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Hush Hush: The Secrecy Behind Confidentiality Clauses in Settlement Agreements

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Many non-lawyers would likely be surprised to know that less than 10% of cases actually make it all the way to trial.  With a growing trend toward more out-of-court settlements, many clients ask about the meaning and implications of a “confidentiality clause.” A confidentiality clause is basically a provision written into many settlement agreements that is designed to keep the terms of the settlement confidential so that only the litigants and their attorneys are privy to the details. 

In most instances, it is the “losing” party, usually the defendant, who bargains for the inclusion of a confidentiality clause in the settlement.  The scope of a confidentiality clause can vary and it is determined by the language in the settlement agreement itself.  Depending on the motivation behind a party’s request that the settlement agreement contain a confidentiality clause in the first place, and the relative bargaining power of the parties during negotiations, the impact of a confidentiality provision can be either quite restrictive or have very little practical effect.  By keeping the details of the settlement private, the goal is to prevent additional harm to one's reputation by minimizing any bad publicity that might accompany a “bad” result.  The defendant’s basic fear is that if the general public learns that Defendant X paid Plaintiff Y a certain sum of money to settle a case before trial (as a result of Defendant X’s unfair and deceptive trade practices (or fraud, or breach of contract, or any number of other civil actions)), the public may conclude that Defendant X did in fact commit some wrongdoing, and that the amount of the payout to Plaintiff Y is directly correlated to the severity of Defendant X’s offense.

Defendants also have an interest in keeping a settlement private when there are multiple plaintiffs suing the same defendant under similar theories or for the same action.  For example, let’s assume that Plaintiff Y is a passenger on a bus who was injured when Defendant X, a drunken truck driver, negligently hit the bus in a head-on collision.  If other passengers on the bus were injured as a result of the head-on collision and are also suing Defendant X, the other plaintiffs may learn that Defendant X paid Plaintiff Y $500,000.00 to settle the case before trial if there is no confidentiality clause in the settlement agreement.  Such a settlement may lead other plaintiffs to pursue their case against Defendant X in hopes that they too will receive a significant payment for their injuries.

While a plaintiff may want to spread the news of the settlement’s terms, his or her interest in receiving a favorable outcome usually outweighs any desire to publicize the result.  If a defendant is unwavering in its request for a confidentiality clause, seldom will a plaintiff let a promising deal fall through for want of bragging rights.   

We hope that the above will help you better understand the secrecy, or lack thereof, surrounding confidentiality clauses.  The attorneys at Brendle Law Firm, PLLC are experienced in settlement negotiations and we are prepared to offer you the advice you need if you find yourself in settlement talks.

Hiring the Right Attorney

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When selecting an attorney, you should view yourself as an "employer" of sorts, who is interviewing someone (the attorney) for a job.  In an attempt to help you find the right Charlotte attorney, we have compiled the following list of attributes that we believe you should look for when interviewing different lawyers:

  • Time:  Hire an attorney who has a manageable case load.  After they learn more about your case, ask the attorney if they have the necessary time to devote to your case.  Ask them who, exactly, will be working on your case, as there may be other attorneys or paralegals from the firm involved, not solely the attorney you are interviewing.  You might want to consider hiring another attorney if you have a time sensitive issue and the one you are meeting with has a three-week trial the following week.
  • Energy:  Even if the attorney assigned to your case has the time, you should hire someone who has the energy to use that time for you on a regular basis.
  • Passionate:  Find an attorney who cares about what you are fighting for.  When you sit down for your initial consultation, take note of whether or not the attorney is engaged in what you have to say.  If he or she appears disinterested, hire someone else, period.
  • Aggressive:  Hire an attorney who is willing to stand up for you, and your cause.
  • Available:  Hire an attorney who will talk to you when you need them.
  • Smart:  You should hire an attorney who understands the issues. You will be able to tell from the feedback you receive during your initial consultation whether the attorney is well versed in the area.  An attorney who is familiar with the issues you are facing may not be able to immediately answer every question you pose, but he or she will at least give you a practical forecast of your situation and will be able to competently explain your options.  Having an attorney clearly lay out the issues in your case, explain your options in regard to each issue, and give suggestions based on the direction of the litigation will greatly ease the weight on your shoulders.
  • Communicative:  We believe it is important to hire an attorney who you get along with.  You will be communicating with this person often, and for long periods of time, so make sure your attorney is someone you will not dread having conversations with for the next several months or even years.  If there is something about an attorney's personality that does not mesh well with yours, consider hiring another attorney.
  • Trustworthy:  This one is pretty simple.  Do not work with an attorney you do not trust.  If you do not believe your lawyer will be honest with you, hire someone else.  Some attorneys will tell their clients what they want to hear but a pleasing prognosis of your case might hurt you in the long run if it is dishonest.
If you need to hire a Charlotte attorney, we would be happy to set up an initial consultation with you so that you are able to decide if you want to hire the firm.  We work diligently for our clients but you will need to determine if we are the right fit for you.

