ethical rules applied to contract and settlement negotiations
TRANSCRIPT
Microsoft PowerPoint - Gardere01 6246970_1 ACC presentation _
ethics negotiation (2) [Read-Only]ACC Houston
Texas Lawyer’s Creed
ACC Houston 11/13/12 2
International Bar Association Principles
Council of Bars and Law Societies of Europe (CCBE) Code of Conduct
Texas-Mexico Bar Association International Lawyer’s Creed
It’s not my fault.
During settlement negotiations, you offer to settle by paying $650,000.
The mediator returns with a mediation agreement listing $605,000.
ACC Houston 11/13/12 3
Do you correct the amount?
ABA “practical, user-friendly guide”
During settlement negotiations and in concluding a settlement, a lawyer is the client’s representative and fiduciary, and should act in the client’s
ACC Houston 11/13/12 4
fiduciary, and should act in the client’s best interest and in furtherance of the client’s lawful goals.
A lawyer’s conduct in negotiating a settlement should be characterized by honor and fair-dealing.
ABA Section of Litigation – Ethical Guidelines for Settlement Negotiations
A lawyer shall treat client interests as paramount, subject always to there being no conflict with the lawyer’s duties to the court and the interests of justice, to observe the law, and to maintain ethical standards.
A lawyer shall at all times maintain the highest standards of honesty, integrity and fairness towards the lawyer’s clients, the court,
ACC Houston 11/13/12 5
towards the lawyer’s clients, the court, colleagues and all those with whom the lawyer comes into professional contact.
It is also true that there are different standards expected towards the client, the court or a professional colleague since the lawyer has different responsibilities towards each category.
International Bar Association Principles on Conduct for the Legal Profession
734 lawyers …
Ms. suggests their lawyers meet
ACC Houston 11/13/12 6
Mr. confides in his lawyer that his tests were false-positives.
Mr. requests his lawyer keep quiet.
Art Hinshaw and Jess K. Alberts, Attorney Negotiation Ethics: An Empirical Assessment
62% would not agree to the client’s demand
Personal integrity
No affirmative duty to inform opposing party
A lawyer shall not assist or counsel a client to engage in conduct that the lawyer knows is criminal or fraudulent.
When a lawyer has confidential information clearly establishing that a client is likely to commit a criminal or
ACC Houston 11/13/12 8
client is likely to commit a criminal or fraudulent act that is likely to result in substantial injury to the financial interests or property of another, the lawyer shall promptly make reasonable efforts under the circumstances to dissuade the client from committing the crime or fraud.
Texas Disciplinary Rules of Professional Conduct
ABA 4.1 Truthfulness in Statements to Others
In the course of representing a client, a lawyer shall not knowingly:
(a) Make a false statement of material fact or law to a third person; or
ACC Houston 11/13/12 9
fact or law to a third person; or
(b) Fail to disclose a material fact 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.
Materiality … “depends” False statement of law
False statement of material fact
ACC Houston 11/13/12 10
Know its false
Intend to mislead
Identification of the principal
If a client directs the lawyer to act, in the context of settlement negotiations or in concluding a settlement, in a manner the lawyer reasonably believes is contrary to the attorney’s ethical obligations or applicable law, the lawyer should counsel the client to pursue a different and lawful course of conduct. If a mutually agreeable and proper course of action does not arise from the
ACC Houston 11/13/12 11
proper course of action does not arise from the consultation, the lawyer should determine whether withdrawal from representing the client is mandatory or discretionary, and should consider whether the circumstances activate ethical obligations in addition to withdrawal, such as disclosure obligations to a tribunal or to higher decisionmaking authorities in an organization.
ABA Comment on Rule 4.1
You snooze you lose...
You are reducing the terms of a contract to a written agreement. The buyer’s attorney sends back the final agreement with the buyer’s signature.
ACC Houston 11/13/12 12
agreement with the buyer’s signature.
You notice that a hotly contested provision reverted by mistake back to previous contract version – to your client’s immense benefit.
Do you call opposing counsel?
CCBE Core Principle: the dignity and honour of the legal profession, and the integrity and good repute of the individual lawyer.
TMBA: A lawyer owes to opposing counsel, in the conduct of legal transactions … courtesy, candor, cooperation and
ACC Houston 11/13/12 13
courtesy, candor, cooperation and scrupulous observance of all agreements and mutual understandings.
TDRPC: As negotiator, a lawyers seeks a result advantageous to the client but consistent with requirements of honest dealing with others.
I have a secret. Day 18 of a jury trial.
Counsel negotiates over the lunch hour and plaintiff’s demand is now down to $700,000.
ACC Houston 11/13/12 14
$700,000.
Client remained in the courtroom and overheard the jury agree to a $4,000,000 award.
Client says accept the demand right now and keep your mouth shut.
Do you accept in silence?
