On April 12, 2006, the American Bar Association Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 06-439 on a lawyer’s obligation of truthfulness when representing a client in negotiations in caucused mediation.
Under Model Rule 4.1, a lawyer representing a client in general negotiations outside of the mediation process may not make a false statement of material fact to a third person. However, statements that are considered to be negotiation "puffing", or statements regarding a party’s negotiating goals are not considered as false statements of material facts within the meaning of the Model Rules when dealing with general negotiations. The simple example given is where an attorney understates the willingness of a client to make concessions to resolve a dispute. Another example is where a party may exaggerate or emphasize the strengths or minimize the weakness of a factual or legal position. These remarks have been viewed as statements as to which a party would not ordinarily be expected to justifiably rely and are distinguished from a false statement of material fact.
There are obviously two different sides to the issue. In the context of a mediation, it has been argued that lawyers should be held to a more exacting standard of truthfulness because a neutral is involved. The other side asserts that less attention need be paid to the accuracy of information being communicated in a mediation as consensual deception is intrinsic to the process. The issue of "truthfulness in negotiations" also raises the question of whether a lawyer can accept a result that is unconscionably unfair, when it is to the benefit of the lawyer’s own client. The other side takes the position that deception is inherent in the negotiation process and that an advocate should take advantage of every opportunity to advance the cause of the client.
In the Opinion, the Committee found that the ethical standard for negotiating in or out of the mediation process are the same. Lawyers are not held to a different or higher standard in a mediation because of the consensual nature of mediation. The Model Rules do not require a higher standard of truthfulness in any particular negotiating context. The Committee ruled that a lawyer representing a party may not make a false statement of material fact to a third person but may make statements regarding negotiating goals or willingness to compromise. For example, even though a client’s Board of Directors has authorized a higher settlement figure, a lawyer may state in a negotiation that the client does not wish to settle for more than $50. However, it would not be permissible for the lawyer to state that the Board of Directors had formally disapproved any settlement in excess of $50., when authority had been in fact been granted to settle for a higher figure.