Covering All Your Bases: Alimony and (some of) its Tax Implications

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When parties are negotiating and determining one’s alimony rights and obligations, the tax implications should not be overlooked, as spousal support will affect the taxes of both the payor and payee spouse.  For the payor (the supporting spouse), alimony payments may be deducted from his or her gross income.  Deducting alimony payments on your taxes is a big deal and can potentially save you a substantial amount of money.  Likewise, for the payee, failure to report your alimony as income is a serious issue that may result in an audit or back tax obligations with penalties and interest.  Unfortunately, there is often a disconnect between a party, the party’s attorney, and the party’s CPA (if they have one).  If there isn’t someone in the chain that is looking out for both the legal and financial interests of the party, tax deductions for alimony can go unnoticed—and often the chance to deduct them is realized too late and the opportunity is missed.  There is no reason why any party should neglect to write off alimony payments.  A payor utilizing tax deductions for the payment of alimony does not affect the payee spouse’s financial security in any way—he or she will neither be harmed nor benefitted from this practice, so there is no reason why a payor should chose not to do so. 

Prudent family law attorneys will look out for their clients beyond what’s in the immediate future, and make sure all bases are covered.  If you decide to hire Brendle Law Firm for your Charlotte divorce case, you will be able to rest peacefully knowing that all aspects of your case will be handled competently, and that the implications of any settlement or order will be thoroughly explained to you. While some divorce attorneys may only tell you what you “need” or "want" to know, our attorneys will work diligently to set you on the right path for your future beyond the courthouse steps.  As always, we encourage you to contact your tax advisor before making any major financial decisions.

Contempt of Court for Violation of a Custody Order

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In North Carolina, child custody disputes are resolved either by contract (i.e., a parenting agreement) or court order.  If the parenting agreement is never incorporated into a court order, the court lacks the authority to hold either party in contempt for failure to comply.  If, on the other hand, a court order controls the terms of the custody arrangement (through the incorporation of a parenting agreement or through a direct order of the court) the court’s powers of contempt attach, allowing the court to hold parties in contempt for failing to comply with the terms of the order. 

Parents are often confronted with situations where they believe the terms of the custody order or parenting agreement no longer promote their child’s best interests and they resort to “self-help” remedies.  Unfortunately, these “self-help” remedies often result in more harm than good.  The parent who embarks down this road will often face a contempt action.

Violating a court order is a serious issue that could negatively impact your time with your child.  Judges take their orders seriously, especially where the wellbeing of a child is involved.  Accordingly, courts are generally not hesitant to find a parent in contempt of court when the parent willfully disobeys an order.  A recent case out of North Carolina, however, has softened what was once the harsh consequence of violating a court order—at least in some very narrow instances.

The case brought to light the notion that for a parent to “willfully” disobey an order (as required by the contempt statute), more than a simple conscious purpose to act in violation of the order is necessary.  To find a parent in contempt, the court must determine that the parent has acted “with stubborn disregard” to the authority of the court.  If the parent has violated the order for a valid reason (i.e., to protect the safety of the child), the court may decline from finding a “willful” action on the part of the parent, and refrain from holding the parent in contempt.

Engaging in “self-help” is almost always a bad idea.  If you believe that to keep your child safe your only option may be to violate a custody order, you should seek a family law attorney in Charlotte as soon as possible so that we can explain your options and the implications of your decisions.  If, in the alternative, you have wrongfully been kept from your child and you believe the other party is in violation of an order, you should contact an attorney right away to protect your rights as a parent and to seek the fastest resolution possible.

