Ezel / Ethics Opinions / ABA
ABA 2006-04-12

Can a lawyer bluff about a client's bottom line in a settlement negotiation or mediation without violating the ethics rules?

Short answer: Within limits. The opinion concludes Rule 4.1 bars false statements of material fact in negotiation, including caucused mediation, but statements about a party's negotiating goals or willingness to compromise, and ordinary puffing, are not statements of material fact.
Currency note: this opinion is from 2006
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.
View original ethics opinion (PDF)

ABA Formal Opinion 06-439: Truthfulness in Negotiation and Caucused Mediation

Short answer: The opinion concludes that under Rule 4.1 a lawyer representing a client in a negotiation, including a caucused mediation, may not make a false statement of material fact to a third person, but statements about a party's negotiating goals or willingness to compromise, and statements fairly characterized as "puffing," ordinarily are not false statements of material fact.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the American Bar Association's Model Rules of Professional Conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

Plain-English summary

The opinion addresses how a lawyer's duty of truthfulness applies during negotiations, and whether caucused mediation, where the mediator shuttles between separated parties, changes that standard. The governing rule is Rule 4.1(a), which prohibits a lawyer, in the course of representing a client, from knowingly making a false statement of material fact or law to a third person. Comment [2] to that rule recognizes that under generally accepted negotiation conventions, estimates of price or value and a party's intentions about an acceptable settlement are ordinarily not taken as statements of material fact.

The committee draws the line between permissible posturing and impermissible false statements of fact. Understating a bottom line, or overstating the strength of a position, is conventional puffing that falls outside Rule 4.1. By contrast, affirmatively misstating a material fact, such as misrepresenting the actual cost of benefits, claiming documents or eyewitnesses that do not exist, or concealing a client's death or the true policy limits, is a false statement of material fact and is prohibited. The committee cautions that lawyers must take care not to phrase a non-factual position statement in a way that converts it into a false factual representation.

On mediation, the committee concludes that no different standard of truthfulness applies. Rule 3.3, which requires candor toward a tribunal, does not apply because a mediator is not a "tribunal" under Rule 1.0(m). Rule 8.4(c) does not demand greater truthfulness than Rule 4.1 and does not prohibit what Rule 4.1 permits. The committee also rejects both the argument that the presence of a neutral calls for heightened candor and the argument that parties impliedly consent to deception by agreeing to mediate, holding that parties cannot waive Rule 4.1's protection, explicitly or implicitly. It adds that a lawyer serving as the mediator is not representing a client and so is not subject to Rule 4.1, though such a lawyer may be subject to Rule 8.4(c), and that in extreme cases a failure to be forthcoming could implicate the competence duty of Rule 1.1.

In practice

Under this opinion, a lawyer in a settlement negotiation or caucused mediation may bluff about how much a client will accept or pay, because such statements are not treated as material facts, but may not lie about the facts of the case. The opinion makes the controlling question whether a statement is one of "material fact" rather than negotiating position, and it confirms that the mediation setting neither raises nor lowers the Rule 4.1 standard.

Common questions

Q: Can I tell the mediator my client won't take less than X when that isn't really the floor?

A: Yes. The opinion treats statements about a party's settlement intentions as outside Rule 4.1, because the rule does not "require a higher standard of truthfulness in any particular negotiation contexts," and puffing on a bottom line is not a statement of material fact.

Q: Does the candor-to-the-tribunal rule apply in mediation?

A: No. The committee concluded Rule 3.3 "does not apply in mediation because a mediator is not a 'tribunal' as defined in Model Rule 1.0(m)."

Q: Can the parties agree that some deception is allowed in mediation?

A: No. The opinion states that "parties otherwise protected against lawyer misrepresentation by Rule 4.1 are not permitted to waive that protection," whether explicitly or by agreeing to the process.

Q: What kinds of statements cross the line?

A: False statements of material fact, such as misstating benefit costs, inventing documents or witnesses, or concealing a client's death or true insurance limits. The committee distinguishes these from permissible statements of negotiating position.

Background and rules framework

The opinion interprets Model Rule 4.1(a) (truthfulness in statements to others) and its Comment [2], and explains why Rule 3.3 (candor to a tribunal) and Rule 8.4(c) (dishonesty) do not impose a higher standard in negotiation. It draws on Rule 1.0(m) (definition of "tribunal") and Rule 2.4 with its Comment [5] (lawyer as a third-party neutral), and notes Rule 1.1 (competence) as a backstop in extreme cases.

Citations and references

Rules of Professional Conduct:

  • ABA Model Rule 4.1(a) and Comment [2] (truthfulness; negotiation conventions)
  • ABA Model Rule 3.3 (candor toward the tribunal)
  • ABA Model Rule 8.4(c) (dishonesty)
  • ABA Model Rule 1.0(m) and Rule 2.4, Comment [5] (tribunal; third-party neutral)
  • ABA Model Rule 1.1 (competence)

Cases:

  • Spaulding v. Zimmerman, 116 N.W.2d 704 (Minn. 1962), concealment of a material medical fact
  • Virzi v. Grand Trunk Warehouse & Cold Storage Co., 571 F. Supp. 507 (E.D. Mich. 1983), concealing a client's death

Other opinions cited:

  • ABA Formal Op. 94-387 (1994): disclosure that a statute of limitations has run
  • ABA Formal Op. 95-397 (1995): duty to disclose the death of a client

See also

Source