A nondisclosure agreement (NDA) is a contract between two or more parties by which they agree to not disclose certain confidential information about their personal injury case. NDAs are optional and negotiated as part of a settlement.
Some NDAs may simply keep the terms of a settlement agreement confidential. Others may go further and also prohibit disclosure of any details related to the negligence/wrongdoing — in some cases, they even prohibit affirmation that a settlement was reached. Most NDAs apply to both the plaintiff and defendant(s).
Sometimes a plaintiff might initiate an NDA to maintain privacy. Defendants, however, initiate the vast majority of NDAs. Key reasons include:
- Preventing damage to their reputation. Perhaps a business owner doesn’t want the public to know they were guilty of driving while intoxicated, or maybe a company wants to keep their harmful business practices from public disclosure.
- Preventing similar lawsuits from other parties who may be inspired to proceed upon seeing settlement details.
For plaintiffs, the pros to signing an NDA, besides privacy, include the defendant frequently offering additional money if the plaintiff agrees to sign an NDA (NDA money is separate from personal injury compensation and can be taxed). Some defendants will not settle if an NDA is not agreed to, so a plaintiff can avoid the unpredictability of a trial by signing one.
The cons include the limited number of people permitted to be privy to case details; penalties for breaching an NDA; and a company/individual continuing to injure people because their negligent actions were not brought to light.
If you are injured due to someone’s negligence, contact our firm for a free consultation.
