Attorney Green is representing a startup company that is negotiating a crucial licensing agreement with a larger corporation. During negotiations, the corporation's attorney, Mr. Black, makes a factual statement about the corporation's financial health that Green knows to be false. Green also knows that correcting this statement would significantly weaken her client's bargaining position. What is Green's ethical obligation?
- AGreen must withdraw from the representation if she cannot correct the statement without harming her client.
- BGreen must correct Mr. Black's false statement, even if it harms her client's position.
- CGreen may use Mr. Black's false statement to her client's advantage in the negotiation.
- DGreen may remain silent, as it is not her duty to correct opposing counsel's misstatements.
Show answer & explanationAnswer & explanation
Correct answer: D. Green may remain silent, as it is not her duty to correct opposing counsel's misstatements.
Model Rule 4.1(a) prohibits a lawyer from knowingly making a false statement of material fact or law to a third person. However, it does not generally impose an affirmative duty to inform an opposing party of relevant facts or to correct a misapprehension, unless disclosure is necessary to avoid assisting a criminal or fraudulent act by the client. In a negotiation, a lawyer is generally not required to volunteer facts that would undermine their client's position, nor to correct an adversary's mistaken factual assumptions, unless silence itself constitutes a knowing misrepresentation of a material fact (e.g., if Green's client was involved in creating the false impression). Here, the false statement was made by opposing counsel, not Green or her client.
Why the other options are wrong
- A. Withdrawal is an extreme measure and typically not required in this scenario, as Green is not participating in the fraud or making false statements herself.
- B. Rule 4.1 does not generally create an affirmative duty to correct an adversary's false statement.
- C. While not required to correct, using a known false statement to actively mislead or take advantage of an error might cross the line into dishonest conduct, but merely remaining silent when the other party makes a false statement is usually permissible.
Duty of Candor vs. Adversarial Role
A lawyer must not knowingly make a false statement of material fact or law. However, a lawyer generally has no affirmative duty to volunteer facts or correct an adversary's factual misapprehension, unless such silence would constitute assisting a client's criminal or fraudulent act.
- Rule 4.1 prohibits affirmative misstatements.
- No general duty to disclose adverse facts.
- Distinguish between silence and active misrepresentation.
Memory trick: Speak no lies, but you don't have to spill all the beans.