Volume 12, Issue 2 - June 2014

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VOLUME 12, ISSUE 2: LEAD ARTICLE

CLARIFYING CANDOR: WHY THE MODEL RULES SHOULD DRAW BRIGHT LINES FOR ATTORNEYS’ TRUTH-TELLING DUTIES IN ARBITRATION, MEDIATION, AND UNASSISTED NEGOTIATION

*Michael Dallaire

 I. Introduction

Alternative Dispute Resolution (ADR) is here to stay.  The Model Rules of Professional Conduct (Model Rules)[1] must acknowledge that fact.  Several scholars have posited the lofty goal of creating an entirely separate code of ethics for ADR or at least individual processes.[2]  But the process of ADR-specific rules must begin within the framework of the existing Model Rules.  One of the first steps in that direction should be to clearly define the level of candor required of an attorney-advocate in each major ADR forum.[3]  An attorney’s duty to tell the truth, or his ability to deceive, should not be governed by a static standard when operating across a range of informal, nonbinding, participant-controlled settings like unassisted negotiation and mediation.  The Model Rules of Professional Conduct should include separate and distinct duties of candor for each major ADR forum, formulating each based on the unique characteristics of an individual forum.  The reformulated rules should focus on two primary factors in setting the requisite level of candor for a particular forum: (1) the stage in the dispute resolution process in which the particular forum is normally used, and (2) the degree to which a third-party neutral affects settlement.

This Article does not propose explicit amendments to the Model Rules for forum-based candor, but it instead highlights the shortcomings of the current regime and offers key focal points on which forum-based revisions should focus.  Part II gives an overview of the current candor requirements in the Model Rules, which distinguish an attorney’s duty to tell the truth based on whether statements are being made before a tribunal.[4]  It illustrates that one half of that bipartite distinction, Model Rule 3.3 as applied to binding arbitration, offers a good example of a candor rule well-tailored to its forum.  It then highlights the inability of Model Rule 4.1 to adequately accommodate the distinct characteristics and operation of both unassisted negotiation and mediation, two fundamentally distinct processes.  Part III discusses attempts to offer solutions to the issue of non-tribunal candor and efforts to clarify current duties under Model Rule 4.1.  Part IV highlights the importance of including clear, understandable candor duties in the Model Rules in order to educate those new to the law, and accommodate the quickly-growing practice of ADR.  Charting the course toward ADR specific, forum-based candor rules, Part V offers the unique characteristics of unassisted negotiation and mediation that should primarily shape an attorney’s truth-telling duties in each process. 

II. Current Candor Requirements in Arbitration, Negotiation and Mediation

 Integral to any ADR process, most of which are conducted by participants who are not under oath and who always have competing interests,[5] is assuring some level of uniform, open and honest communication.  With a range of ADR forums available to attorneys and their clients, the level of candor required of attorney-advocates in each process is an important issue.  The Model Rules[6] fail to reflect that importance, leaving the duty of attorney-advocates to tell the truth in non-adjudicative ADR a muddled, open question.  The current truthfulness requirements laid out in the Model Rules distinguish an attorney’s duty to tell the truth based on only one factor: whether he or she is before a tribunal.[7]  Under the current regime, attorneys have an unqualified duty to tell the truth at all times before a tribunal but are permitted to make certain false statements to opposing parties in a variety of non-tribunal settings. [8]  The proliferation of ADR generally and the diversification of its forms has rendered this current, bipartite candor structure obsolete. 

A. The Fit Between Model Rule 3.3 and Arbitration

Model Rule 3.3 governs binding arbitrations—the only form of ADR that involves a tribunal—and presses upon attorneys an unqualified duty of truthfulness that aligns with the mechanics and objectives of the process.  Arbitration is the only adjudicatory form of ADR and is similar to traditional litigation in that parties make presentations to neutral decision makers who issue a decision and award.[9]  Arbitrations normally stem from clauses included in preexisting agreements that stipulate the parties to the agreement will resolve any future dispute through arbitration as opposed to litigation.[10]  Parties may also agree to submit existing controversies to arbitration.[11]  The process can be binding or non-binding, the latter of which results in a recommendation by the neutral arbiter that may either be accepted or discarded in favor of trial.[12]  Prior to the onset of the process, both parties must sign onto an arbitration agreement, which specifies the range of issues to be decided and defines the score of the arbitrator’s power.[13]

Model Rule 3.3 imposes a strict duty of candor on attorneys involved in arbitration.  In relevant part, the provision proscribes an attorney from knowingly: (1) making any false statement to a tribunal or failing to correct a materially false statement previously made by the attorney; (2) failing to disclose controlling legal authority known to the attorney that is adverse to his or her client’s position and that was not disclosed by opposing counsel; and (3) offering evidence the attorney knows to be false, or failing to take reasonable remedial measures if the attorney comes to know of the falsity of previously introduced material evidence.[14]  The thoroughness of the provision makes clear that “[t]he duty of candor imposed under Rule 3.3 requires even more of lawyers [than just truthfulness]. . . .  [W]hen dealing with a tribunal, a lawyer must be above-board, forthcoming, frank, guileless, open and straightforward.”[15]  A high level of openness and honesty should be required in a process in which a neutral, third-party decision-maker issues binding rulings.

