The Ethical Boundaries of Lawyers in Negotiations
In the realm of negotiation, what are the ethical expectations placed upon lawyers? Do they have the liberty to lie on behalf of their clients? How can they effectively advocate for their clients while remaining within ethical boundaries?
Upholding Ethical Standards in California and Beyond
In California, lawyers’ ethical duties are governed by the Rules of Professional Conduct. These regulations strictly prohibit dishonesty, allowing lawyers to only employ methods that align “with the truth.” These guidelines apply even when lawyers are dealing with matters before the court. Similar provisions are in place outside of California as well. The American Bar Association’s Model Rules of Professional Conduct also prohibit lawyers from making false statements of material fact or law, and from withholding material facts that could facilitate criminal or fraudulent conduct by their clients. Additionally, the ABA Model Rules expressly forbid dishonesty, fraud, deceit, or misrepresentation.
Client Loyalty vs. Legal Obligations
Lawyers owe their clients the utmost duty of loyalty, but not when it comes to opposing counsel or third party non-clients. Nevertheless, attorneys are not absolved from committing fraud or deceit, nor from making false statements of material facts to non-clients. In negotiations, they also have a duty to other attorneys to avoid fraudulent behavior when engaged in negotiations at arms’ length.
Navigating Ethical Dilemmas: Balancing Client Instructions and Professional Responsibilities
Negotiations become further complicated when lawyers receive instructions from their clients. Lawyers are bound by their duty of confidentiality, which often prevents them from disclosing information without the client’s consent. While lawyers are obligated to follow their clients’ instructions regarding what should be disclosed, they must intervene if the client instructs them to make fraudulent statements. In such cases, lawyers must advise against such misconduct. If the client insists, the lawyer must carefully evaluate whether this behavior amounts to fraud or the suppression of evidence. In such scenarios, lawyers might be obliged to withdraw from representing the client.
The Hazy Line Between Acceptable Exaggeration and Falsehoods
In the realm of legal negotiations, certain types of statements are not typically regarded as statements of material fact. Examples include estimated prices or values assigned to a transaction, or a party’s intentions regarding an acceptable settlement. Distinguishing between permissible “puffery” and false statements of material fact can be challenging. Attorneys should be aware that making false statements about the existence of a favorable witness is not allowed. Similarly, providing inaccurate information about a party’s wages, insurance coverage, or policy limits with the intention to mislead is impermissible. On the other hand, statements regarding a client’s “bottom line” settlement position generally fall under acceptable exaggeration.
Navigating Negotiations with Care
Lawyers must exercise caution when interacting with third parties during negotiations. They must always be aware of their ethical obligations and their duty to their clients.
Carole J. Buckner is the Dean of St. Francis School of Law, Co-chair of the Orange County Bar Association’s Professionalism and Ethics Committee, and a member and former Chair of the Los Angeles County Bar Association’s Professional Responsibility and Ethics Committee.