbesood's expenses relating to litigation, in addition to the settlement amount already agreed upon between the parties. If Ms. Orbesood will not agree to these terms, Widget CEO's suggests, as an alternative, that Widget offer to retain Ms. Orbesood as a legal consultant. Widget would pay her a monthly fee to be “on call” to advise it in connection with product liability claims as they arise. The agreement would be memorialized in a separate retainer agreement entered after the settlement with her client is consummated. Ms. Orbesood would be providing valuable insight to help Widget minimize its exposure to future lawsuits, and the arrangement would have the intended result of conflicting her out of taking any cases against Widget in the future.
Is This Ethical?
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