From Zealous Advocating to Bar Sanctions: Ethical Considerations in Negotiations

Photo Credit: https://www.cimaglobal.com/Members/Insights/Six-strategies-to-negotiate-your-salary/ (last visited May 30, 2020).

Written By: Hannah Trucks
Senior Associate Editor, American Journal of Trial Advocacy

          Many people have a mental image of what they picture an attorney to be. Some picture Elle Woods’ cross-examining Chutney’s alibi of washing her hair directly after getting it permed with the infamous line “the first cardinal rule of perm maintenance that you are forbidden to wet your hair for at least 20 hours after getting a perm.”[1] Others picture Vinny Gambini successfully positioning Mona Lisa as an automotive expert, ultimately winning an acquittal for his clients.[2] While modern television and cinema oftentimes only show the trial aspect of an attorney’s role, an attorney does so much more than cross-examine, fight objections, or maneuver their way around the courtroom.

          A fundamental duty of a practicing attorney is advocating for your client through every aspect of the lawsuit journey. It is often reported, and generally accepted, that up to 97 percent of all civil cases end before trial, some in the form of a settlement agreement.[3] With a small fraction of cases actually going to trial and many cases settling, it is important that that attorneys are able to competently and diligently negotiate on behalf of their clients.[4] Although each state has their own code of professional conduct, all states, with the exception of California, have based their own rules on the American Bar Association’s (ABA) Model Rules of Professional Conduct.[5] Despite the Model Rules outlining most aspects of the lawyering experience, the proffered guidance for negotiations are not always straightforward and many studies indicate that an alarming percentage of attorneys believe that the rules allowed them to engage in fraudulent behavior.[6] 

          The rule most applicable to attorney behavior in negotiations is Rule 4.1. Rule 4.1 states that while representing a client, a lawyer shall not:

knowingly (a) make a false statement of material fact or law to a third party; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.[7]

          Official Comment 1 to Rule 4.1 states that lawyers are required to be truthful to others when working on the client’s behalf, however, the lawyer “generally has no affirmative duty to inform an opposing party of relevant facts.”[8] Despite having no affirmative duty, a misrepresentation can still occur if “the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by partially true but misleading statements or omissions that are the equivalent or affirmative false statements.”[9] Further, Official Comment 2 directly addresses negotiations, stating that “[u]nder generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact.”[10] These types of statements include estimates of price or values placed on the transaction and the price that a client is willing to settle a claim for.[11] While the comment gives a few examples of what does not constitute an ethical violation, it provides little, if any, guidance as what counts as ethical behavior in a negotiation.[12]

          Negotiations are oftentimes filled with puffery. Just as popsicles are associated with a hot summer day, puffery is expected in a negotiation setting. So, what is the difference between puffery and a material statement of fact? In the legal world, puffery refers to “an exaggeration or statement that no reasonable person would take as factual,[13]” while a material statement is “a [statement] one reasonably viewed as important to a fair understanding of what is being given up and gained in the transaction.”[14] Another difference between a material statement of fact and puffery “rests in the specificity or generality of the claim.”[15] Intentional vagueness regarding the negotiating party’s bottom line is thought to “encompass representations that are not material.”[16] 

          Examples of puffery in a negotiation include one party saying that their client won’t accept anything less than $100,000 to settle their claim, when in reality their client said they would settle the claim for $75,000. Or, in the midst of the negotiation, one side exclaiming that they are incredibly confident that this would be a slam dunk at trial. However, if one party states that the total medical expenses their client incurred as a result of the defendant’s actions was $100,000, when in fact the medical expenses were $25,000, the attorney has violated Rule 4.1(a) by providing a misrepresentation of material fact that no doubt impacts the value of the settlement.

          Another ethical issue that arises from settlement agreements deals with attempting to limit opposing counsel’s ability to represent future clients in an effort to settle the current controversy at hand.  Model Rule 5.6(b) says that it is impermissible to enter into an agreement restricting a lawyer’s future right to practice as part of the settlement of a client controversy.[17] The ABA has concluded that “a lawyer may not offer, nor may opposing counsel accept, a settlement agreement which would obligate the latter to limit the representation of future claimants.”[18] Basically, you cannot condition a settlement agreement upon one of the attorneys refusing to represent another client.   

