The Myth of the Honest Negotiator

A lawyer has an obligation to be honourable and a duty of integrity. In a negotiation, a lawyer will not be completely honest. Both of these statements are true, but they seem contradictory. The Federation of Law Societies of Canada’s Model Code of Professional Conduct, does not expressly prohibit a lawyer from lying to another lawyer, but the Code does include provisions that promote integrity, honesty and honour. In this post, I attempt to defend the idea that an honourable lawyer can engage in a small range of permitted deception during negotiations.

James White famously framed the question of whether a lawyer can lie in a negotiation as follows:

On the one hand the negotiator must be fair and truthful; on the other hand he must mislead his opponent. Like the poker player, a negotiator hopes that his opponent will overestimate the value of his hand. Like the poker player, in a variety of ways he must facilitate his opponent’s inaccurate assessment. The critical difference between those who are successful negotiators and those who are not lies in his capacity both to mislead and not be misled.[1]

The Lie And Other Tricky Tactics

Most people tell lies. I’m not referring to the outrageous distortion of truth perpetuated by Trump south of the border. I’m referring to studies that show most people lie every day, or at least between 30%-50% of the time, about their feelings, plans, and locations.[2] Common explanations and justifications for lying include that it was unavoidable, harmless, or the lie will help avoid negative consequences – an altruistic motivation.[3] When people meet each other for the first time, they lie even more than usual (60% of the time) in order to create a “favourable impression”, and on a date, the rate increases further still.[4] It makes sense to me that people will lie to create a favourable impression. Consider the person who arrives late to work and lies about a car being broken down to preserve their employment. Or the person who is hosting a dinner party (pre-pandemic) and lies about liking the type of flowers brought by one of their guests – when in fact, they find daisies intolerable, but they have no interest in offending the thoughtfulness of their guest. I accept that these “harmless” lies are human nature.

A lawyer’s role is to pursue her client’s interests within the bounds of legality. That means, in a negotiation, her job is to pursue a good deal for her client within what the law allows. The laws of contract and tort prohibit a fair amount of lying. A lawyer cannot participate in any type of fraud which excludes lies about things like the terms of agreement or accuracy of disclosure. Moreover, a lawyer cannot inflict duress, or undue influence, nor can she negotiate terms that are unconscionable. If she were to breach those obligations, the agreement could be set aside, and the lawyer could be sued in negligence or accused of professional misconduct. So a significant range of what is probably the worst type of lying in negotiations is prohibited by the law already. That means, at one end of the spectrum, some lies are accepted as human nature, and at the other end the most nefarious lies are unlawful.

In Alberta, their Code of Conduct provides that a “lawyer must not lie to or mislead another lawyer” including in a negotiation (R 7.2-2). The commentary states that being truthful is an “obvious aspect of integrity and a fundamental principle” (R 7.2-2[1]). According to the commentary, if answering a question truthfully means that a lawyer needs to get permission to reveal confidential information then that is what she needs to do, or decline to answer. Interestingly, that provision is also right before the rule against sharp practice (R 7.2-3), suggesting a close relationship between the two. Similarly, the American Bar Association issued “Ethical Guidelines for Settlement Negotiations” which prohibits a lawyer from making “false statements of fact or law” (R 4.1.1). Their rule includes misleading, incorporating someone else’s false statement, and remaining silent, as types of unethical false statements; the rule applies to facts, but not the lawyer’s opinion – presumably, allowing advocacy. In essence, the ABA rule makes sense in that it is nuanced enough to permit advocacy, whereas the Alberta rule seems to prohibit all lying which seems impractical and contrary to our traditional understanding of the reason for the duty of confidentiality and solicitor-client privilege – to encourage “full and frank” disclosure. I can imagine a scenario where a client wants to tell his lawyer the reason for wanting what he does, but in Alberta, that lawyer cannot have that information if her client is unwilling to share it with the other side when asked.

To be clear, I’m not referring to a lawyer lying to a court, that conduct is clearly prohibited by the Model Code in Rules 5.1-2(d) through to 5.1-2(l). For example, the rules prohibit a lawyer from “attempting to deceive a tribunal” by “offering false evidence” (R 5.1-2(e)), and from knowingly misstating the “contents of a document” or “testimony of a witness” (R 5.1-2(f)). By hinging these rules on the presence of an adjudicator, the priority seems to be on the lawyer’s duty to the court and the administration of justice – they do not clearly apply to negotiations.

