DIFFICULT MORAL QUESTIONS

Question 186: Must a lawyer admit how much a client is ready to concede?

The leading partner in the small firm where I have just started practicing law assigned me a case he deemed simple enough for a beginner. We have been retained by a home builder, one of whose projects went awry due to subsurface water resulting from the spring thaw. He should have foreseen the problem and provided drainage but failed to do so. As a result, shortly after the homes were occupied, sixteen were flooded on their finished and furnished lower levels. The builder belatedly corrected his mistake, but the owners, most of whose losses were not covered by insurance, have filed suit to recover for property damage, temporary loss of use of the space, and so on.

Even before the water receded, the builder asked the owners for lists of their losses; he checked out these claims, took photographs, and made his own estimate of each one’s actual loss. When he retained us, he gave us these estimates and told us that, to settle these cases, he is ready to pay each owner an average of two thousand dollars more than the estimate. He hopes we will be able to persuade most plaintiffs to settle within that limit.

This morning I settled the first of these cases. The builder’s estimate of the owner’s actual loss was just over fifteen thousand dollars, and the owner’s lawyer took me by surprise when he said: “I think that I could get my client to settle this case for about seventeen thousand dollars. Would your client be ready to pay that much?” While the offer signaled that the case could be settled for less, the honest answer, of course, would have been yes. But being acutely aware that I need to be tight with the easy cases so as to settle them all, if possible, in accord with my instructions, I hesitated momentarily before answering: “That is on the high side.”

For two reasons, that answer was not satisfactory. The first, of course, is that I lied, and I’d rather avoid lying if I can. But, in addition, my hesitation was noted, so that after much discussion I realized I could not do better and agreed to the settlement originally proposed. When I asked the partner who assigned me this matter for advice on dealing with this problem next time, he said: “Long experience has taught me that in cases of this sort it is best to ignore the other side’s initial figure and to open by offering about two-thirds of your target figure. You should have been ready to shoot back: ‘That’s too much; something like eleven would be more like it.’”

What do you think of that strategy? If you think it, too, would be morally questionable, what alternative is there that is likely to be successful?

Analysis:

This question calls for applying the exceptionless norm that excludes lying. In the context of negotiation, one can make certain statements that would be untruthful in other contexts without lying. This is so because the language used in negotiating has a special meaning in this context. Still, given its special meaning, this language also can be used dishonestly, and that dishonesty should be avoided as should other lying in negotiating.

The reply could be along the following lines:

In my judgment, you could follow the advice of the partner who assigned you the case without violating legal ethics, which requires truthfulness in a lawyer’s statements not only to clients and to other persons, but explains how this applies in negotiation: “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 in this category.”⁴¹³ While an unsophisticated, honest person might regard this clarification as an instance of the evasive double talk it might seem to invite, I believe it is entirely consistent with the moral truth that lying always is wrong.

In every society, negotiation is a practice with various inherent assumptions and special norms. The comment’s phrase, “generally accepted conventions in negotiation” refers to the assumptions and norms currently obtaining in this practice in the United States and, probably, most other English-speaking nations; these conventions are unlikely to change significantly in the near future. Experienced negotiators take them for granted and interpret one another’s statements in their light. Hence, a negotiator’s statements about price and value often do not mean what they seem to and would mean in other contexts.

However, in saying such statements “are not taken as statements of material fact,” the ABA comment lacks precision and fails accurately to express the point its drafters plainly intended. While it is true that negotiators’ statements have meanings other than those they would have in other contexts, such statements do assert something and are taken by the other party as factual. Thus, the statement you hesitated over but made, “That’s on the high side,” could have been made truthfully by an experienced negotiator, for he or she would have meant: “That is more than my client’s instructions authorize me to accept at this stage of negotiations; he hopes to settle this claim for less than seventeen thousand dollars.” Unfortunately, understanding your statement as you did, it was a lie, since, being unfamiliar with the conventions of negotiation, what you meant to assert was, in fact, false. Bearing those conventions in mind, however, next time you could say precisely the same thing without lying.

Similarly, had you responded to the other lawyer’s question, “Would your client be ready to pay that much?” along the lines of the partner’s advice by saying, “Something like eleven would be more like it,” that would have asserted, not that your client was unready to pay seventeen thousand dollars, if necessary to settle the case, but that he was prepared to pay at least eleven thousand. This can be seen by considering how your partner in negotiation would have regarded different developments of your position as bargaining proceeded. If you later made it clear that your client preferred litigation to a settlement of eleven thousand dollars, the other lawyer would have objected that you were not bargaining “in good faith,” in other words, that your initial statement of position had been untruthful and its implicit commitment insincere. But if the negotiation’s outcome made it clear that your client was, indeed, prepared to pay fifteen thousand dollars, your counterpart would not have regarded your initial statement as in the least dishonest.

The explanation given here about the meaning of language in negotiations by no means justifies deception in that context. For example, it would be lying to try to bring about a quick settlement by hinting that your client might be forced into bankruptcy, if that is not true. Similarly, you would lie if you denied being authorized by your client to negotiate settlements in excess of his estimates or asserted that your instructions precluded a settlement that they in fact allowed you to make.⁴¹⁴

Of course, not being an experienced negotiator, you might be uneasy in observing the usual conventions, and that nervousness might reduce your chances of serving your client’s legitimate interests as effectively as possible. You might adopt an alternative approach that probably would work well and would avoid even seeming to distort the truth. Assuming there are no significant discrepancies between your client’s estimate of each owner’s actual loss and the owner’s own estimate, you could begin each negotiating session by laying on the table your client’s estimate of the owner’s actual loss and the photographs he took to support it, then point out that your client already has shown that he wants to resolve the problems resulting from his mistake, and offer to settle the claim by paying in full for the actual damage. Having made an offer, based on evidence supplied by your client, you can demand comparable evidence for any added amount in an owner’s claim of actual loss as well as proof that other grounds alleged, such as loss of use, involved real harm rather than brief, minor inconvenience. Naturally, you will challenge the other side’s claims at every step, and so work toward a settlement that, on average, will not exceed the limit your client set.

A final point. The attitude you express by saying, “I’d rather avoid lying if I can,” is not the worst possible one, but it is shared by many thoroughly dishonest people. Lying always is wrong. Usually, too, it serves manipulation, which is at odds with true community. While lying may seem unavoidable at times to people who have no hope, it should never be regarded as acceptable, especially by Christians, whose credibility is vital to the mission of sharing their faith with every neighbor (see Eph 4.17–25; cf. LCL, 405–12). Consequently, your attitude should be: I always can avoid lying and never will lie. To carry out this commitment, of course, you will need to cultivate reserve about confidential matters and learn how to tell the truth without unnecessarily jeopardizing your clients’ and your own legitimate interests.

413. American Bar Association, Model Rules of Professional Conduct (1993), Rule 4.1, Comment.

414. One can apply the preceding explanation of honesty in negotiation to other bargaining situations, such as buying and selling real estate, automobiles, and so forth (see qq. 144–46, above). There, too, lying within the negotiation—for example, saying one has received other offers when none has been made—is not only wrong in itself but unjust inasmuch as it is meant to take advantage of the other party.