A Brief Look at Alimony in North Carolina

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Alimony is one of the five major areas of practice for a divorce attorney.  Historically speaking, many marriages employ a system whereby one party takes on the roll of a “supporting spouse” and the other becomes a “dependent spouse.”  As a result of the emergence of supporting and dependent spouses, alimony was developed to provide for the “support and maintenance” of a dependent spouse or dependent former spouse. N.C.G.S. §50-16.1A. 

N.C.G.S. §50-16.1A defines a supporting spouse as: “a spouse, whether husband or wife, upon whom the other spouse is actually substantially dependent for maintenance and support or from whom such spouse is substantially in need of maintenance and support.”  A dependent spouse is defined by N.C.G.S. §50-16.1A as: “a spouse, whether husband or wife, who is actually substantially dependent upon the other spouse for his or her maintenance and support or is substantially in need of maintenance and support from the other spouse.” 

One of the most difficult parts of determining one’s alimony obligation, or award, lies not in determining who is the supporting spouse or dependent spouse, but rather in calculating the amount and duration of the payments.  The North Carolina General Assembly has enumerated sixteen factors for the courts to consider when determining the amount, duration, and manner of alimony payments in N.C.G.S. §50-16.3A, specifically:

  1. The marital misconduct of either of the spouses. Nothing herein shall prevent a court from considering incidents of post date-of-separation marital misconduct as corroborating evidence supporting other evidence that marital misconduct occurred during the marriage and prior to date of separation;
  2. The relative earnings and earning capacities of the spouses;
  3. The ages and the physical, mental, and emotional conditions of the spouses;
  4. The amount and sources of earned and unearned income of both spouses, including, but not limited to, earnings, dividends, and benefits such as medical, retirement, insurance, social security, or others;
  5. The duration of the marriage;
  6. The contribution by one spouse to the education, training, or increased earning power of the other spouse;
  7.  The extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child;
  8.  The standard of living of the spouses established during the marriage;
  9.  The relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs;
  10.  The relative assets and liabilities of the spouses and the relative debt service requirements of the spouses, including legal obligations of support;
  11.  The property brought to the marriage by either spouse;
  12.  The contribution of a spouse as homemaker;
  13.  The relative needs of the spouses;
  14.  The federal, State, and local tax ramifications of the alimony award;
  15.  Any other factor relating to the economic circumstances of the parties that the court finds to be just and proper.
  16.  The fact that income received by either party was previously considered by the court in determining the value of a marital or divisible asset in an equitable distribution of the parties' marital or divisible property.

As you review the above, consider how your future may be impacted.  If you decide to set up an initial consultation with the firm, use the above information to prepare a list of questions before your meeting.  This should help relieve some of the stress your are undoubtedly experiencing while also maximizing efficiency during your consultation.

Alienation of Affection and Criminal Conversation

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North Carolina is one of a handful of states that continues to recognize a married individual’s rights to bring suit against a third party for alienation of affection as well as criminal conversation.  Alienation of affection is designed to protect a spouse’s interest in a peaceful and uninterrupted marriage as well as the affection, love, companionship, and comfort that accompanies it.  Criminal conversation is rooted in the theory that one enjoys a right to have an exclusive sexual relationship with their spouse.  While distinct from one another, the factual basis that surrounds the two claims often overlaps; thus, alienation of affection and criminal conversation are frequently pled together along with intentional infliction of emotional distress or negligent infliction of emotional distress.

In order for one to have a claim for alienation of affection the plaintiff must be able to establish that there was: genuine love and affection between the spouses; the genuine love and affection was alienated and destroyed; and the wrongful and malicious acts of the defendant caused the loss of love and affection.  What is equally important, but often overlooked, or misunderstood, is that one is not required to prove adultery to pursue a claim for alienation of affection.  As for criminal conversation, the plaintiff must prove: that there was a valid marriage of the spouses and adultery between the defendant and the plaintiff’s spouse during the marriage.  Intentional infliction of emotional distress requires conduct by the defendant that was extreme, outrageous, exceeding all bounds tolerated by society, and intended to cause the plaintiff severe emotional distress.  Conversely, negligent infliction of emotional distress is based on a defendant who acted negligently despite it being reasonably foreseeable that their conduct would cause the Plaintiff severe emotional distress.  Lastly, the plaintiff must show that the Defendant’s conduct was the proximate and actual cause of the plaintiff’s severe emotional distress.

