Why does the defending party want this statement? This is a personal injury case.
It's called a "confidentiality clause." Most of the time, these clauses are used when you have settled with a popular or well-known company. They want these clauses in order to prevent future claims by people who might be impressed with your settlement and, therefore, will view this particular defendant as a "cash cow." Be careful! These clauses can be written very broadly to a point where you can be in breach just by casually discussing your case with your friends and neighbors. I usually limit the confidentiality clause just to disclosures in the "public media." That is, you would agree not to discuss the details of the settlement only through any public media, press releases, book, magazine, radio, advertisements, etc. This way you don't get in trouble for innocently discussing the settlement in a casual or informal private setting.
Sadly this has become a norm when defendants want to keep the contents & amounts of their settlement confidential. Sometimes it is the only way the defense will agree to settle a case. Of course if the case goes to trail and a verdict for the plaintiff is rendered there would be no such requirement. It is also often done by the defense to keep other plaintiff's from ever learning of earlier similar cases that have been settled. You should discuss your case in detail with a local attorney before signing any releaase.
I agree with what the other lawyers have said, but if the amount of the settlement is large, the IRS will try to tax it as consideration for confidentiality. While injury damages are generally not taxable, confidentiality money is. It is best to 1) make the defendant pay something for confidentiality and 2) set out what that is in the settlement so it will be separate from the injury damages.
Such clauses have been routine. i do not like them. One of the purposes of such cases is to deter similar acts and omissions for the same defendant and to others similarly situated and confidentiality stifles this goal of litigation. For the most part, my clients do not care and want the settlement so i certainly cannot tell my client to reject the clause and move forward with the case.
There is also a benefit to the client. Sometimes when a case is resolved my clients learn they have relatives and friends they never thought they had. They need some money or a loan and may become resentful when they know how much you received. With the confidentiality agreement, my clients can tell such folks that the amount is confidential and they will have to pay the money back and more if they disclose the amount to anyone. They can simply say the case was favorably resolved and that is all that can be sent.
You should discuss with your attorney whether there is an adverse tax consequence to you for agreeing to a confidentiality agreement. There just may be.
Almost all of my work is malpractice and a lot of times they demand a confidentiality clause. Many times I do not have a problem with this because I have found that it protects my clients against many of their relatives looking for handouts. Unfortunately, when one of your relatives thinks you are getting a big chunk of money, you would be first on the list of people to go to. I always look at this on a case by case basis, because sometimes I will not agree to the confidentiality, but in others, if I feel it is in my clients best interest I will encourage it, but leave it up to them. It is always nice for you to make your attorney the "bad" guy and tell anyone asking for a handout the settlement was confidential, and not very much and they will never know.
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