{"id":187,"date":"2009-08-04T15:23:03","date_gmt":"2009-08-04T19:23:03","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=187"},"modified":"2009-08-04T15:23:03","modified_gmt":"2009-08-04T19:23:03","slug":"basic-ethics-of-business-negotiators","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2009\/08\/basic-ethics-of-business-negotiators\/","title":{"rendered":"Basic Ethics of Business Negotiators"},"content":{"rendered":"<p>At the Chicago ABA Meeting, a helpful panel was presented on &#8220;Ethics Basis for Business Lawyers.&#8221;\u00a0 The discussion of Rule 4 &#8212; addressing responsibilities with respect to persons other than clients &#8212; boiled down to the ethics of negotiation.\u00a0 One of my favorite definitions of mediation is &#8220;negotiation with adult supervision&#8221; and it is interesting to look at the process through the ethical constraints &#8212; not of the mediator &#8212; but of the negotiating counsel.<!--more-->(I strongly recommend that those interested in this topic buy and heavily mark-up the textbook by Carrie Menkle-Meadow and Michael Wheeler, <a href=\"http:\/\/www.josseybass.com\/WileyCDA\/WileyTitle\/productCd-0787969168.html\" target=\"_self\"><em>What&#8217;s Fair: Ethics for Negotiators<\/em> <\/a>(Jossey-Bass 2004).)<\/p>\n<p>Panelist <a href=\"http:\/\/www.zoominfo.com\/people\/Lachman_Arthur_604782899.aspx\" target=\"_self\">Arthur J.\u00a0Lachman<\/a>, of Seattle, WA,\u00a0boiled down the obligation to four principles.\u00a0<\/p>\n<ul>\n<li>FIRST, an attorney\u00a0can&#8217;t make false statements of material fact, or allow her client to omit material facts\u00a0whose omission would constitute fraud.\u00a0<\/li>\n<li>SECOND, an attorney can&#8217;t otherwise assist a client in a course of action (including a course of negotiation) constituting criminal or fradulent conduct.\u00a0<\/li>\n<li>THIRD, an attorney cannot communicate with the adversary client without the knowledge and consent of the adversary attorney.\u00a0<\/li>\n<li>FOURTH, an attorney must (should?) advise the adversary of an erroroneously conveyed document.<\/li>\n<\/ul>\n<p>As you can imagine, the fun was in the discussion.\u00a0 First. Mr. \u00a0Lachman emphasized that the rule about making false statements\u00a0(<a href=\"http:\/\/www.abanet.org\/cpr\/mrpc\/rule_4_1.html\" target=\"_self\">Rule 4.1(a<\/a>)) contains a materiality provision.\u00a0 This differs from <a href=\"http:\/\/www.abanet.org\/cpr\/mrpc\/rule_3_3.html\" target=\"_self\">Rule 3.3(a)(1)<\/a>, addressing an attorney&#8217;s statements to a tribunal, which contains no such materiality exception.\u00a0<\/p>\n<p>Moreover,\u00a0it is broadly accepted that opinions as to the value of an asset or a claim, statements about the strength of one&#8217;s legal position or the weaknesses in the adversary&#8217;s position, or statements concerning one&#8217;s flexibility in bargaining are <em>not<\/em> material within the meaning of the Rule.\u00a0 \u00a0By way of illustration, when your client has told you she needs $500,000 for an asset and at the first session an offer is made for $600,000, it is entirely okay to reply &#8220;Sorry, that just won&#8217;t be good enough.&#8221;\u00a0 And according to fellow panelist <a href=\"http:\/\/www.law.upenn.edu\/cf\/faculty\/ghazard\/\" target=\"_self\">Geoffrey Hazard<\/a>, an acceptable response to the representation &#8220;We always require this language in our negotiated documents&#8221; is &#8220;Well, you&#8217;re not going to get it in this one.&#8221;<\/p>\n<p>By contrast, the existence and scope of insurance coverage is a material fact.\u00a0 So is your client&#8217;s ability to pay or\u00a0impending bankruptcy.\u00a0 Mr. Lachman noted that the risk of enforcement and professional discipline is remote; however, the risk of liability is very real, in the event of fraud or other civil or criminal bad acts by the client.\u00a0 Indeed, the overarching obligations of client confidentiality (<a href=\"http:\/\/www.abanet.org\/cpr\/mrpc\/rule_1_6.html\" target=\"_self\">Rule 1.6<\/a>)\u00a0contain an exception permitting the attorney to reveal confidential client information when necessary &#8220;to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer&#8217;s services.&#8221;<\/p>\n<p>The panel agreed that an attorney may not communicate with an adversary client who is represented without the consent of that party&#8217;s counsel (<a href=\"http:\/\/www.abanet.org\/cpr\/mrpc\/rule_4_2.html\" target=\"_self\">Rule 4.2<\/a>).\u00a0 But they also agreed that parties are utterly free to communicate with each other.\u00a0 So what happens when a party advises his attorney she is going to sent a letter to the other side?\u00a0 When the attorney advises the client on such a letter?\u00a0 When the attorney drafts the letter?\u00a0 When the attorney suggests that the client send the letter?\u00a0\u00a0As a mediator, I sometimes speak to counsel outside the presence of the client.\u00a0 Is it ethical for me to speak to the client outside the presence of counsel?\u00a0 Or to arrange for the clients to communicate with each other without their attorneys?<\/p>\n<p>One provision that was not discussed was Rule 4.4(a), which provides: &#8220;In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person.&#8221;\u00a0 This evokes a situation that I have seen in mediation &#8212; particularly court-required mediation &#8212; too often.\u00a0 Counsel refuse to supply information needed to assess a claim or defense in mediation, or on the other hand use the mediation to obtain that information but not to engage in good-faith discussion.\u00a0 Does such behavior have ethical as well as practical implications?<\/p>\n<p>And is there any role for the mediator who witnesses counsel stating,\u00a0either to the adversary or to the mediator privately, &#8220;We won&#8217;t budge another penny&#8221; or &#8220;There&#8217;s no way my client can be found liable for this&#8221; or &#8220;If you can&#8217;t prove that my client was there then the mediation is finished&#8221;?\u00a0 Are these statements so material to the mediation process that they cannot be false?\u00a0 Or are they mere puffery?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The provisions of the Model Rules of Professional Conduct with respect to &#8220;Transactions with Persons Other than Clients&#8221; have implications for facilitated negotiations that may warrant further exploration.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,14],"tags":[31],"class_list":["post-187","post","type-post","status-publish","format-standard","hentry","category-ethics","category-mediation","tag-negotiation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=187"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/187\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=187"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}