Model Rule 3.3’s extensive candor requirement is well-tailored to the specific mechanics of arbitration and the general nature of its objectives.  Rule 3.3’s commentary explains the strict duty of candor “sets forth special duties of lawyers as officers of the court to avoid conduct that undermines the integrity of the adjudicative process. . . . [T]he lawyer must not allow the tribunal to be misled by false statements of law or fact or evidence that the lawyer knows to be false.”[16]  The Comment makes clear that the presence of a neutral, third-party arbiter is one of the primary reasons for requiring the utmost openness and honesty of attorneys.  Allowing puffery or other forms of deception would disrupt the dispute resolution process by undermining the arbitrator’s ability to make an informed and equitable decision.  Further, parties involved in arbitration sign an agreement stipulating the issues they are willing to allow an arbitrator to resolve and the exact scope of the arbitrator’s power.  Allowing any deception into such a formal, well-defined balance of power situation wrestles control of the process from the arbitrator, who was given that control by the party-participants, and places it back in the hands of the attorney, again undermining the process.  Thus, the clear-cut, strict candor requirements of Rule 3.3 align with the unique operation of the arbitration environment. 

B. The Incongruity of Model Rule  4.1 and Negotiation, Mediation

The primary non-tribunal forms of ADR are negotiation and mediation,[17] both of which are governed by a single Model Rule misleadingly labeled “Truthfulness in Statements to Others.” [18]  While both further the general tenants of cost reduction and relatively swift dispute settlement, each entail unique procedures and objectives that demand a specifically-tailored and distinctive level of candor that Model Rule 4.1 does not currently provide.  The Rule states in relevant part: “In the course of representing a client a lawyer shall not knowingly . . . make a false statement of material fact or law to a third person.”[19]  The comment following the straightforward mandate partially hollows and significantly convolutes it:

Whether a particular statement should be regarded as one of fact can depend on the circumstances. 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 ordinarily in this category.[20]

The following sections give a brief overview of the negotiation and mediation processes and illustrate that Model Rule 4.1 is unable to provide a coherent candor standard across multiple ADR forums that adequately acknowledges the unique characteristics of each. 

1. Negotiation

Negotiation is the most basic form of ADR,[21] requiring no investment in outside resources and placing more control directly in the hands of disputants and their attorneys than any other dispute resolution process.  By contrast, arbitration and mediation both involve third parties, almost always at a fee, in the participants’ dispute.[22]  Both processes also relinquish some control, procedural in mediation and both procedural and substantive in binding arbitration, from the hands of the participants to those of neutral third parties.  The typical unassisted negotiation involves only the disputants and their attorneys.[23]  The lack of an adjudicatory body or any mode of facilitation distinguishes negotiation from any other form of ADR, leaving disputants only their respective attorneys on which to rely to arrive at an acceptable settlement.  For this reason, attorneys should be given broad latitude to employ a range of negotiating techniques, including a moderate amount of deception, to reach an optimal settlement for their clients.[24]  However, that wide latitude must still be subject to some bounds.  The current Model Rules fail to clearly and succinctly define the scope of an attorney’s duty of candor in negotiations.  

The commentary following Model Rule 4.1 makes clear the level of candor it demands is much less stringent than the “above-board, forthcoming[] frank[ness]”[25] required by Model Rule 3.3.  Unlike an attorney participating in arbitration, a negotiating attorney is not required to inform the opposing party of relevant facts[26] and may misrepresent estimations of price or value and may exaggerate settlement amounts his client finds acceptable.[27]  These allowances align with the significant amount to which unassisted negotiations retain adversarial characteristics.  Unassisted negotiation is a process in which “parties’ mutual distrust of one another” is acute and inherent,[28] and attorneys often lack “concern with both the opponent’s situation and the overall social effect of a given result.”[29]   The current level of candor required in negotiations, which allows leeway for the use of competitive, sometimes deceptive negotiation tactics, is warranted at this early stage of the dispute resolution process.  However, though a few specific deceptive statements are explicitly highlighted in the comments following Rule 4.1,[30] the permissibility of a myriad of others is left to be judged by “the circumstances” and “generally accepted conventions in negotiations.”[31]  Thus, a reformulation of the level of candor should remain informed by generally accepted negotiation conventions, but should seek to draw bright lines as to the scope of permissible deception.  

2. Mediation

Mediation is similar to negotiation, except that participants utilize the time and resources of a neutral third party to help direct the negotiation and open lines of communication.  In this way, mediation is generally seen as a more cooperative process than unassisted negotiations.[32]  Model Rule 4.1 governs attorneys’ duty to tell the truth in the unique mediation format in the same way as in unassisted negotiations.[33]  The Rule applies to all attorney communications with any third parties in the course of representing a client (outside of the tribunal context governed by Model Rule 4.1).[34]  The key to mediation, and what distinguishes it from a basic, unassisted negotiation is “the mediator’s knowledge of each party’s private negotiating stance[,] [which] places the mediator in the unique position of recommending solutions that address each side’s interests and objectives.”[35]  Disputants often submit key documents and written overviews of the dispute to the mediator in preparation of mediation, and each side is free to meet privately with the mediator to confidentially explain concerns and interests.[36]  During joint sessions, the mediator helps to highlight issues and work the disputants through impasses using his best judgment in light of his knowledge of each side’s confidential interests, concerns and ultimate goals for settlement.[37]  Misrepresentations of any sort in mediation can significantly disadvantage one side of the dispute.  The semi-cooperative nature of the mediation environment is most productive and equitable to both parties when disputants and their attorneys are open and forthright.  The allowance for some deception under Model Rule 4.1 is incompatible with the goals and characteristics of the mediation format.

