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Ethics

Rules Of The Game


In most circumstances, that kind of posturing and embellishment is an ex­pected part of the horse trading game.

But what about lawyers–are they allowed to massage the truth when they negotiate on behalf of clients?

In a recent opinion, the ABA Standing Committee on Ethics and Professional Re­spon­sibility indicated that ethics rules give lawyers some leeway in what they say during the course of negotiations. But the committee also cautioned that there is an ethical line a lawyer may not cross.

Formal Opinion 06-439 (April 12) focuses primarily on the application of Rule 4.1 (Truthfulness in Statements to Others) of the ABA Model Rules of Pro­fessional Conduct to lawyers negotiating on behalf of cli­ents. Rule 4.1 states that a lawyer may not, in the course of representing a client, knowingly “make a false statement of material fact or law to a third person.”

(The ABA Model Rules are the basis for most state professional conduct rules, which directly govern lawyers.)

But the opinion also recognizes that “it is not unusual in a negotiation for a party, directly or through counsel, to make a statement in the course of communicating its position that is less than entirely forthcoming.” During negotiations, a party and its counsel “might exaggerate or emphasize the strengths, and minimize or deemphasize the weaknesses, of its factual or legal position,” states the opinion. “Such remarks, often characterized as ‘posturing’ or ‘puffing,’ are statements upon which parties to a negotiation ordinarily would not be expected justifiably to rely, and must be distinguished from false statements of material fact.”

Accordingly, statements that downplay a client’s willingness to compromise, that present a bargaining position without disclosing the client’s “bottom line,” or that overstate or understate the strength or weakness of a cli­ent’s position “are ordinarily not considered ‘false statements of material fact’ within the meaning of the Model Rules,” states the opinion.

Different Settings, Same Rules

This interpretation of Model Rule 4.1 applies in the context of a “caucused mediation” as well as to other negotiation settings, states the ethics committee in its opinion. Unlike basic mediations, where the mediator meets with all the parties together, the mediator in a caucused mediation goes back and forth between private meetings with each side until an agreement is reached.

“The Model Rules do not require a higher standard of truthfulness in any particular negotiation contexts,” the opinion states. “Nor is a lower standard of truthfulness warranted because of the consensual nature of mediation.”

At the same time, the eth­ics committee’s opinion cautions against stepping over the line during negotiations. It would, for example, be a false statement of material fact if a lawyer representing a company in labor negotiations told the union that a particular employee benefit would cost the employer an additional $100 per employee when the benefit actually would cost only $20 more.

Providing another example, the opinion notes that, in For­mal Opinion 95-397 (1995), the committee stated that a lawyer negotiating for a plaintiff in a personal injury case may not conceal the client’s death from opposing counsel.

In addition, states the opinion, “Care must be taken by the lawyer to ensure that communications regarding the client’s position, which otherwise would not be considered statements ‘of fact,’ are not conveyed in language that converts them, even inadvertently, into false factual representations.”


Eileen Libby is associate ethics counsel for the ABA Center for Professional Responsibility.


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