          So, what does all of this mean? Can you lie in negotiations to make sure that you leave nothing on the table and win the negotiation? The traditional notion that lawyers are bound to their word is codified in Ausherman, stating:

[i]n its simplest application, Rule 4.1(a) merely codifies a simple proposition: although lawyers are supposed to be zealous partisans of their clients, they must draw the line at lying. The law generally and all lawyer codes of conduct have always been clear that a lawyer may not make misrepresentations to a court, a client, or to a third person. Rule 4.1(a) recodifies the traditional rule that a lawyer’s word is his bond.[19]

          While puffery is expected, one cannot outright lie about facts that truly impact the settlement amount of the agreement. In conclusion, attorneys should avoid negotiation styles or tactics a la Saul Goodman[20], and they will be alright.


[1] Legally Blonde (MGM Distribution Co. 2001).

[2] My Cousin Vinny (20th Century Fox. 1992).

[3] John Barkai, Elizabeth Kent, & Pamela Martin, A Profile of Settlement, The Journal of the Am. Judges Ass’n, Court Review: Volume 42, Issue 3-4 (2006).

[4] Theodore Eisenberg & Charlotte Lanyers, What is the Settlement Rate and Why Should We Care? Cornell Law Faculty Publications. Paper 203 (2009) (suggesting that a reasonable computation of the settlement rate is that two-thirds of civil cases settle).

[5] Art Hinshaw, On Professional Practice: Ethics and Negotiation, Am. Bar Ass’n, https://www.americanbar.org/groups/dispute_resolution/publications/dispute_resolution_magazine/2019/summer-2019-new-york-convention/summer-2019-on-professional-practice/ (last visited May 30, 2020).

[6] Art Hinshaw & Jess K. Alberts, Doing the Right Thing: An Empirical Study of Attorney Negotiation Ethics, 16 Harv. Neg. L. Rev. 95 (2011) (finding that 30% of polled attorneys indicated that they would engage in various degrees of unethical behavior in negotiation settings).

[7] Model Rules of Prof’l Conduct r. 4.1 (Am. Bar Ass’n, 2018).

[8] Model Rules of Prof’l Conduct r. 4.1 cmt. 1 (Am. Bar Ass’n, 2018).

[9] Id.

[10] Model Rules of Prof’l Conduct r. 4.1 cmt. 2 (Am. Bar Ass’n, 2018).

[11] Id.

[12] Yi He, Free Reign or Strict Courtroom Courtesy? An Ethical Code for Business Negotiators, 31 Geo. J. Legal Ethics 657, 658–59 (2018).

[13] Puffery, uslegal.com, https://definitions.uslegal.com/p/puffery/ (last visited May 30, 2020).

[14] Art Hinshaw, On Professional Practice: Ethics and Negotiation, Am. Bar Ass’n, https://www.americanbar.org/groups/dispute_resolution/publications/dispute_resolution_magazine/2019/summer-2019-new-york-convention/summer-2019-on-professional-practice/ (last visited May 30, 2020).

[15] Newcal Indus., Inc. v. IKON Office Solution, 513 F.3d 1038, 1053 (9th Cir. 2008); see also Phx. Payment Sols., Inc. v. Towner, No. CV-08-651-PHX-DGC, 2009 U.S. Dist. LEXIS 91978, at *16 (D. Ariz. Oct. 2, 2009).

[16] Ausherman v. Bank of Am. Corp., 212 F. Supp. 2d 435, 446 (D. Md. 2002).

[17] Model Rules of Prof’l Conduct r. 5.6(b) (Am. Bar Ass’n, 2018).

[18] ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 93-371 (1993) (discussing restrictions on the right to represent clients in the future as applied to Rule 5.6(b)).

[19] Ausherman, 212 F. Supp. 2d at 446; see also Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 37.3.

[20] Breaking Bad: Caballo sin Nombre. (Sony Pictures Television 2010).

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