## **Learning Outcomes**

After reading this article, you will be able to identify the ethical duties of a lawyer acting as a negotiator, distinguish between acceptable negotiation tactics and prohibited conduct, and apply the Model Rules to scenarios involving truthfulness, misrepresentation, and permissible “puffing.” You will also recognize the limits of advocacy in negotiation and avoid common pitfalls tested on the MPRE.

## **MPRE Syllabus**

For the MPRE, you are required to understand the ethical standards governing lawyers in negotiation settings. This includes knowing when statements are considered material facts, what constitutes permissible negotiation tactics, and the boundaries of truthfulness. You should be able to:

- Explain a lawyer’s duty of truthfulness in negotiations under the Model Rules.
- Distinguish between statements of fact and permissible “puffing” or opinion.
- Identify conduct that constitutes misrepresentation or dishonesty.
- Recognize when silence or omission may be misleading or unethical.
- Apply the rules to scenarios involving settlement discussions, transactional bargaining, and client instructions.

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. During settlement talks, a lawyer states, “My client will never accept less than \$100,000,” even though the client has authorized settlement for \$80,000. Is this statement:
   a) A prohibited misrepresentation of material fact
   b) Permissible negotiation “puffing”
   c) Always subject to discipline
   d) Only allowed if opposing counsel consents

2. Which of the following is most likely a statement of material fact in negotiation?
   a) “This is our bottom line.”
   b) “The property has no environmental issues,” when the lawyer knows otherwise.
   c) “We believe the case is worth much more.”
   d) “The client is eager to settle.”

3. A lawyer remains silent about a known boundary defect in property during negotiations, believing the other side will discover it. Is the lawyer:
   a) Always permitted to remain silent
   b) Required to disclose if silence would be misleading
   c) Required to disclose only if asked directly
   d) Required to withdraw from the matter

4. In negotiations, a lawyer tells the other side, “We have several interested buyers,” when there are none. Is this:
   a) Permissible opinion
   b) Acceptable “puffing”
   c) A misrepresentation subject to discipline
   d) Required by the duty of advocacy

## **Introduction**

Lawyers frequently act as negotiators, whether in settlement discussions, business transactions, or other contexts. While zealous representation is expected, the Model Rules impose clear limits on what a lawyer may say or do during negotiations. The duty of truthfulness applies, but not every statement is treated equally—some are considered opinions or “puffing,” while others are material facts. Understanding these distinctions is essential for avoiding ethical violations and answering MPRE questions correctly.

> **Key Term: Negotiator**
> A lawyer acting on behalf of a client to reach agreement with another party, typically in settlement, transactional, or dispute contexts.

### The Duty of Truthfulness in Negotiation

Lawyers must not make false statements of material fact or law to others, including during negotiations. However, not every statement made in negotiation is a “material fact.” The Model Rules recognize that certain statements are expected as part of bargaining.

> **Key Term: Material Fact**
> Information that would influence a party’s decision-making in a negotiation, such as facts about the subject matter, legal rights, or obligations.

### Permissible “Puffing” and Opinion

Statements about a party’s negotiating goals, estimates of value, or intentions are generally not considered statements of material fact. These are viewed as opinions or “puffing,” and are not subject to discipline.

> **Key Term: Puffing**
> Exaggerated or subjective statements about value, intent, or negotiation position that are not intended as factual representations.

### Misrepresentation and Silence

A lawyer may not knowingly make a false statement of material fact. This includes affirmatively stating something untrue or partially true statements that are misleading. Silence or omission can also be unethical if it creates a false impression, especially when the lawyer knows the other party is operating under a mistaken belief and the lawyer’s silence would be unfair.

> **Key Term: Misrepresentation**
> Any statement or omission by a lawyer that is knowingly false or misleading regarding a material fact or law.

### Examples of Statements in Negotiation

- “Our client will not accept less than \$100,000.” (Usually opinion/puffing)
- “The property is free of liens,” when the lawyer knows of a lien. (Material fact—misrepresentation if false)
- “We have multiple offers,” when there are none. (Material fact—misrepresentation)
- “This is the best offer you’ll get.” (Opinion/puffing)

### When Silence Becomes Misleading

If a lawyer knows the other party is acting under a mistaken assumption about a material fact, and the lawyer’s silence would be unfair or amount to assisting a fraud, the lawyer may be required to correct the misunderstanding.

> **Key Term: Duty of Truthfulness**
> The obligation to avoid knowingly making false statements of material fact or law to others, including during negotiations.

### **Worked Example 1.1**

A lawyer represents a seller in negotiations for a commercial property. The buyer asks, “Are there any ongoing environmental investigations?” The lawyer knows the property is under investigation but says, “Not that I’m aware of,” despite having received notice from the agency.

**Is the lawyer subject to discipline?**

> **Answer:** Yes. The lawyer’s statement is a false statement of material fact. The existence of an environmental investigation is material to the transaction, and the lawyer’s denial is knowingly false.

### **Worked Example 1.2**

During settlement talks, a lawyer says, “My client would never settle for less than \$50,000,” even though the client has authorized settlement for \$40,000. The opposing lawyer suspects this is posturing.

**Is this statement improper?**

> **Answer:** No. Statements about a party’s willingness to settle or negotiating position are generally considered opinion or “puffing,” not material facts. This is not subject to discipline.

### **Worked Example 1.3**

A lawyer is negotiating the sale of a business and learns that a key contract will expire soon, which will significantly reduce the business’s value. The buyer does not ask about contract expiration dates, and the lawyer remains silent.

**Is the lawyer required to disclose the expiring contract?**

> **Answer:** Not necessarily. Unless the lawyer’s silence would make a previous statement misleading or would assist a crime or fraud, there is no general duty to volunteer adverse facts. However, if the buyer is clearly mistaken and the lawyer’s silence would be unfair, disclosure may be required.

### **Exam Warning**

> In MPRE questions, be careful to distinguish between statements of value or negotiation position (usually permissible) and factual assertions about the subject matter (which may be material facts). Mislabeling a material fact as “puffing” is a common error.

### **Revision Tip**

> Practice identifying whether a statement in a negotiation is a material fact, opinion, or puffing. Focus on the context and the likely impact on the other party’s decision.

## **Summary**

Lawyers as negotiators must balance advocacy with the duty of truthfulness. While opinions and “puffing” are allowed, false statements of material fact or law are prohibited. Silence is not always safe—if it would mislead or assist a fraud, disclosure may be required. Understanding these distinctions is essential for MPRE success.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Lawyers must not make false statements of material fact or law in negotiation.
- Statements of value, intent, or negotiation position are generally permissible “puffing.”
- Material facts include information likely to affect the other party’s decision.
- Silence can be unethical if it creates a false impression or assists a fraud.
- Misrepresentation includes both false statements and misleading omissions.
- The duty of truthfulness applies to all negotiation contexts covered by the Model Rules.

## **Key Terms and Concepts**

- Negotiator
- Material Fact
- Puffing
- Misrepresentation
- Duty of Truthfulness

Advisor, evaluator, negotiator - Lawyer as negotiator