CCBE: Loyalty to the client is of the essence of the lawyer’s role.
TDRP: A lawyer shall not knowingly reveal confidential information of a client to a person that the client has instructed is not to receive the information or anyone else…
ABA: A lawyer shall not reveal information
ACC Houston 11/13/12 15
ABA: A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent.
IBA: The loyal defence of a client’s case may never cause advocates to be other than perfectly candid, subject to any right or privilege to the contrary which clients choose them to exercise, or knowingly to go against the law.
If you don’t, I will.
Your client has given you pictures of the opposing party’s CEO.
They are embarrassing.
ACC Houston 11/13/12 16
Client says – “Tell the lawyer I’ll post them on Facebook unless they agree to renew our contract.”
Do you issue the Facebook threat?
The pictures are / are not relevant.
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.
ACC Houston 11/13/12 17
violate the legal rights of such a person.
Comment: Although in most cases a lawyer’s responsibility to the interest of his client is paramount to the interest of other persons, a lawyer should avoid the infliction of needless harm.
Texas Disciplinary Rules of Professional Conduct
If a lawyer finds a client’s proposed strategy or goal regarding settlement to be repugnant, but not contrary to applicable law or rules, or if the lawyer has a fundamental disagreement with the client’s strategy or goal, the lawyer may
ACC Houston 11/13/12 18
client’s strategy or goal, the lawyer may continue the representation on the condition that the lawyer will not be required to perform acts in furtherance of the repugnant strategy or goal, or may withdraw from the representation.
ABA Comment on Rule 4.1
Ethics Opinion 214
Wife sues husband for divorce. Husband wants his attorney to notify the wife's attorney of an affirmative
ACC Houston 11/13/12 19
the wife's attorney of an affirmative defense (infidelity), to be used as "trading matter" to secure a favorable property settlement.
Can you use the threat of an affirmative defense?
Unanimous opinion
In the absence of other facts indicating lack of candor to the court, the attorney may use this
ACC Houston 11/13/12 20
court, the attorney may use this information in an attempt to
favorably influence negotiations for settlement.
Texas Lawyer’s Creed
Therefore, “My word is my bond.”
ACC Houston 11/13/12 21
Charlie Meacham Samantha Trahan Gardere Wynne Sewell
Bass Wallace, Jr. Tetra Technologies, Inc. 24955 Interstate 45 North The Woodlands, TX 77380 (281) 367-1983 [email protected]
Gardere Wynne Sewell 1000 Louisiana Suite 3400 Houston, TX 77002 (713) 276-5500 [email protected] [email protected]
22
Texas Lawyer’s Creed
ACC Houston 11/13/12 2
International Bar Association Principles
Council of Bars and Law Societies of Europe (CCBE) Code of Conduct
Texas-Mexico Bar Association International Lawyer’s Creed
It’s not my fault.
During settlement negotiations, you offer to settle by paying $650,000.
The mediator returns with a mediation agreement listing $605,000.
ACC Houston 11/13/12 3
Do you correct the amount?
ABA “practical, user-friendly guide”
During settlement negotiations and in concluding a settlement, a lawyer is the client’s representative and fiduciary, and should act in the client’s
ACC Houston 11/13/12 4
fiduciary, and should act in the client’s best interest and in furtherance of the client’s lawful goals.
A lawyer’s conduct in negotiating a settlement should be characterized by honor and fair-dealing.
ABA Section of Litigation – Ethical Guidelines for Settlement Negotiations
A lawyer shall treat client interests as paramount, subject always to there being no conflict with the lawyer’s duties to the court and the interests of justice, to observe the law, and to maintain ethical standards.
A lawyer shall at all times maintain the highest standards of honesty, integrity and fairness towards the lawyer’s clients, the court,
ACC Houston 11/13/12 5
towards the lawyer’s clients, the court, colleagues and all those with whom the lawyer comes into professional contact.
It is also true that there are different standards expected towards the client, the court or a professional colleague since the lawyer has different responsibilities towards each category.
International Bar Association Principles on Conduct for the Legal Profession
734 lawyers …
Ms. suggests their lawyers meet
ACC Houston 11/13/12 6
Mr. confides in his lawyer that his tests were false-positives.
Mr. requests his lawyer keep quiet.
Art Hinshaw and Jess K. Alberts, Attorney Negotiation Ethics: An Empirical Assessment
62% would not agree to the client’s demand
Personal integrity
No affirmative duty to inform opposing party
A lawyer shall not assist or counsel a client to engage in conduct that the lawyer knows is criminal or fraudulent.
When a lawyer has confidential information clearly establishing that a client is likely to commit a criminal or
ACC Houston 11/13/12 8
client is likely to commit a criminal or fraudulent act that is likely to result in substantial injury to the financial interests or property of another, the lawyer shall promptly make reasonable efforts under the circumstances to dissuade the client from committing the crime or fraud.
