California Lawyers Receive Clarification on the Limits of Negotiation ‘Puffery’

The State Bar of California Standing Committee on Professional Responsibility and Conduct released an opinion this month concluding that while engaged in negotiations on behalf of a client, an attorney’s puffery and posturing are generally permissible, but false statements of fact or implicit representations are prohibited. The opinion is consistent with the 2006 ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion on the same topic.

The committee interpreted sections of the Rules of Professional Conduct of the State Bar of California and the Business and Professions Code as they applied to a hypothetical scenario involving negotiations in an automotive personal injury suit. It analyzed six statements made by two attorneys from the scenario; of the six, one was found to be clearly permissible puffery. The lawyer made an inaccurate representation regarding his client’s “bottom line,” but the committee explained that such statements are not considered “verifiable statements of fact” because parties should expect that the opposition will not reveal its true goals or willingness to compromise during negotiations. Four other statements made of the attorneys’ own volition were considered impermissible conduct on the part of the lawyers, and the sixth statement—which was the result of a client’s instruction—was analyzed in further detail.

In the sixth statement, the plaintiff instructed the attorney to conceal a material fact (new employment). Because the employment would affect the client’s ability to collect lost future earnings, the failure to disclose this fact would be an implicit misrepresentation that the client had not yet found a job. The committee continued and explained that the attorney should first counsel the client against the misrepresentation and/or suppression, and if the attorney is unsuccessful, they must then withdraw from representation.

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