Negotiation Ethics - Cases

NEGOTIATION ETHICS -

CASES

David Rabinowitz

Moses & Singer LLP

405 Lexington Avenue

New York, NY 10174-1299

(212) 554-7815

Copyright 2016 David Rabinowitz

Negotiation Ethics - Cases

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Case Example #1

• You are negotiating a settlement of a claim against a

credit reporting agency for falsely stating that your client

was dead. During the negotiation, your client does, in

fact, die. Two weeks after your client dies, the credit

reporting agency offers $19,000 to settle the claim. You

accept the offer without disclosing your client’s death and

the credit reporting agency’s counsel drafts a settlement

agreement. Two months later, your client’s widow signs

the settlement agreement as personal representative of

the client’s estate.

(Please switch to Polling.)



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Polling Question #1:

1. Has an impropriety been committed?

A. Yes

B. No

C. Maybe



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Answer #1

• Petition against Lyons, 780 N.W.2d 629 (Minn.

2010)

Case Example #2

• You represented a bank in a debtor’s bankruptcy in which the

bank’s judgment lien on debtor’s home was avoided “to the

extent the lien impairs an exemption to which the debtor is

entitled.” The bankruptcy court order did not state the extent to

which the lien impaired the debtor’s homestead exemption.

• The former debtor’s new bank asks your client, the bank, to

execute a release of the judgment lien, since the old lien was

avoided. You respond, without checking your old file, that “the

lien of the bank was apparently not avoided in the couple's

bankruptcy.” You then request $1,000 for your bank to release

the lien, which is paid.



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Has an impropriety been committed?

A. Yes

B. No

C. Maybe

Answer #2

• In re Wagner, 744 N.E.2d 418 (Ind. 2001)



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Case Example #3

• You are trial counsel for a hospital sued in a malpractice

action. During the trial, as settlement negotiations were

proceeding, you represent to the plaintiff’s counsel that the

hospital carries a total of $200,000 in insurance coverage.

In the trial file you were handed were letters indicating that

the hospital also had an umbrella policy in the amount of

$1,000,000, but you failed to notice those letters. The

action is settled for $185,000.

• Ten days later, the umbrella policy is actually brought to

your attention. You immediately contact counsel for the

plaintiff and disclose the information.




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A. Yes

B. No

C. Maybe



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Answer #3

• Matter of McGrath, 96 A.D.2d 267, 468 N.Y.S.2d

349 (1st Dep’t 1983); see also Slotkin v. Citizens

Casualty Co., 614 F.2d 301 (2d Cir. 1979).

Case Example #4

• A personal injury lawyer told an insurance

company that a formerly active 44 year old “has

been unable to participate in any activity which

requires the slightest bit of physical exertion due

to the injuries suffered.” In fact, the treating

physician found only a 5% partial permanent

disability, and the claim for these supposedly

crippling injuries were settled for $4,000.



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A. Yes

B. No

C. Maybe

Answer #4

• Statewide Grievance Committee v. Gillis, 36

Conn. L. Rptr. 464, 2004 WL 423905 (Conn.

Super. Ct. 2004)



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Case Example #5

• Your client is a subcontractor who installs an underwater

pipeline. The general contractor withholds payment to

your client subcontractor for alleged defective installation.

Your client files a mechanic’s lien on the property.

• Property owner’s lawyer calls you about the mechanic’s

lien. You do not tell property owner’s lawyer about the

pending claim by the general contractor against your client

for defective installation, which a court later upholds. You

request and obtain full payment from the property owner

in exchange for releasing the lien.



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A. Yes

B. No

C. Maybe

Answer #5

• Cedar Island Imp. Ass’n., Inc. v. Drake

Associates, Inc., 2009 WL 415991 (Ct. Super.

2009)



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Case Example #6

• You represent Kress, the owner of a shopping center. Mortgage foreclosure proceedings have been commenced against Kress, including the filing of a lis pendens which will make all subsequent encumbrances on the property subject to the result in the foreclosure proceedings.

• While the foreclosure proceeding is still under way, Kress asks you to prepare a lease at the shopping center to a new tenant. The lease contains the usual clause promising the tenant quiet enjoyment of its property. You do not disclose the pending foreclosure proceedings to tenant, nor does your client, nor do you urge you client to disclose the foreclosure. The lease is signed with the quiet enjoyment clause in it.




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A. Yes

B. No

C. Maybe



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Answer #6

• Davin, L.L.C. v. Daham, 329 N.J. Super. 54, 746

A.2d 1034 (App. Div. 2000)



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Case Example #7

• Your client, Burbank Broadcasting Company is a general partnership that owns and operates a television station. You are representing Burbank Broadcasting in trying to borrow money. The lender asks you for an opinion letter stating that in your professional opinion, Burbank Broadcasting is a duly organized general partnership consisting of 14 general partners.

• You are aware, from representing this partnership, that many of the supposed general partners:

• (1) Did not believe that Burbank Broadcasting was a general partnership or that they were general partners if it was.

• (2) Believed that Burbank Broadcasting was in fact a corporation, not a partnership of any kind,

• (3) Believed that their individual liability for any loan would not exceed their pro rata shares according to their limited or general partnership interests, as the case might be, or

• (4) Believed that there was only one general partner, if Burbank Broadcasting was a partnership at all, the remaining partners being limited partners.