So exactly what type of conduct is left and might be considered a lie in negotiations? The Merriam-Webster dictionary defines a “lie” as making “an untrue statement with intent to deceive” or creating “a false or misleading impression”. They define “mislead”, to “lead in the wrong direction or into a mistaken action or belief often by deliberate deceit” or “to give the wrong impression”. I think many people would probably say that lying by omission is also making a misleading impression, and so it makes sense that being deceptive through silence is also lying. (The Alberta rule also prohibits lying by omission, see: R 7.2-2[1]). Similarly, “manipulate” is defined as, to “control or play upon by artful, unfair, or insidious means especially to one’s own advantage”.

The most obvious example of lying during negotiations is not telling the truth about a client’s bottom line. Even if we imagine two honest negotiators, it seems unwise to suggest that the person who reveals their bottom line second should tell the truth if that would mean she negotiates against herself (i.e.: if the seller was willing to sell for less than the buyer was willing to pay). A negotiator must always leave room to negotiate. That’s just common sense.

If a lawyer refrains from employing tactics, the fear may be that she would be doing a bad job for her client – like with the bottom line example, she could be outdone. In Getting to Yes, Fisher and Ury discussed a series of examples they called “tricky tactics”.[5] These are not tactics they endorse, but what they view as techniques employed by the “hard bargainer”, and they caution against matching style with style.[6] The following is drawn from their list of tricky tactics with my embellishments:

• use of phony facts that are not material (e.g.: suggesting something is more meaningful than it is, to trade it for something else later);
• imply they don’t have the authority to agree (e.g.: client needs to talk to someone else);
• increase the stressfulness of the negotiation so the other side will give in (e.g.: manipulate the physical environment to make it uncomfortable);
• use the good-guy / bad-guy routine with the client or a colleague;
• make threats and ultimatums, assuming it does not violate Rules 3.2-5 and 5.1-2(n) (e.g.: threaten to proceed to court unless they take the deal);
• refuse to negotiate;
• make extreme demands;
• escalate demands;
• use a calculated delay.[7]

Most of these tactics will be unwise, things like cost consequences or a negative impact on the negotiation will extinguish their usefulness. Maybe some would suggest that if we puzzled through each of these tactics they would be caught by the honesty, integrity, and competence rules and are therefore prohibited. Perhaps because they seem dodgy, they are therefore dishonourable and should not be engaged, but I’m not convinced that we can easily assign them all to the impermissible category, nor do I think we want to. Moreover, provided the tactic itself is used honestly, for example, the client will actually proceed to litigation if a deal is not reached, then there is no deception just a genuine threat. We are not necessarily going to know when many of them are genuine and when they are a tactic of deceit. What if the other side is abusive and the deception is made with the intent to protect a client’s safety? For example, being asked to disclose a client’s location, or less obviously, omitting information that would inflame negotiations if revealed. In short, negotiations involve tactics, whether they are employed honestly is not something we can regulate effectively.

The Exercise Of Professional Judgement Will Be In Favour of Honesty, Most Of The Time

Most of the time, I suspect lawyers will be truthful because their professional judgement will require them to be honest. I can think of two instances where professional judgement will presumably be exercised on the side of honesty.

First, if anyone lies, not just lawyers, their dishonesty causes distrust. Trust is often labour-intensive to establish, easy to violate, and nearly impossible to repair once it is gone. The solicitor-client relationship hinges on the trust between a lawyer and her client, and lawyers need to be able to trust each other. The era of fake news and outright lies by political leaders has destabilized the institutions that we rely on in a society governed by the rule of law. But when it comes to negotiating the terms of a deal, there may be an element of deception and that is not a bad thing. Bluffing and some deception is presumably expected and would not typically cause distrust, maybe just a perception of unreasonableness in some cases. But if those lies escalate to a point where they begin to destabilize the trust between counsel, then I think most lawyers will care to preserve their reputation and will not want to be known as dishonest. Lawyers need to be trusted to do their job well, and they will typically develop community norms that encourage honesty.

That said, I was recently told about an instance where two lawyers were negotiating the terms of a deal on the phone. After the call ended, one lawyer learned through his client that the other side’s client had been on the call but failed to make their presence known. To me, that level of deception is captured by the Integrity Rule (R 2.1-1) because such an omission causes “doubt” about the lawyer’s “trustworthiness” and the behaviour does not “inspire the confidence, respect and trust of clients and the community”. The rule obviously did not prevent that conduct, nor did their professional judgement, but now their reputation is presumably sullied and more often I think that works to dissuade dishonesty.