Model Rule 4.1 allows attorney-advocates to pervert mediators’ fundamental role and use it as a tool to exploit the other side.  As in negotiation, attorney-advocates’ statements in mediation “regarding a party’s negotiating goals or its willingness to compromise, as well as statements that can fairly be characterized as negotiation ‘puffing,’ ordinarily are not considered ‘false statements of material fact’ within the meaning of the Model Rules.”[38]  That type of deception runs counter to the purpose and mechanics of the mediation process.  When one side misrepresents its private negotiating stance to the mediator and the other side is forthright, the scales are prejudicially tipped against the honest participant.  Both the opposing side and the mediator will be pushing the process forward from a position that skews the location at which each side would be content to settle.  Contrasted with the range of aggressive, deceptive techniques that should be available to attorneys in the still-adversarial realm of unassisted negotiation, mediation aims to “move[] parties from focusing on their individual bargaining positions to inventing options that will meet the primary needs of all parties.”[39]  Deception of any sort undermines that goal.  A rewritten Model Rule for candor in mediation must acknowledge the distinction between unassisted negotiation and mediation.  A new mediation rule should root-out any deception to foster an environment in which an accurately-informed mediator can help find truly equitable middle-ground on which parties may settle their disputes.

III. Current Attempts at Reforming the Duty of Candor

The level of candor required in particular forms of ADR has been a constant topic of academic scholarship.[40]  The issue was also highly debated at the time the Model Rules of Professional Conduct were originally drafted,[41] and it has been addressed in subsequent attempts to revise the Model Rules.[42]  Individual states, which are responsible for promulgating binding rules of professional conduct,[43] have largely enacted rules with the same effect as Model Rules 3.3 and 4.1, save for a few innocuous changes.[44]  The foregoing debates and variations on the level of candor required by attorneys were largely unsuccessful or effected only pedestrian changes.  But two aspects of the candor debate do warrant some detailed discussion: (1) negotiation-specific candor rules proposed during the original drafting of the Model Rules of Professional Conduct, and (2) ethical guidelines produced by various sections of the bar. 

A. Original Forum-Based Candor Attempts: Proposed Model Rules 4.2 and 4.3

A forum-tailored candor requirement is not a novel idea.  In 1983, when the Kutak Commission was drafting and debating the Model Rules of Professional Conduct, two proposed rules sought to “define different ethical standards for negotiation than for court-room or traditional advocacy.”[45]  Proposed Rule 4.2 aimed to require candor in negotiation similar to that required in arbitration under current Model Rule 3.3.[46]  Proposed Rule 4.3 sought to prohibit attorneys from effectuating settlement agreements that were unconscionable.[47]  The argument in favor of stricter candor duties in negotiations was that because statements were made in private, without a neutral third-party to monitor the process that attorneys’ owed a higher duty to tell the truth.[48]  Conversely, opponents of negotiation-specific candor claimed “the actual culture of negotiations . . . recognized ‘puffing,’ and exaggeration . . . about ‘bottom lines’” as engrained and accepted features of the process.[49]  The latter argument prevailed, requiring strict candor only in statements toward a tribunal.  That left negotiations, mediations, and all other communications with third parties in the course of representation under the broad, vague ambit of Model Rule 4.1.[50] 

The original drafting produced an ill-fated and overly-broad candor requirement that falls short when applied to both negotiation and mediation, but the arguments made on both sides of the debate can inform an appropriate reformulation of distinct candor rules for each forum.  Arguments in favor of current Model Rule 4.1, claiming that certain deceptive techniques are engrained in attorneys’ negotiating repertoire and rules forbidding them will only be broken, should be heeded in drafting a new rule to help explicitly and clearly define those techniques.  The converse of that argument, in favor of a strict duty to tell the truth in all instances, should now be applied to a new rule governing candor in mediation.  The evolution of ADR processes has revived thirty year-old debates and repurposed their application.   

B. Supplemental Ethical Standards and Guidelines

Individual sections of the bar have set forth ethical guidelines to attempt to clarify or supplement the Model Rules’ ethical prescriptions.  These supplemental collections have been touted as the forum-based solution to ethical dilemmas raised by the growth of ADR,[51] but they do not live up to their billing.  In the context of mediation, the Model Standards of Conduct for Mediators[52] and the Uniform Mediation Act[53] have been promulgated.  But these specific works focus on the ethical duties of attorneys serving as third-party neutrals, and spend little or no time clarifying or reformulating the duty of candor for attorney-advocates.  The confidentiality requirements, impartiality standards, and conflicts of interest concerns of attorneys serving as mediators are vitally important to the success of mediation as an ADR process, and have been comprehensively addressed in the foregoing collections.  However, the truth-telling duties of attorney-advocates participating in mediation are equally important, yet have received far less forum-specific attention. 

