Tangled Incentives: Proportionality and the Market for Reputation Harm

Abstract

Excessive litigation confidentiality and disproportionate discovery are symbiotic problems. Indeed, when a litigant uses discovery to obtain damaging information about an opposing party, the party will often pay money to avoid public disclosure through a confidentiality agreement. As a result, litigants have significant financial incentives to seek damaging information through discovery, whether it is connected to the case or not.

Nevertheless, policy makers largely approach discovery proportionality and confidentiality as unrelated problems. Take, for example, the recent proportionality amendment to Rule 26 limiting the scope of discovery, or “sunshine” statutes aimed at reducing litigation confidentiality for the sake of public safety. The reforms ignore one another and the tangled incentives that connect both problems.

This Article is the first to address the confidentiality-discovery incentive relationship in the post-proportionality-amendment era. It contends that making private confidentiality agreements illegal, at both the pretrial and settlement stages, would reduce incentives to seek low-merits-value discovery.

Keywords: secrecy, confidentiality, proportionality, discovery, protective order, Rule 26, sunshine, sunshine legislation, civil procedure, secrecy order