Second, contrary to what might be intuitive, lying is not actually an effective negotiation tactic. In 2002, Andrea Kupfer Schneider re-tested Gerald William’s famous empirical study which sought to determine what constitutes an “effective” negotiator.[8] Schneider, compiled a fascinating look at what lawyers think is effective by other lawyers in negotiations. She found that lawyers overwhelmingly saw problem-solving negotiators as more effective than adversarial negotiators. Interestingly, the more “stubborn” and “argumentative” an adversarial negotiator was, the more ineffective they were perceived to be.[9] When she looked at what was effective about adversarial negotiators, the words used were terms like “demanding”, “confident” and “assertive”, as opposed to words like deceptive, manipulative or dishonest.[10] In contrast, problem-solving negotiators were described as “ethical” and “trustworthy”; in fact, the more ethical the negotiator was perceived to be, the more effective they were perceived to be.[11] The Schneider study debunked the “myth of the effective hard bargainer”.[12] Her research suggests that the majority of lawyers respect a negotiator who does not play games, who is going to make it easier to reach a good deal for both sides. Presumably they will also embody those characteristics themselves to be effective for their clients.

There Will Still Be A Bit of Dishonesty In Negotiations

I’ve ruled out a lot of conduct that will be captured by either the law or professional judgement. I’m not sure what is left would or could be covered by the Model Code. Ultimately, if we prohibited lawyers from relying on effective negotiation techniques whereas someone who is without counsel can engage in those tactics, why would anyone hire a lawyer for a negotiation when they could potentially reach a better deal on their own? Moreover, the type of deception that remains might be necessary because it amounts to good advocacy or is defensible through common sense. Even if we did prohibit all lying, I’m not sure that it would make a positive impact on a lawyer’s integrity – if that would be the goal. And what would the rule apply to?

• Information the client asked to keep confidential because its personal (i.e.: interests)
• Tricky tactics that are not employed honestly
• A client’s bottom line
• Lying to create a favourable impression

White drew a line around being truthful about an opinion on a case, statute or value of an object, because “everyone expects a lawyer to distort the value of his own case, of his own facts and arguments, and to deprecate those of his opponent”.[13] The “system accepts and expects that behaviour”[14] when the lie is not harmful, when the stakes are exceptionally high, or where a lie is viewed as acceptable. He seemed to be distinguishing between effective advocacy informed by community norms, and unexpected behaviour that would shatter trust.

It matters that we have a hard time proving and enforcing honesty. It also matters that a rule seems unnecessary given the effectiveness of the law, and the unhelpfulness of such a rule for the client. It matters that lying is human nature. Negotiations require advocacy and involve a certain amount of expected posturing, bluffing and game-playing, and that’s okay, it’s part of the process. In the end, I agree with White, we cannot reasonably prohibit all forms of lying in negotiations. I suggest that the range of permissible deception is small and expected and capable of maintaining a lawyer’s obligations to embody honour and integrity.

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[1] James J. White, “Machiavelli and the Bar: Ethical Limitations on Lying in Negotiation” (1980) Am B Found Res J 926 at 927.

[2] Robert S. Adler, “Negotiating with Liars” in Roy J Lewicki, Bruce Barry and David M. Saunders eds, Negotiation: Readings, Exercises and Cases, 7^th ed (New York, NY: McGraw Hill Education, 2015) at 123.

[3] Roy J Lewicki, Bruce Barry and David M Saunders, “Negotiation” in John C Kleefeld Dispute Resolution: Readings and Case Studies, 4^th ed (Toronto, ON: Emond, 2016) at 270.

[4] Adler, supra note 2 at 123.

[5] Roger Fisher and William Ury, Getting to Yes: Negotiating Agreement Without Giving In (Toronto, ON: Penguin Books, 2011) at 134.

[6] Fisher and Ury, ibid at 131-132.

[7] Fisher and Ury, ibid at 134-145.

[8] Andrea Kupfer Schneider, “Shattering Negotiation Myths: Empirical Evidence of the Effectiveness of Negotiation Style” (2002) 7 Harv Negot L Rev 143.

[9] Schneider, ibid at 177.

[10] Schneider, ibid at 177.

[11] Schneider, ibid at 169, 180 and 184-185.

[12] Schneider, ibid at 196.

[13] White, supra note 1 at 934-935

[14] White, ibid at 934