Turning to negotiations, the American Bar Association Section of Litigation produced the Ethical Guidelines for Settlement Negotiations.[54]  The guidelines were not approved by the ABA House of Delegates or Board of Governors.[55]  They aimed to offer “advice on ethical issues arising in settlement negotiations [and] suggest best practices and aspirational goals.”[56]  However, with regard to the duty of truthfulness in negotiations, the guidelines largely echoed the commentary to Model Rule 4.1 and provided no further clarification of the distinction between permissible and prohibited deception.  As far as forum-specificity in the realm of candor duties, the guidelines fell flat even before they began, evidenced by this assertion on the very first page: “As a general rule . . . the involvement of a third party neutral in the settlement process does not change the attorney’s ethical obligations.”[57]  It is precisely the level of involvement of a third-party neutral that should be the defining factor around which to shape the level of candor required of an attorney-advocate.  

IV. Importance of a Clear, Forum-Based Candor Standard in the Model Rules

Clear, forum-based candor requirements included in the Model Rules are important for three reasons: (1) the Model Rules serve an important education and norm-molding function for attorneys, (2) the proliferation and diversification of ADR demands unique candor rules for each forum, and (3) the level of candor required may affect the choice of negotiating technique and type of ADR forum in which to settle a dispute.  Ethical violations are often tough to detect and punish.[58]  For the most part, states’ binding versions of the professional conduct rules are not enforced, and disciplinary actions are rare.[59]  Accordingly, the Model Rules’ primary function is to provide “[t]hose who are new to the practice of law . . . guidance on their role and responsibilities.”[60]  This function is especially important for attorneys representing clients in the ever-shifting arena of ADR.  Many veteran attorneys may not have extensive experience in ADR forums and therefore may be unable to teach young attorneys the requirements and duties associated with processes like mediation.  Alternatively, older attorneys may indoctrinate their new counterparts incorrectly, based on their own misunderstanding of broad, vaguely-worded mandates like Model Rule 4.1.  If the Model Rules are clearly drafted, and candor duties are tailored to each ADR forum, the process of confusion-perpetuation can be avoided.  Young attorneys will have an understandable, bright-line resource to which to refer to clarify an ethical issue quickly and easily no matter the forum.    

As the use of ADR proliferates and its forms diversify, the rules of ethics must show sensitivity to the changing landscape and help define “‘fresh and different ethical guidelines.’”[61]  The iterations of ADR processes with inevitably change in the future, and will probably stray further and further from the courtroom setting for which the Model Rules were predominantly drafted.  If the current Model Rules are not amended, Model Rule 4.1 will be stretched even thinner that it currently is in trying to prescribe candor requirements for all non-tribunal interactions.  Rather than formulating ad hoc conventions for the inevitable slew of new ADR processes based on convoluted commentary for a rule written primarily for a single type of informal negotiation,[62] if forum-based rules are already in place, they will provide at least a temporary ethics regime.  With the precedent of forum-based rules already in place, if a process gains enough popularity and interest, rules or sub-rules can be added that specifically address the unique mechanics of that form.  The longer the Model Rules go without forum-based rules of candor, the more engrained deceptive tactics will become in processes in which they will only be counterproductive.

Lastly, a forum-specific candor requirement helps attorneys to be more effective because it provides guidance on which negotiating strategies will work best in a particular forum and allows them to better explain a forum’s mechanics and purpose to their clients.  Attorneys employ a range of bargaining styles, from aggressive, to competitive, to cooperative.[63]  The mechanics and requirements of each ADR process should and will affect the way in which an attorney advocates for his client.  Thus, ethics rules, especially those that dictate the level of candor required, should be keyed to specific forums, prompting a level of candor that aligns with the characteristics of the forum.  That way, an attorney can formulate his strategy based on the clear, unmistakable level of candor that is appropriate for the format in which he will be negotiating.  Additionally the attorney will be better equipped to help his clients choose the forum most conducive to their needs, and he can help explain the level of openness and cooperation to be expected in order to help set and manage client expectations.

V. Guiding Principles for Forum-Based Candor Rules In Unassisted Negotiations and Mediations

 The current candor requirements in negotiation and mediation under Model Rule 4.1 are molded by Professor James White’s sentiment that “truth and truthful behavior at one time in one set of circumstances with one set of negotiators may be untruthful in another circumstance with other negotiators.”[64]  While this may be the case for unassisted negotiations, the diverse landscape and increasing utilization of a range of ADR techniques calls for clearer candor bounds to be drawn.  Common sets of circumstances in which behavior may be on the boarder of truthfulness must be explored by those experienced with negotiation to expressly define the bounds of permissible deception.  Mediation, a process perhaps not at the forefront of Professor White’s consciousness when he penned the above quote almost thirty-five years ago, certainly demands a more straightforward candor requirement.  And the forum’s unique characteristics demand one that prohibits deceptive statements of any sort. 

