The biggest reason we bring causes in equity to the government is that only the government has the power to impose liability and actually make the plaintiff whole. I can certainly submit a case to a private arbiter, but what would I do with a ruling in my favor, absent some prior arrangement between the parties to obey the arbiter? "That guy over there said you defamed me and you owe me a jillion dollars." "Sod off, mate!"
Next, the point of public trial is not to air the dirty laundry of the parties, but to ensure public confidence in the integrity of the process. The dirty laundry is just an unfortunate side effect. If you let everyone see what goes on so that they can form their own opinions about whether the lord of the manor is being equitable, you sort of have to let everyone see what goes on, even if it's embarrassing to the parties. Someone who is sued would quite probably rather have kept his affairs secret, especially if the suit is in bad faith. But he has little choice if he wishes to defend himself. The price we pay for a transparent liberal judicial system is a public disclosure of things we'd rather keep to ourselves. The public's right to know the facts in a public trial flows from the public's right to inspect the process, not a right per se to invade the privacy of anyone who invokes or is brought before the process.
Honestly I've been involved in lawsuits where the plaintiff wasn't fully aware of just how much of his affairs he would have to reveal in discovery. Now keep in mind that protective orders apply. It's not as if the whole world got to see into his cupboard, but he was mighty embarrassed that I got to. This is why a gentleman's approach is still in order: let's sit down like adults and see if we can't resolve something amicably (or at least cordially) in private.
Legally, a trial deals only in matters brought before the court, whether the court is open or proceeds behind closed doors. Settlement negotiations are not part of the trial. They do not happen in court. Hence they are not subject to the rigors of the process. The court is involved only in the approval of the final agreement, and then generally only to opine on whether the agreement is conscionable and in good faith. The court simply has a limited right to probe into the mutually agreeable conduct engaged in outside the courtroom.
Practically, voluntary settlements save everyone time and money. Less court time, less attorney time, and almost always less stress. Often the pre-trial court exercise is helpful to instruct one party or the other just how weak the case is, and therefore how conciliatory they should be. But people hashing things out and coming to a mutually satisfactory agreement should be the norm. If sweetening the settlement process by providing for keeping certain details private—even if the process started publicly—-brings a previously reluctant party to the negotiating table, that's often for the best.
Ethically, confidential settlements are a reminder that not every losing defendant is a scoundrel. This is a hard point to make in the shadow of Newsmax. But not everyone who loses a lawsuit deserves a horrible reputation thereafter. In the ideal jurisprudence, every case is insular, and every defendant deserves a fair shake every time.
Keeping the amount of a settlement confidential prevents the parasitical ills that come from public awareness that some individual now has a ton of money, or just how much a defendant is willing to pay to make a nuisance lawsuit go away. These are generally considered good for the integrity of the justice system, since they reduce bad-faith follow-on suits and protect plaintiffs. However, those concerns over prejudice pale in the light of a pretty justifiable desire to see Newsmax sued into oblivion.
In the end, the judge's acceptance of the settlement terms—even if confidential—is supposed to provide the assurance in the integrity of the process: once brought, a case can only go away if a judge grants an imprimatur on the outcome. The parties' right to a swift, equitable resolution to their controversy outweighs the public's general interest in the process. Confidential settlements are just one tip of the balance in that direction.
But this is far from settled jurisprudence. The notion that a string of confidential settlements that do not admit liability can permit a wealthy, unscrupulous actor to continue to cause harm unabated is a very real concern. This is the impetus behind New York's public law 62(12) under which Trump was convicted. Behind every confidental settlement is the suspicion that a rich and powerful person hasn't been fully held accountable.
It just seems unsatisfactory.
