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special / Legal Ethics

Walking the thin zealous, ethical advocacy line

Trausch michelle web

Michele Trausch

When interacting with opposing counsel, an attorney can be torn between an obligation to be truthful and acting as an advocate for his or her client. There are fine ethical lines between two competing responsibilities: acting as a zealous advocate and complying with ethical principles.

Fortunately, there is guidance in the ethics opinion recently generated by the State Bar's Standing Committee on Professional Responsibility and Conduct (COPRAC), Formal Opinion No. 2015-194. In sum, an attorney may not engage in dishonesty, deceit or collusion - but puffery and posturing in negotiations are generally acceptable.

Hypothetical

To apply these concepts to real life, consider the following hypothetical: Plaintiff's counsel represents a client involved in an automobile collision. She serves the complaint and is contacted by defense counsel who questions liability, but still wants to discuss settlement before engaging in litigation and discovery.

Plaintiff is currently unemployed. Her medical bills are relatively minimal. She has indicated that she is not interested in protracted litigation and would happily settle for $25,000.

Defendant has insurance limits of $100,000. Defense counsel, however, wants to save some money for the insurer who sent him the case; he tells plaintiff's lawyer that defendant only has $50,000 in limits. He goes on to say that defendant is otherwise without assets, even though he has never actually spoken to his client and does not know anything about his finances.

Plaintiff's counsel advises the defense attorney that her client is earning $90,000 a year and has a substantial wage loss claim as well as a claim for future wages. When they discuss the facts of the accident, she says that she has an eyewitness who will support plaintiff's version, although she actually does not know of any witnesses.

Lastly, she tells opposing counsel that plaintiff is furious about this collision and determined to take the matter all the way to trial, but that plaintiff's "bottom line" to avoid protracted litigation is $150,000.

Legal analysis

An attorney's conduct and statements are limited by both the Rules of Professional Conduct and the Business and Professions Code. For example, Business and Professions Code Section 6068(d) requires that an attorney "employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth." Business and Professions Code Section 6106 provides that an attorney who commits any act of moral turpitude or dishonesty is subject to disbarment or suspension. And Section 6128(a) provides that an attorney is guilty of a misdemeanor if "guilty of any deceit or collusion ... with intent to deceive the court or any party."

California courts have weighed in on these provisions. In Segretti v. State Bar, 15 Cal. 3d 878, 888 (1976), the court stated "[a] member of the bar should not under any circumstances attempt to deceive another," finding that a practice of deceit in that case involved moral turpitude. And in Vega v. Jones, Day, Reavis & Pogue, 121 Cal. App. 4th 282, 291 (2004), the court held that "a lawyer communicating on behalf of a client with a nonclient may not knowingly make a false statement of material fact to the nonclient, and may be liable to a nonclient for fraudulent statements made during business negotiations [Citations omitted]." "[T]he case law is clear that a duty is owed by an attorney not to defraud another, even if that other is an attorney negotiating at arm's length." Cicone v. URS Corp., 183 Cal. App. 3d 194, 202 (1986).

In analyzing the statements made by the two attorneys here, we look to whether they are impermissible misrepresentations of material fact upon which the other attorney and his or her client are justifiably entitled to rely, or whether they are acceptable exaggeration and mere puffing in negotiating.

Application to Facts

Plaintiff's counsel claims to have a favorable witness but this false statement was made with the intent that defense counsel rely upon it. It is not an expression of opinion but a material representation. Thus is it an improper and unethical statement which involves deceit and dishonesty.

Likewise, plaintiff's counsel's statements regarding plaintiff's wage loss claims and present earnings are false and intentional misstatements of fact. These are not ethically permissible and could lead to disciplinary action against the attorney.

In stating that plaintiff will try the case and asserting that $150,000 is plaintiff's "bottom line," however, the analysis is different. Statements regarding negotiating goals are considered posturing or puffery. It is not expected that an opponent will rely on such statements or consider them to be true rather than simply a part of the negotiation process. These would not appear to constitute ethical violations.

Turning now to defense counsel, his statement about insurance policy limits was made without qualification and is an intentional misrepresentation of fact intended to mislead plaintiff and her attorney. The statement is ethically impermissible, as is the assertion that defendant has no assets. These comments were presumably made so that plaintiff would not expect to recover any funds beyond the insurance policy. Under the circumstances, these statements could be considered material representations upon which plaintiff and her attorney would rely. See Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 107 Cal. App. 4th 54, 76 (2003).

Conclusion

Puffery or posturing in negotiations is permissible, including statements of a client's "bottom line." Opposing counsel will not justifiably rely on such statements but will assume they are made as part of negotiations.

Posturing is generally acceptable. But misrepresentations of fact made with the intent that the opposing party rely upon them are not. Such ethically impermissible statements could lead to disciplinary charges against an attorney whose obligations of truthfulness must outweigh professional efforts to zealously advocate for the client.

#81

Ben Armistead


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