A. Unassisted Negotiations

Attorneys involved in unassisted negotiations should not be held to a strict duty of candor.  Unassisted negotiation is generally the first step in the dispute resolution process.[65]  It often takes place at a time when distrust of the other side is at its peak, and parties are not necessarily open to a large amount of cooperation.[66]   Unlike arbitration and mediation, unassisted negotiations do not rely on any outside resources to aid in dispute settlement.  For these reasons, attorneys should remain free to employ some deceptive tactics such as puffery and inaccurate assessments of clients’ willingness to settle.  The informal circumstances, lack of a neutral third-party to whom a supply of accurate information is vital, and the early stage in dispute settlement at which unassisted negotiations occur all dictate that attorneys should be given wide latitude to employ some deceptive tactics.  But clearer lines must be drawn as to the bounds of that permissible deception than are currently in place under Model Rule 4.1.  The level of candor required in unassisted negotiations should no longer be defined ex post, based on the individual set of circumstances.  That defeats the “vital educational function”[67] of the Model Rules, forcing new attorneys to blindly feel-out the bounds of their cryptic ethical constraints in negotiations.  Instead, drafters should compile a finite set of common circumstances and deceptive techniques in which negotiating attorneys may find themselves.  Those factual situations should form the basis for a reformulated Model Rule for candor in negotiations. 

The current commentary following Model Rule 4.1 and the ABA Section of Litigation Ethical Guidelines for Settlement Negotiations forms the backdrop against which the reformulate rule should be drafted.  For example, the text of a revised rule should explicitly include estimations as to price or value and in regard to a party’s willingness to settle at a specific value under a subheading such as “permissible puffery.”  Practitioners who commonly engage in negotiations should be consulted by drafters to come up with other articulable concepts that are commonly exaggerated or employed as bargaining chips in negotiations.  Drafters should err on the side of defining permissible deception too broadly because attorneys are almost always conscious of the reputational costs of unfairly deceiving a counterparty.[68]  Implicitly allowing these deceptive techniques or attempting to clarify them in supplemental guidelines only confuses those that must abide by the ethical rules in practice.  Instead of lying to themselves about the degree to which they lie in negotiations, negotiating attorneys and the Model Rules should address head-on the fact that certain deceptive techniques may be acceptable.

B. Mediation

Attorney-advocates involved in the mediation process should be held to a high level of candor similar to that required of statements made toward a tribunal.  Mediation is often used in situations in which the parties have displayed poor communication in the past and cooperation and creative solutions are necessary to settle the dispute.[69]  The timing of mediation in the dispute resolution process weighs in favor of increased forthrightness that should be compelled by a Model Rule that roots-out deception.  Mediation is normally employed after unassisted negotiation where the sides “have struggled and failed to come up with their own resolution.”[70]  Since the operation of the unassisted negotiation format failed, parties’ election or courts’ compulsion to move the dispute to a more formal, structured mediation process should be viewed as an opportunity to increase the candor and openness of the dispute settlement process.  A non-binding process, mediation allows parties to subsequently opt to progress to litigation, the format requiring the strictest level of candor.[71]  For this reason, perhaps the level of candor in mediation should require more forthrightness that unassisted negotiation, but still fall somewhere short of the extreme candor compelled by a tribunal. 

Mediation’s key distinguishing factor prompting a more stringent candor requirement than unassisted negotiation is the use of a third-party neutral.  The commentary to Rule 3.3, governing binding arbitrations, explicitly highlighted the presence of a third-party neutral as the primary reason for imposing a strict duty of candor.[72]  Although a mediator has no power to issue any binding, or even advisory, decisions regarding settlement, its primary function is to distill private information shared by each party and use that knowledge of each side’s interests and objectives to bring the parties together.[73]  If a mediator trying to facilitate discussion and cooperation based on his knowledge of each side’s situation is misinformed as to one party’s interests, his mediation role is reduced to merely a pawn of deceit and exploitation.  The undue influence that deceptive tactics have in mediation is fundamentally different from the mano-a-mano environment of unassisted negotiation.  Where a third-party neutral has the potential to amplify the effects of deception and skew the parties’ interests so drastically, the utmost candor must be required.

A reformulated Model Rule should reflect mediation’s unique characteristics, including its heightened formality and use of a third-party neutral, as well as its intermediate location in the dispute resolution process.  Professor James Alfini offered a revised Model Rule 4.1 based on the fact that “settlement discussions are now likely to take place in more structured and complex settings than the informal negotiations contemplated by the present Rule 4.1.”[74]  While Professor Alfini posits that his proposal should be applied to all non-tribunal ADR settings, for the purposes of this Article, it provides a good framework for a reformulated Model Rules specifically governing candor in mediation.  The proposed rule strikes all language in the commentary following Model Rule 4.1 that “attempting to distinguish between ‘material’ facts and other kinds of facts” because it “may actually encourage deceptive practices.”[75]  Additionally, the new rule prohibits a lawyer form facilitating a settlement agreement reached upon a false statement of fact by his client.[76]  Lastly, the rule includes language in the commentary that acknowledges the proliferation of ADR practice and “cautions the lawyer to be truthful and to inform his or her client of the dictates of this rule.”[77]  Thus, the proposed rule and its underlying logic acknowledge increased formality in ADR processes and the inclusion of a third-party neutral alter the effects of deceptive tactics.  It increases forthrightness at the intermediate stage of dispute resolution, and it places on attorneys clear and manageable truth-telling duties, without requiring the extreme candor[78] required in the most formal tribunal settings.

