Facilitation, Conflict Management and Dispute Resolution
Joseph P McMahon Jr.

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617 Steele St., Denver CO  80206-3941

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’Ear Ye! ’Ear Ye!

By Joseph P. McMahon, Jr.

In many respects, the guidance provided to lawyers concerning ethics in settlement negotiation is minimal. Therefore, widely divergent opinions are not surprising about the duties owed by a lawyer to the mediator when participating in a mediation. The issue is important in that the mediator, in some contexts (e.g., settlement conferences), receives and relays settlement communications from one party to the other.

So, in either settlement conferences or joint mediation sessions, what are the lawyer’s ethical duties regarding representations made to the mediator?

Commentators note that, in settlement negotiations, the Model Rules of Professional Conduct provide little guidance for the lawyer-negotiator. See Debra S. Katz and Jolie Chambers, "Attorney’s Ethical Responsibilities During Settlement Negotiations," SEO5 ALI-ABA 821.

Not only is the guidance offered to lawyers by the rules limited, but also perhaps the sanction. "[I]n negotiation, more than other contexts, ethical norms can probably be violated with greater confidence that there will be no discovery and punishment." Charles B. Craver, "The Lawyer’s Duties and Responsibilities in Dispute Resolution," 38 S. Tex. L. Rev. 713, 719 (1997). As a result, perhaps the complaints from mediators about misrepresentation and distortion are well-founded. More than one mediator stopped participating in commercial mediation after experiencing high levels of distortion and misrepresentation.

At least to the issue of truthfulness, Colorado Rules of Professional Responsibility (Rule 4.1) provide, in part, "[I]n the course of representing a client, a lawyer shall not knowingly make a false or misleading statement of fact or law to a third person." The Colorado rule is different from the Model Rules in that the latter prohibit false or misleading statements of "material fact or law." Colorado has eliminated the materiality issue, thereby, as the committee comment to the rule notes, eliminating the argument over whether a statement contained a "material fact." The real effect of that deletion may not be obvious.

Perhaps other rules (Model Rules and Colorado Rules) pertaining to statements made to a mediator are relevant. Rule 1.2 states that "a lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal." Rule 8.4 states that "it is professional misconduct for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit or misrepresentation."

Little writing directly regards statements to a mediator. Bruce Myerson’s recent article, "Telling The Truth In Mediation: Mediator Owed Duty of Candor," 16 No.2 GP Solo & Small Firm Law 32 (1999), argues that lawyers owe the same ethical obligations to a mediator as to a judge. That assertion alone may be shocking to many lawyers, and perhaps to some mediators.

Myerson’s arguments, when supplemented by other theories, would support the theory that a lawyer owes the same duties to a judge as to a mediator:

• Lawyers owe such duties when a judge is functioning as a mediator, and that duty should not change merely because the mediator is not also a judge.
• Under Model Rule 4.1, the mediator is a "third person." Furthermore, rules 8.4 and 1.2 forbid engaging in conduct involving dishonesty or misrepresentation or assisting a client in conduct that the lawyer knows to be fraudulent.
• Mediation often occurs under court order or court affiliation. The mediation therefore should follow Model Rule 3.3 regarding candor to a tribunal.
• Such a duty is consistent with the tremendous growth in mediation and the claimed increase in liti-mediation (cases filed for the purpose of being diverted into mediation).

The argument that the duties to a mediator are co-extensive with an advocate’s duty of candor toward a tribunal is not new. Fifteen years ago, Robert Gordon raised this issue in "Private Settlement as Alternative Adjudication: A Rationale for Negotiation Ethics," 18 U. Mich. J.L. Reform 503, 504 (1985).

If the advocates of co-extensive duties to both a tribunal and a mediator are correct, the lawyer-negotiator should take care in his or her mediation statements. This is particularly true under Colorado Rule 4.1, where materiality is not an issue. The tension existing between advocating for a beneficial result and truth-telling clearly is present. The preamble to the Colorado Rules of Professional Conduct recognizes that tension explicitly: "As a negotiator, a lawyer seeks a result advantageous to the client but consistent with requirements of honest dealing with others."

