Resolving employment disputes under America's adversarial, competitive legal system requires attention to the lawyer's ethical role with respect to truthfulness. Part I emphasized truth in litigation. Part II focuses on the lawyer's less-regulated responsibility for truthfulness during negotiation and settlement of employment disputes. The conclusion of both parts is that ethical rules leave substantial leeway to practicing lawyers to define for themselves what standards for truth are consistent with competent representation. Besides the obvious good judgment needed to navigate these under-charted waters, solid preparation for possible ethical issues must attend every phase of dispute resolution, regardless if litigated or negotiated. These articles should assist that preparation.
To deceive and avoid being deceived are essential accomplishments for a negotiator. Information control is paramount. Truthfulness often takes a back seat to competitiveness. This unpretty characterization of the competitive bargaining process is largely accurate. In appropriate circumstances, problem-solving collaboration with maximum disclosure, rather than pure competition, can help all parties by expanding the pie. Competent negotiators should be capable of principled bargaining as an alternative to the horse-trading and bluffing associated with positional bargaining. But most negotiations that employment lawyers will encounter involve the traditional spinning and selling of information to advance the client's position. The universality of this competitive process is borne out by this news summary of preparation by the U.S. chief trade negotiator for the November World Trade Organization meeting: "He recently took home a Rand Corporation study of how negotiating styles vary across cultures. The secret, he suggests, is knowing when to cajole and when to harangue. One American trade official calls the strategy `an iron fist in a velvet glove.'" (1)
Mastery and control of information, common skills of good litigators and good negotiators, carry radically different ethical requirements: As pointed out in Part I of this article, (2) truth in litigation is required and regulated, while truth in negotiation means, practically, "anything goes." And, aptly summarized by another commentator: "The most critical ethical issues in negotiation revolve around lies, misleading statements, partial disclosures, and nondisclosures." (3) This negotiation phase of lawyering is where the employment practitioner must constantly answer the questions: What kind of professional do I want to be? How far will I go on behalf of a client in negotiating the getting and giving of value to settle an employment dispute? Some practitioners visualize their ethical requirements as a floor, others as a boundary marker. Either way, personal, professional, and client interests dictate the lawyer's choice of how close to approach that ethical bottom step or sideline. Because the ethical standards for attorney-negotiators are, to some, laissez faire, and to others, unclear, it is vital to understand their applicability to every negotiation.
The ethical issues discussed in this article are framed by the American Bar Association's Model Rules of Professional Conduct. For those practitioners more familiar with the ABA's earlier Model Code of Professional Responsibility and its Disciplinary Rules, the good news is that the Model Rules and the Model Code deal with the issues raised here in a practically identical manner. I have relied on the Model Rules because they are referred to more frequently by courts, legislatures, academics, and practicing lawyers than is the Model Code. (4) The Model Rules also open with the affirmative requirement that lawyers be competent, a more demanding standard than the "do no harm" implications in the Model Code. Thus, Model Rule 1.1, the overriding consideration for an attorney-negotiator, states: "A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." A competent attorney approaches a negotiation with a mastery of applicable facts, law, and ethical rules. To prepare any less is unethical.
TRUTHFULNESS DURING NEGOTIATION: ETHICAL DILEMMAS WITH LITTLE GUIDANCE
The lawyer-negotiator in the adversary system, whether purely competitive or collaborative, is ethically constrained by Model Rules 1.6 (confidentiality of client information) and 4.1 (truthfulness in statements to others). Absent client consent to disclosure, Rule 1.6 requires the lawyer to maintain client confidences. Other than to resolve attorney-client or attorney misconduct issues, the only exception to nondisclosure is to prevent client criminality "likely to result in imminent death or substantial bodily harm." This airtight confidentiality is loosened by the rule of reason expressed in the Comments which, though they explain the meaning and purpose of each Rule, "are intended as guides to interpretation" while "the text of each Rule is authoritative." The Comments to Rule 1.6 acknowledge the lawyer's implied authorization "to make disclosures about a client when appropriate in carrying out the representation," except when specific client instructions or "special circumstances" limit that authority. The Comment thus illustrates this attorney discretion to disclose client information: in litigation, "by admitting a fact that cannot properly be disputed, or in negotiation by making a disclosure that facilitates a satisfactory conclusion." These sole examples of when a lawyer can ethically disclose client information appear to permit the negotiator far more leeway than the litigator: While the litigator is confined to turning over indisputable evidence, the negotiator can decide what and when to disclose based merely on whether it will help the client obtain a "satisfactory" result.
Model Rule 4.1 on truthfulness prohibits attorney misrepresentation to "persons other than clients" (5) and applies equally to litigators and negotiators. Rule 4.1 makes clear that misrepresentation may include failure to communicate or act as well as false statements. Rule 4.1 prohibitions attach "in the course of representing a client" and only when an attorney "knowingly" transgresses. Rather than impose an affirmative obligation on attorneys to be truthful, Rule 4.1 is carefully hedged, prohibiting a lawyer "knowingly" to "(a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact [note that "or law" is omitted] to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6." The Comment makes clear that the truthful attorney "generally has no affirmative duty to inform an opposing party of relevant facts," but that the attorney cannot ethically "incorporate or affirm statements by others, including the client, "that the attorney knows is false." (6) Most important to negotiators, the Comment confines the meaning of "statement of material fact": "Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party's intentions as to an acceptable settlement of a claim are in this category.... "In other words, misrepresentations such as "we cannot lose," or "my bottom fine is X," or "we won't accept/offer a dollar below/above Y," or "we'll take this to the Supreme Court," are permissible statements under Rule 4.1--although not required not competent negotiation.
Truthfulness constraints for the lawyer-negotiator are thus scant, primarily because Rule 4.1 incorporates the "conventions" of the marketplace, that is, drawing the lines at fraud or crime. By contrast, as pointed out in Part I, the lawyer-advocate and the lawyer-witness are held to much tougher requirements by the tribunal before which they are communicating about facts or law. The same ethical rules that prohibit false statements by lawyers have different meaning if the venue is court or bargaining table. Although Rule 4.1 is the Model Rule most directly applicable to what attorneys say during negotiation, it is virtually a Rorschach ink blot in its susceptibility to interpretation. For example, the distinctions between "fact" and opinion, or between "material" and less than material, are wide enough to permit a broad range of less-than-truthful communication.
Similarly, it is difficult to conceive what constitutes a knowing and materially false statement of law if it is made during the heat of across-the-table negotiation. After all, negotiators do not exchange legal briefs and settlement talks do not often adjourn for legal research. The expectation is that competent, zealous counsel will come to the table sufficiently knowledgeable of applicable law to advance each client's interests in the face of competitive versions of fact and law. Statements of "law" typically consist of an advocate's argument that you can or cannot do something, or that the "facts" require, permit, or prohibit a variety of outcomes under the "law," that is, your case is dead in the …