VI. Conclusion

The “multi-door courthouse”[79] of Alternative Dispute Resolution should no longer be subject to the Model Rules’ one-track candor requirements.  Model Rule 4.1 is no longer a viable standard for prescribing the level of candor required in negotiation and mediation, let alone the variety of other processes that fall under its ambit.  As ADR becomes a more central part of attorneys’ practices, and the forms of dispute resolution evolve and become more varied, rules of ethics must adapt.  To this point, they have done so mainly by way of analogizing to and stretching the text and commentary of Model Rule 4.1.  That process has run its course.  Model Rule 3.3 has proven successful in aligning candor duties with the characteristics of a particular forum, and Model Rule 4.1 should follow its lead.

Though unassisted negotiation and mediation are often grouped together in debates over applicable ethical duties in ADR processes, the two forums present unique ethical challenges and characteristics.  The early point in the dispute resolution process as well as the informality and lack of structure entailed in unassisted negotiations should leave attorneys with a wide range of bargaining techniques with which to work.  Puffery and other exaggeration have become commonplace in negotiations, and should remain permissible, but must be subject to clear limits in the Model Rules.  Conversely, a third-party neutral’s role in the mediation process is undermined if he is supplied with inaccurate information with which to try and facilitate a settlement.  The possibility that a mediator may pressure a party into settling based on his honest belief that the other side’s settling point is much different than reality, should preclude any type of misstatements in mediation.  The forum is usually employed later in the dispute resolution process, and so attorneys should be compelled to abandon the deceptive techniques that did not prove fruitful at earlier, less formal stages of settlement. 

Though these reformation steps are not exhaustive and the characteristics listed not the only one relevant, they provide a basis from which drafters may tailor candor rules to the particular forum in which an attorney is representing a client.  Valuable bargaining techniques should remain available to attorneys at the earliest stages of settlement, with their reputational capital serving as a check on abuse of those techniques.  As the settlement process progresses, the level of candor should incrementally increase, respecting the role of neutral third parties, until litigation, where the utmost candor should and is required.  This model can serve as a basis for implementing candor requirements in newly emerging ADR processes, and it should be periodically revisited by the ABA’s Standing Committees on the Model Rules.  Balancing candor and attorneys’ ability to effectively negotiate in a range of ADR forums must be an ongoing process. 



* Written in conjunction with Dean Christopher Fairman’s ADR & Ethics seminar at The Ohio State University Moritz College of Law.

[1] See generally Model Rules of Prof’l Conduct (2009), available at http://www.americanbar.org/groups/professional_responsibility/publications/
model_rules_of_professional_conduct/model_rules_of_professional_conduct_table_of_contents.html
(last visited May 9, 2013).

[2] See, e.g., Robert C. Bordone, Fitting the Ethics to the Forum: A Proposal for Process-Enabling Ethical Codes, 21 Ohio State J. Disp. Resol. 1 (2005); Scott R. Peppet, ADR Ethics, 54 J. Legal Educ. 72 (2004); Carrie Menkel-Meadow, Ethics in Alternative Dispute Resolution: New Issues, No Answers from the Adversary Conception of Lawyers’ Responsibilities, 38 S. Tex. L. Rev. 407 (1997).

[3] Arbitration, mediation, and unassisted negotiation are the most widely used and well-known forms of ADR.  See Thomas J. Stipanowich, The Quiet Revolution Comes to Kentucky: A Case Study in Community Mediation, 81 Ky. L.J. 855, 865–868 (1993).  Though these three major forums constitute the focus of this Paper, ADR consists of numerous and varied processes.  For a general overview of all ADR processes, see id.

[4] Compare Model Rules of Prof’l Conduct R. 3.3 (2009) with Model Rules of Prof’l Conduct 4.1 (2009).

[5] See Ronald J. Hedges, Mediation Development & Trends, SL083 ALI-ABA 787, 813 (2005).

[6] Although the Model Rules themselves are not binding in any jurisdiction, “forty-four states . . . pattern their ethical governance substantially on these guidelines.”  Don Peters,  When Lawyers Move Their Lips: Attorney Truthfulness in Mediation and a Modest Proposal, 2007 J. Disp. Resol. 119, 122 (2007).  For that reason, this Paper omits qualifying phrases like “as long as this Rule has been adopted” or “in States that have enacted the Model Rules” when discussing when a particular Model Rule governs or controls a process.  For a list of states adopting the Model Rules, see ABA Ctr. for Prof’l Responsibility, Alphabetical List of States Adopting Model Rules, http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_
of_professional_conduct/alpha_list_state_adopting_model_rules.html
(last visited May 9, 2013).

[7] The Model Rules define “Tribunal” as a “court, an arbitrator in a binding arbitration proceeding or a legislative body, administrative agency or other body acting in an adjudicative capacity.”  Model Rules of Prof’l Conduct R. 1.0(m) (2009).