Although that tension noted in the preamble is powerful, some lawyers contend that Rule 4.1 exceptions permit a very wide latitude for truth-telling in mediation. Under this rule, the lawyer in mediation may not knowingly make a false or misleading statement of fact or law to a third party. Yet people argue that a lawyer’s opinion clearly is not "fact" or "law." Thus, they argue, the rule is not violated.

The argument also advances under Rule 4.1’s comment. It states, "Under generally accepted conventions and negotiations, certain types of statements ordinarily are not taken as statements of fact." The principal exceptions as further identified in Rule 4.1 comments include estimates of "value" place on the subject of a transaction and a party’s intention as to an acceptable settlement. If "value" is to include the worth of a claim or settlement claim, then proponents of wide latitude in mediation say that the lawyer’s statements of claim value or settlement value are exceptions to Rule 4.1.

Moreover, some contend that, beyond the wording of the rule, people generally accept a lawyer’s "puffery" in negotiation and, as such, in mediation. In essence, the argument is that lawyers commonly exaggerate and puff in mediation — therefore, that is part of the "generally accepted conventions" of settlement negotiation and mediation. Is this widespread tactic really an exception to the Rule 4.1 prohibition from misleading statements, or is it just so engrained that many members of the Bar will not let it go?

"Little has been written about what exactly are the limits and definition of the ‘estimates of value’ exception [to Rule 4.1]." See Paul Zwier, Ethics and Negotiation, 31 PLI/NY 335 (1995). Nor do we have good information as to what the word "estimates" means. Some commentators suggest that, if a convention or measurement applies to the matter, it is still an "estimate" under the Rule 4.1 exception. Zwier at 356. Therefore, if an issue is value and objective forms of measurement exist, can the lawyer continue to rely on the estimate-of-value exception to Rule 4.1?

Consider the following: If an issue in an environmental mediation is the level of contamination, and testing has supportable objectivity, are statements of contamination level estimates of value or statements of fact — thereby subject to Rule 4.1? If an issue in a breach-of-contract mediation is the damages resulting from breach and the attorney has knowledge of actual costs incurred by his or her client, can the lawyer exaggerate that cost as being an "estimate of value"?

Perhaps the core of the tension between the Rule 4.1 mandate and the lawyer’s desire and duty for a beneficial result for his or her client revolves around accepted norms of misstatement or misrepresentation in mediation. The negotiating literature if full of citations to the norm of misrepresentation in negotiation: For example, see Howard Raiffa, "The Art and Science of Negotiation" 30, 142-145 (Harvard Univ. Press 1982); Gerald Wetlaufer, "The Ethics of Lying in Negotiations," 75 Iowa L. Rev. 1219 (1990). Do lawyers excessively rely on a convention of misrepresentation? Perhaps so.

Perhaps Rule 4.1 will continue to be ill-defined in the mediation context as it is in the negotiation context — this leaves the lawyer to his or her own values on what is or is not appropriate and acceptable. Some argue that rules, such as the Model Rules, cannot address effectively such an issue: "Truth in the negotiation context admits no absolute definition and drafting rules to demand what cannot be defined is folly." Robert B. Gordon, "A Rationale for Negotiation Ethics," 18 U. Mich. J.L. Reform 503 (1985), citing James White, "Machiavelli & Bar: Ethical Limitations on Lying in Negotiations," Am. B. Found. Res. J. 926 (1980). Perhaps Professor Menkel-Meadow provides us with the most usable thought: "Don’t lie if, in the same circumstances, you would not want to be lied to." Carrie Menkel-Meadow, "Lying to Clients For Economic Gain or Paternalistic Judgment," 138 U. Pa. L. Rev. 761, 764 (1990). Beyond reference to the rules, perhaps mediators can improve the process by reminding parties and their counsel of that suggestion.