If a court determines that the plaintiff has met their burden of proof then the plaintiff may be awarded compensatory damages, punitive damages, or some combination thereof.  Whether you are interested in pursuing these causes of actions or you are defending such a suit you may want to set up an initial consultation so we can help explain your options. 

Prenuptial Agreements - Demand is Rising

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As more and more people are going to college and graduate school it is becoming increasingly common to wait longer to get married than in years past.  By waiting longer, and presumably acquiring more personal wealth, and debt, the demand for prenuptial agreements is rising.  Student loans, credit card debt, inheritance, start up businesses, family businesses, and high paying jobs right out of school are just a few of the financial issues one might have questions about.

Make no mistake about it, discussing a prenuptial agreement with the person you intend to marry can be a daunting task.  That is, thinking about how you might handle certain aspects of your divorce before you are married, or even engaged, can evoke a litany of completely normal emotions and questions.  One way to help manage the stress is by talking to a divorce attorney who can analyze your situation and explain whether a prenuptial agreement may be helpful or completely unnecessary. 

Before having a serious talk with you loved one, sit down and meet with a divorce attorney and explain your questions or concerns.  By taking the time to go over your case with a family law attorney you may be able to avoid the conversation all together.  Conversely, if you and your attorney determine that a prenuptial agreement is appropriate then they should be able to help you approach the situation with your loved one appropriately.  All of our consultations are confidential, so if you want to learn more about prenuptial agreements, or you have been asked to sign one, please do not hesitate to call and set up an appointment.

A Grandparent's Rights in Child Custody Proceedings

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In order for a third party, most frequently a grandparent, to have standing to bring a custody action against a child’s parents, they must allege that the  parents are either unfit or have acted inconsistently with their constitutionally protected parental rights.  These hurdles present a formidable challenge to any third party seeking custody of a minor child.

Nonetheless, the above requirements are not insurmountable as parents often fail to live up to their responsibilities.  Whether you are a grandparent who wants to know more about your child custody options, or you are a parent defending such a claim, it may be worth your time to sit down and talk with a family law attorney. 

Broken Promises After Separation

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Unfulfilled promises, of all varieties, are all too common in failed marriages.  Upon reaching a resolution of all of the relevant family law issues, either through a separation agreement or a court order, each party must fulfill their obligations to the other.  By failing to do so, one can find themselves in a precarious situation where they are facing liability or contempt for their refusal or inability to follow the terms of the agreement or order.

If you believe you are doing all you can to perform your obligations and the other party is willfully ignoring theirs, you may want to consider hiring a family law attorney to explore your remedies.  Conversely, if you have failed to fulfill your responsibilities under a court order or a separation agreement you may want to hire a family law attorney to help you handle the situation properly.

Should you find yourself in either one of the aforementioned situations do not sit back and wait for the problem to fix itself.

How Will You Protect Yourself If a Divorce Is Approaching?

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What do you do when you are in a “good” marriage and you start to get that feeling in your stomach that something might be awry?  There are three “typical” individuals I meet with regularly who all take a different approach.

Some go into isolation and shun the people they need most. Overwhelmed with important decisions they start procrastinating; stop paying bills; stop calling their friends; and never bother to protect themselves.  Then, all of a sudden, they discover that their joint checking accounts have been closed, direct deposit has terminated, and all of their marital assets have been moved into an account that they are unable to access.

Others take steps for months, even years, to prepare for a divorce. Usually, these individuals have had a feeling that their marriage might be destined for a divorce.  They slowly hide money from their spouse and over time they have accumulated a small “war chest” in the event they need to hire a divorce attorney.

The last “typical” prospective client will wake up one morning and realize that their marriage is over.  They protect themselves that same day by walking into their bank and withdrawing whatever money they have available from their joint bank account.  Next, they open a new account that their spouse cannot access and deposit the money.  This approach can leave a dependent spouse in a nearly impossible situation for months.

Not everyone fits neatly into these categories.  There are shades of gray here and there but patterns emerge.  What is important is that you understand that all of these decisions have consequences and how you handle them will affect the way your divorce proceeds.  A divorce lawyer can help give you the information you need to prepare for the road ahead by explaining how these decisions will affect you, your spouse, and your children.