[8] See generally Model Rules of Prof’l Conduct R. 3.3 (2009); Model Rules of Prof’l Conduct R. 4.1 (2009).  See also Christopher M. Fairman, A Proposed Model Rule for Collaborative Law, 21 Ohio St. J. on Disp. Resol. 73 (2005) (noting the Rules and accompanying comments “support[] an exception for ‘puffery’—a euphemism for lying.”).

[9] Jay E. Grenig, Alternative Dispute Resolution, 1 Alt. Disp. Resol. § 1:1 (3d ed.).

[10] Id. at § 7:1

[11] Id.

[12] Id. at § 1:1

[13] Id.

[14] See Model Rules of Prof’l Conduct R. 3.3 (2009).

[15] Douglas R. Richmond, The Ethics of Zealous Advocacy: Civility, Candor and Parlor Tricks, 34 Tex. Tech L. Rev. 3, 27 (2002).

[16] Model Rules of Prof’l Conduct R. 3.3 (2009).

[17] Douglas R. Richmond, Lawyers’ Professional Responsibilities and Liabilities in Negotiations, 22 Geo. J. Legal Ethics 249, 249 (2009) (“Approximately 95 percent of all civil litigation settles.  Those settlements are the product of negotiations . . . whether conduct directly or facilitated by third-party neutrals, as in mediation.”).  Recently, a third non-tribunal form of ADR, Collaborative Law, has gained popularity.  See Fairman, supra note 8, at 73; James K.L. Lawrence, Collaborative Lawyering: A New Development in Conflict Resolution, 17 Ohio St. J. on Disp. Resol. 431, 442 (2002).  This Paper does not focus on reforming the duty of candor in collaborative law because the uniqueness of the process demands its own, comprehensive Model Rule dictating all relevant ethics requirements.  For an excellent proposal of such a rule, see Fairman, supra.

[18] Model Rules of Prof’l Conduct R. 4.1 (2009).  Although this Paper, focuses on negotiation and mediation, less common forms of ADR such as mini-trials and summary-jury trials also fall under this umbrella. 

[19] Id.  R. 4.1(a).

[20] Id. R. 4.1 cmt. 2.

[21] See Daniel E. Klein, et al., Alternative Dispute Resolution, in Mediation: A Handbook for Maryland Lawyers Chapter 1  (Md. Inst. For Continuing Prof’l Educ. Of Lawyers, Inc., 1999).

[22] Thomas J. Stipanowich, ADR and the “Vanishing Trial”: The Growth and Impact of “Alternative Dispute Resolution”, J. Empirical Legal Studies 843, 869 (2004).

[23] Klein, supra note 21.

[24] Although Model Rule 4.1 does allow attorneys this wide latitude in negotiations, its roundabout way of doing so is confusing and has the potential to disadvantage clients whose attorneys are unwilling to push the bounds of the vaguely worded Rule and commentary.  Clear, explicit language should be found in the text of the Rule, not the comments below, as to the precise situations that will not be treated as impermissible deception.  See supra Part

[25] Richmond, supra note 15, at 27.

[26] Compare Model Rules of Prof’l Conduct R. 3.3 (2009) with Model Rules of Prof’l Conduct R. 4.1 cmt. 1 (2009).

[27] Compare Model Rules of Prof’l Conduct R. 3.3 (2009) with Model Rules of Prof’l Conduct R. 4.1 cmt. 2 (2009).

[28] Klein, supra note 21

[29] The Contemplative Lawyer: On the Potential Contributions of Mindfulness Meditation to Law Students, Lawyers, and Their Careers, 7 Harv. Negotiation L. Rev. 1, 7 (2002).

[30] See Model Rules of Prof’l Conduct R. 4.1 cmt. 2 (2009) (permitting misstatements of “[e]stimates of price or value placed on the subject of a transaction[,] a party’s intentions as to an acceptable settlement of a claim . . . and . . . the existence of a undisclosed principal except where nondisclosure of the principal would constitute fraud.”).

[31] Model Rules of Prof’l Conduct R. 4.1 cmt. 2 (2009).

[32] See, e.g., Klein, supra note 17, at Chapter IV (“Lawyers should adopt a non-combative, cooperative approach in mediation.  Clients should be advised that the mediation process is better suited to a less combative approach and that their lawyer is not shirking his or her ethical responsibility to serve as a zealous advocate merely by adopting a more cooperative approach.”).

[33] See Hedges, supra note 5, at 1349–50.

[34] See id.

[35] Klein, supra note 21.

[36] Susan Reach Winters & Thomas D. Baldwin, Types of ADR, 7 West’s Legal Forms, Domestic Relations § 21:3 (3d ed.).

[37] Id.

[38] ABA Formal Op. 06-439 (2006).

[39] Hedges, supra note 23, at 1332.

[40] See, generally e.g., Richard Silverman, Is New Jersey’s Heightened Duty of Candor Too Much of a Good Thing?, 19 Geo J. Legal Ethics 951(2006); Van M. Pounds, Promoting Truthfulness in Negotiation: A Mindful Approach, 40 Willamette L. Rev. 181 (2004); James Alfini, E2K Leaves Mediation in an Ethics “Black Hole”, Disp. Resol. Mag., Spring 2001; Charles B. Craver, Negotiation Ethics: How to Be Deceptive Without Being Dishonest/How to Be Assertive Without Being Offensive, 38 S. Tex. L. Rev. 713 (1997).