Texas Disciplinary Rules of Professional Conduct
ABA 4.1 Truthfulness in Statements to Others
In the course of representing a client, a lawyer shall not knowingly:
(a) Make a false statement of material fact or law to a third person; or
ACC Houston 11/13/12 9
fact or law to a third person; or
(b) Fail to disclose a material fact 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.
Materiality … “depends” False statement of law
False statement of material fact
ACC Houston 11/13/12 10
Know its false
Intend to mislead
Identification of the principal
If a client directs the lawyer to act, in the context of settlement negotiations or in concluding a settlement, in a manner the lawyer reasonably believes is contrary to the attorney’s ethical obligations or applicable law, the lawyer should counsel the client to pursue a different and lawful course of conduct. If a mutually agreeable and proper course of action does not arise from the
ACC Houston 11/13/12 11
proper course of action does not arise from the consultation, the lawyer should determine whether withdrawal from representing the client is mandatory or discretionary, and should consider whether the circumstances activate ethical obligations in addition to withdrawal, such as disclosure obligations to a tribunal or to higher decisionmaking authorities in an organization.
ABA Comment on Rule 4.1
You snooze you lose...
You are reducing the terms of a contract to a written agreement. The buyer’s attorney sends back the final agreement with the buyer’s signature.
ACC Houston 11/13/12 12
agreement with the buyer’s signature.
You notice that a hotly contested provision reverted by mistake back to previous contract version – to your client’s immense benefit.
Do you call opposing counsel?
CCBE Core Principle: the dignity and honour of the legal profession, and the integrity and good repute of the individual lawyer.
TMBA: A lawyer owes to opposing counsel, in the conduct of legal transactions … courtesy, candor, cooperation and
ACC Houston 11/13/12 13
courtesy, candor, cooperation and scrupulous observance of all agreements and mutual understandings.
TDRPC: As negotiator, a lawyers seeks a result advantageous to the client but consistent with requirements of honest dealing with others.
I have a secret. Day 18 of a jury trial.
Counsel negotiates over the lunch hour and plaintiff’s demand is now down to $700,000.
ACC Houston 11/13/12 14
$700,000.
Client remained in the courtroom and overheard the jury agree to a $4,000,000 award.
Client says accept the demand right now and keep your mouth shut.
Do you accept in silence?
CCBE: Loyalty to the client is of the essence of the lawyer’s role.
TDRP: A lawyer shall not knowingly reveal confidential information of a client to a person that the client has instructed is not to receive the information or anyone else…
ABA: A lawyer shall not reveal information
ACC Houston 11/13/12 15
ABA: A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent.
IBA: The loyal defence of a client’s case may never cause advocates to be other than perfectly candid, subject to any right or privilege to the contrary which clients choose them to exercise, or knowingly to go against the law.
If you don’t, I will.
Your client has given you pictures of the opposing party’s CEO.
They are embarrassing.
ACC Houston 11/13/12 16
Client says – “Tell the lawyer I’ll post them on Facebook unless they agree to renew our contract.”
Do you issue the Facebook threat?
The pictures are / are not relevant.
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.
ACC Houston 11/13/12 17
violate the legal rights of such a person.
Comment: Although in most cases a lawyer’s responsibility to the interest of his client is paramount to the interest of other persons, a lawyer should avoid the infliction of needless harm.
Texas Disciplinary Rules of Professional Conduct
If a lawyer finds a client’s proposed strategy or goal regarding settlement to be repugnant, but not contrary to applicable law or rules, or if the lawyer has a fundamental disagreement with the client’s strategy or goal, the lawyer may
ACC Houston 11/13/12 18
client’s strategy or goal, the lawyer may continue the representation on the condition that the lawyer will not be required to perform acts in furtherance of the repugnant strategy or goal, or may withdraw from the representation.
ABA Comment on Rule 4.1
Ethics Opinion 214
Wife sues husband for divorce. Husband wants his attorney to notify the wife's attorney of an affirmative
ACC Houston 11/13/12 19
the wife's attorney of an affirmative defense (infidelity), to be used as "trading matter" to secure a favorable property settlement.
Can you use the threat of an affirmative defense?
Unanimous opinion
In the absence of other facts indicating lack of candor to the court, the attorney may use this
ACC Houston 11/13/12 20
court, the attorney may use this information in an attempt to
favorably influence negotiations for settlement.
Texas Lawyer’s Creed
Therefore, “My word is my bond.”
ACC Houston 11/13/12 21
Charlie Meacham Samantha Trahan Gardere Wynne Sewell
Bass Wallace, Jr. Tetra Technologies, Inc. 24955 Interstate 45 North The Woodlands, TX 77380 (281) 367-1983 [email protected]
Gardere Wynne Sewell 1000 Louisiana Suite 3400 Houston, TX 77002 (713) 276-5500 [email protected] [email protected]
22