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What exactly are you giving up when you sign a settlement agreement?

Posted by Scott M. Peterson | May 18, 2018

A reader recently sent me an article which discussed how Bill O'Reilly's lawyers appear to have inserted language into his settlement agreements that required the women receiving payments to lie about the proceedings - even if under oath in court - if any of the information surrounding the settlement ever became public.  The question was, is this legal?

Can you really be forced to lie when you sign a settlement agreement?  Let's take a look.

What are settlement agreements?

First, what is a settlement agreement?  

A settlement agreement is something that you sign after you have resolved a potential or actual legal claim, and typically have been paid something for that claim. 

Example #1: you broke your arm when you fell at a store because the store had allowed a puddle of water to accumulate for an hour or more.  You hire a lawyer, that lawyer has negotiated a settlement with the store owner (or, more likely, their insurance company).

Example #2: you were severely sexually harassed by your former employer.  You've hired a lawyer, who has negotiated a settlement for you after a difficult fight.  

In either of the examples above, you would be required by the wrongdoer's attorneys to sign a release and settlement agreement before being paid.  This document (or documents) does several things.  

First, the release confirms, in writing, that you are being compensated for the alleged wrongdoing, and that in exchange for that compensation you agree that you will never, ever, file a lawsuit relating to these allegations in the future.  Once you receive payment it's over.  

The release is reason #1 for the payment.  The other side is "buying its peace," so to speak.  

But there are several other things that you may be signing off on when you sign a settlement agreement.  These can include:

1) A mutual non-disparagement agreement.  This says that neither side will say anything bad about the other.  Believe it or not, this can be important particularly if things got contentious which they often do. 

2) A non-admission provision.  This is where the (alleged) wrongdoer formally says, in writing, that they are not acknowledging or agreeing to any of the allegations that you've made.  They are making the payment in order to avoid lengthy litigation.  This, of course, is often not the case, but it provides cover for the wrongdoer.  

3) A confidentiality agreement, which says that you will never discuss the terms of the settlement, or in many cases, any non-public allegations against the company.  This is the O'Reilly scenario described above.  

Confidentiality agreements often require the parties to say very little about what actually happened.  In many cases both sides agree to language in the event that someone asks what happened.  It generally looks something like, "the parties have reached an amicable resolution of this matter."  Yes, it's that benign.  

Generally, confidentiality agreements have language that says that they can be broken only "by order of court."  This means that if a court orders you to come in and testify about what happened, you can be compelled to do so.  

The lawyers in the O'Reilly case argued that the language of the settlement agreement that the accusers signed was so onerous that it forced them to lie in court.  In all likelihood this means that the agreement requires the parties to stick to the agreed upon language if asked.  

But reality is that if a witness is compelled into court to testify, they really have three options.  One, tell the truth.  Two, lie and risk a perjury charge.  Three, refuse to answer the questions and risk being held in contempt by the judge.  

In the O'Reilly scenario I would imagine that if they were called into court the judge would compel the witnesses to testify about what actually happened, rather than what they were paid to say.  Of course they risk violating the agreement, but keep in mind that in order for the O'Reilly side to enforce that agreement they have to get a judge somewhere to agree that the witnesses did not have a legal basis for violation.  That's a difficult argument to make.  

Questions about a potential case?  Give us a call today.

About the Author

Scott M. Peterson

Scott M. Peterson is the founding partner of D'Orazio Peterson, having left a partnership at a large regional law firm to limit his practice and focus on helping people protect their families.

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