[41] Carrie Menkel-Meadow, Ethics in ADR Representation: A Road Map of Critical Issues, Disp. Resol. Mag. (Winter 1997), available at http://www.americanbar.org/publications/dispute_resolution_magazine_home/dispute_
magazine_win97cmm.html
(recounting the Kutak Commission’s “arguments about candor in negotiation (Proposed Model Rule 4.2) and effectuation of negotiated agreements that were not ‘unconscionable’ (Proposed Model Rule 4.3), but which failed to pass.”).

[42] The Ethics 2000 Commission was formed to review the Model Rules and provide reports to the ABA House of Delegates regarding its findings.  The Commission did not change the text of Rule 4.1 but did add some relatively innocuous language to the comments.  See Ethics 2000 Commission, http://www.americanbar.org/groups/professional_responsibility/policy/ethics_2000_commission.html (last visited May 8, 2013). 

[43] A vast majority of states base their rules of professional conduct on the Model Rules.  See supra Note 6.

[44] See ABA CPR Policy Implementation Committee, Variations of the ABA Model Rules of Professional Conduct, http://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/
mrpc_4_1.authcheckdam.pdf
(last visited May 9, 2013) (chart giving the state-by-state variances from Model Rule 4.1).  New Jersey has also enacted a “heightened” candor rule that does substantially increase the duty of candor for attorney statements toward a tribunal.  Because this Paper focuses on reforming candor duties in negotiation and mediation, heightened candor will not be discussed at length.  For an in-depth analysis of heightened candor, see Silverman, supra note 40.

[45] Menkel-Meadow, supra note 41.                      

[46] See id.

[47] See id.

[48] See id (describing the stance of Professor Murray Schwartz).

[49] Id. (describing the stance of Professor James J. White and members of the bar).

[50] See id.

[51] See, e.g., Bordone, supra note 3, at 2 (seeming to claim that the various supplemental ethical codes provide adequate and coherent ethical standards for mediation and arbitration).

[52] See Model Standards of Conduct for Mediators (2005), available at http://www.abanet.org/dispute/news/ModelStandardsofConductforMediatorsfinal (last visited May 8, 2013).

[53] See Uniform Mediation Act (amended 2003), available at http://www.law.upenn.edu/bll/ulc/mediat/2003finaldraft.htm (last visited May 8, 2013).

[54] See ABA Section of Litigation, Ethical Guidelines for Settlement Negotiations (2002), available at http://www.americanbar.org/content/dam/aba/migrated/2011_build/dispute_resolution/
settlementnegotiations.authcheckdam.pdf
(last visited May 8, 2013).

[55] These bodies declined to fully adopt the Guidelines are the formal policy of the ABA, but chose instead to “recommend” them.  See William H. Carlile, ABA Group Puts Out Guidelines on Ethical Issues in Negotiating Settlements, 18 Lawyers Manual on Prof’l Conduct: Current Report 346 (2002).

[56] ABA Section of Litigation, supra note 55.

[57] Id.

[58] Fairman, supra note 8, at 75.

[59] Id.

[60] Id.

[61] Id. (quoting Kimberlee K. Kovach, Lawyer Ethics Must Keep Pace with Practice: Plurality in Lawyering Roles Demands Diverse and Innovative Ethical Standards, 39 IDAHO L. REV. 399, 416 (2003)).

[62] See James F. Alfini, Settlement Ethics and Lawyering in ADR Proceedings: A Proposal to Revise Rule 4.1, 19 N. Ill. U. L. Rev. 255, 269 (1999) (noting that current Model Rule 4.1 contemplates informal, unstructured negotiation situations).

[63] See generally, Donald G. Gifford, A Context-Based Theory of Strategy Selection in Legal Negotiation, 46 Ohio State L.J. 41 (1985).

[64] James J. White, Machiavelli and the Bar: Ethical Limitations on Lying in Negotiation, 1980 Am. B. Found. J. 926, 929 (1980).

[65] See Winters & Baldwin, supra note 36.

[66] See Klein, supra note 21.

[67] Fairman, supra note 8.

[68] See David Charny, Nonlegal Sanctions in Commercial Relationships, 104 Harv. L. Rev. 373, 393–94 (1990).

[69] See Winters & Baldwin, supra note 36.

[70] Carol J. King, Mediation, http://washu.wsoldev.com/Library/cdroms/IBL/Construction/s10kin.htm (last visited May 9, 2013).

[71] See generally Model Rules of Prof’ Conduct R. 3.3 (2009).

[72] See supra Note 16 and accompanying text.

[73] See Winters & Baldwin, supra note 36.

[74] Alfini, supra note 62 at 69.

[75] Id. at 270.

[76] Id.

[77] Id.

[78] For example, the proposed mediation rule does not require an attorney to proactively disclose relevant legal authority adverse to his position or correct previous statements that may have inadvertently included false statements.  See generally Model Rule of Prof’l Conduct R 3.3 (2009).

[79] Frank E. A. Sander, Varieties of Dispute Processing, 70 F.R.D. 79, 111 (1976).

Posted in: Volume 12, Issue 2

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