Attorneys have a duty to act as zealous advocates for their clients. This duty is particularly important during settlement negotiations, where counsel’s strategy and negotiation skills play a significant role in achieving a favorable result. However, settlement statements that are intended to deceive one’s adversary can quickly cross the line from permissible posturing to unethical misrepresentations of fact.
This issue was recently brought to the fore in an opinion from the California Standing Committee on Professional Responsibility and Conduct. The opinion addressed whether there are ethical limitations on statements that an attorney may make to third parties when the attorney is engaged in negotiations. The Committee considered a scenario in which the plaintiff was injured in an automobile accident with another vehicle and retained an attorney to sue the second driver. The plaintiff incurred medical expenses and told her attorney that she was no longer able to work.
The attorney filed a lawsuit on the plaintiff’s behalf and the parties agreed to participate in a court-sponsored settlement conference. In anticipation of the settlement conference, the plaintiff’s attorney submitted a brief in which he asserted that he would not have any difficulty proving that the defendant was texting while driving immediately prior to the accident, and referenced the existence of eyewitnesses who would be able to testify to that effect. In truth, the attorney was not able to locate any eyewitness to the accident. Further, during the settlement conference, the plaintiff’s attorney told the settlement officer that his client was earning $75,000 per year, even though she was only earning $50,000.
In analyzing whether the attorney had breach any ethical duty, the Committee noted that attorneys must advocate zealously for their clients and are permitted to engage in reasonable posturing and puffery during negotiations. Nevertheless, the Committee stated that the rules of professional conduct set forth limits as to the actions that an attorney may take. Specifically, under California Business and Professions Code section 6068, an attorney may only pursue an end through truthful means. Additionally, under section 6106, any attorney who commits an act of moral turpitude or dishonesty may be subject to disbarment or suspension. Lastly, the State Bar’s Guidelines of Civility and Professionalism provide that an attorney should avoid negotiating tactics that are not made in good faith or are intended to gain an unfair advantage.
Based on these principles, the Committee determined that the attorney’s misrepresentations regarding the existence of a favorable eyewitness were improper false statements of fact, intended to mislead the defendant, which is a violation of the ethics rules. Likewise, the Committee concluded that the attorney’s statement regarding the plaintiff’s income was an intentional misstatement of fact that is not permissible under the rules.
Attorneys must be cautious when entering negotiations that their negotiating tactics do not cross the line from posturing to materially false statements of fact. If attorneys do make statements that are intended to deceive, they may not only jeopardize their client’s interest in the negotiation, but could be subjected to disciplinary action.