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article imageOp-Ed: Reported Confidential Settlements – A Host of Problems

By John Dewar Gleissner     Oct 31, 2011 in Politics
Confidential settlements can mean a host of different things, and it's tough to find out the truth because they are supposed to be secret.
Media reports of confidential settlements entered into by the National Restaurant Association and involving Herman Cain are fraught with problems of reliability, verification and significance.
Settlements are not evidence of wrongdoing. No such presumption is allowed in the law or under the terms of most settlement agreements. Plaintiff attorneys typically bankroll complaints of all types as part of the contingent fee process. Defendants on the other hand usually pay by the hour for their attorneys or have attorneys on staff to defend lawsuits. Due to the very high costs of litigation, many defendants will settle simply to minimize defense costs. Defending a typical lawsuit all the way through a jury trial usually meets or exceeds the reported “five figure” cost of the National Restaurant Association settlements.
Defense attorneys give their prediction of a successful outcome, but are ethically prohibited from guaranteeing results. This means that the prediction of victory is nearly always less than 100%. Attorneys often shy away from predictions over 90%, depending upon their level of confidence in themselves, the facts, the law, the judge and the likely jury. Predicting the outcome of litigation is by no means an exact science. Almost every seasoned trial lawyer and claim professional has misjudged a case’s true potential at trial. Some attorneys are actually afraid to try lawsuits generally and will try to avoid it, even when their case is strong. Many settlements are reached based on the calculation of a 5% or 10% chance of the claimant or plaintiff winning the "full damage value" of their claim.
Civil litigation takes times, sometimes tons of it, enough to interfere with the regular operation of organizations. After a year or two, lawsuits get tiresome for the participants. Clients with other pressing matters welcome settlements. Judges always welcome settlements. After a few completed lawsuits, settlements look much better.
Employers sometimes reach settlements that include the agreed resignation or departure of a settling employee. The stated terms of the settlement do not always include all the reasons severance is sought. The employer’s hidden agenda might include poor work performance, unpopularity, lateness, absences, downsizing, injuries, illnesses, business conditions, retirement, personnel problems, personality conflicts, salary levels, excessive complaints by or against the employee, confidential complaints or substance abuse suspicions. In fact, an employee who sees the writing on the wall or merely feels insecure in their job may fabricate or exaggerate a claim against the employer. Stellar employees are less prone to file claims against their employers or anyone else.
When an organization settles a claim directed against it and one of its officers, agents or employees, the interests of the organization and individual in question sometimes diverge. The organization or its insurance company usually pays the bill, so the paying party gets to decide about settlement, even when the individual defendant does not believe settlement is justified and would much prefer to fight the claim.
Reporting a confidential settlement goes against the terms and intent of the settlement, which is supposed to remain confidential. How can someone “come clean” about a settlement they are contractually obligated to keep secret? In top secret government work, those holding secrets are legally entitled to lie under oath to protect the government secret. Private settling parties and political candidates do not have that way out. The settlement agreement determines the extent of permissible disclosure and should be reviewed before disclosure is attempted. In the case of a settlement agreement that is 15 years old, finding a copy of the agreement may be difficult or impossible. Many organizations purge records after less than 10 years. Personal recollections of old settlements are notoriously inaccurate and slanted.
The reported amount of the settlements involving Herman Cain, “five figures,” might mean payment of $10,000.00, an amount within the “nuisance value” range for many defendants. With severance of the employment relationship, the settlement may have included a standard severance package, a “golden parachute,” contested benefits, a 401(k) contribution, retirement income, the value of a workers’ compensation claim, vacation and comp time or other amounts.
Of course, the National Restaurant Association, like all employers these days, refused to divulge information about former employees. That’s because of the potential for additional lawsuits – which is what we try to discourage with confidential settlement agreements.
Until more facts appear, criticism of Herman Cain is premature. If all the precise facts are ever disclosed – which will be tough given the passage of time – Mr. Cain may be entitled to an apology from whoever set these wheels in motion. One thing is for sure: With about 3% of all American lawsuits decided by a jury verdict, and settlements resolving the lion's share of the remaining 97%, the existence of two pre-suit settlements can hardly be considered a "dirty little secret."
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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