• Nevertheless, all of the partners, limited partners, shareholders or whatever they are, authorize you to give the opinion requested, and you do.




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If you do so, has an impropriety been committed?

A. Yes

B. No

C. Maybe



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Answer #7

• Roberts v. Ball, Hunt, Hart, Brown & Baerowitz,

57 Cal. App. 3d 104, 128 Cal. Rptr. 901 (Ct. App.

1976)

Case Example #8

• You are regular corporate counsel to a company selling its

assets. You are called upon to give an opinion letter to the

buyer saying that to your knowledge “the execution, delivery and

performance of the agreement will not contravene or violate any

statute.” In the purchase and sale agreement, seller states that

no claims against it are pending, but you are not asked to

confirm this in your opinion letter.

• At the time you are asked to give this opinion letter, you are

already defending your client against a lawsuit. You give the

opinion letter but you do not disclose the existence of the lawsuit

nor the possibility that the sale of assets for less than fair

consideration while a lawsuit is pending might constitute a

fraudulent conveyance violating a New York statute.



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A. Yes

B. No

C. Maybe

Answer #8

• Mega Group, Inv. v. Pechenik & Curro, P.C., 32

A.D.3d 584, 819 N.Y.S.2d 796 (3d Dep’t 2006)



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Case Example #9

• You represent the plaintiff and her Hebrew-speaking

parents in an automobile accident case. The court

orders the parties to appear for a settlement

conference. Counsel for the defendants brings along

a Hebrew-speaking insurance company employee to

talk directly to the plaintiff's parents. While the

lawyers are in chambers talking with the judge, the

insurance company employee does start a

conversation with the plaintiff's parents.



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Case Example #9, ctd.

• According to the claims director, she told the parents that she had traveled all the way from Atlanta to help resolve the case, that the insurance company had already made settlement offers, that it was good that you, the parents’ attorney, had communicated those offers and that she was glad that the parents had a good attorney taking care of them.




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A. Yes

B. No

C. Maybe



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Case Example #10

• The parents' version of the conversation is somewhat different.

• The parents say that the claims director said that you, the plaintiff's counsel, had rejected the previous settlement offers because you were chiefly interested in the publicity of the case, and that if a settlement was not reached, the case would be litigated and appealed for years, depriving the injured daughter of any award.




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If the parents' version of the conversation is

credited by the Court, has an impropriety been

committed?

A. Yes

B. No

C. Maybe



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Answer #9 & #10

• Reference: Miller v. Lewis, New York Law

Journal 9/17/13 (Sup. Ct. Kings Co.) Index No.

11358/09.



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Case Example #11

• You are admitted to practice in Pennsylvania and

New Jersey and maintain an office for the

practice of law in Pennsylvania. You are hired as

an employee by a public accountant located in

Delaware and, in Pennsylvania, prepare wills,

trusts, powers of attorney, and deeds governed

by Delaware law for the accountant's Delaware

clients. You also meet in Delaware with the

Delaware clients to discuss estate planning

matters.




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A. Yes

B. No

C. Maybe



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Answer #11

• Matter of Kingsley, 950 A.2d 659 (Del. 2008).

Case Example #12

• Your mother-in-law and father-in-law live in

Minnesota. They telephone you to ask your help

in negotiating the settlement of a small ($2,368)

judgment against them in “conciliation court” in

Minnesota. You are admitted to practice in

Colorado, but not in Minnesota. You

communicate with the attorney for the Minnesota

adversary by email and telephone in an

unsuccessful attempt to settle the case.



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A. Yes

B. No

C. Maybe

Answer #12

• In re Charge of Unprofessional Conduct in Panel

File No. 39302, 2016 Bloomberg Law 284077,

No. A15-2078 (Minn. 8/31/16).



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Case Example #13

• A married couple, the Gordons, borrow money from Chase. The loan goes into default and the Gordons divorce. Chase accelerates maturity and demands payment.

• You represent the former Mrs. Gordon. You represent to Chase that her real estate is being sold to raise money to pay the note and ask Chase to forbear from legal proceedings. In fact, you did not believe that the proceeds of sale would be used to pay the loan.




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A. Yes

B. No

C. Maybe



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Case Example #14

Assume in addition that

• You actually knew that the real estate was going to be sold to your wife

• The former Mrs. Gordon would take the money and leave the state

• You had arranged the whole transaction at the time you made the representation to Chase?



With this additional information, has an

impropriety been committed?

A. Yes

B. No

C. Maybe



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Answer #13 & #14

• Chase Manhattan Bank, N.A. v. Perla, 65 A.D.2d

207, 411 N.Y.S.2d 66 (4th Dep’t 1978)



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Questions?

Contact:

David Rabinowitz

Moses & Singer LLP

405 Lexington Avenue

New York, NY 10174-1299

Phone - (212) 554-7815

Fax - (212)554-7700

Disclaimer: This presentation does not constitute legal advice or an opinion of Moses & Singer LLP or any member of the

firm. It does not create or invite an attorney-client relationship and may be rendered incorrect by future developments. It is

recommended that it not be relied upon in connection with any dispute or other matter but that professional advice be

sought.

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