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
3
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.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #1:
1. Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #2:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Answer #2
• In re Wagner, 744 N.E.2d 418 (Ind. 2001)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #3:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #4:
Has an impropriety been committed?
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)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #5:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Answer #5
• Cedar Island Imp. Ass’n., Inc. v. Drake
Associates, Inc., 2009 WL 415991 (Ct. Super.
2009)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #6:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Answer #6
• Davin, L.L.C. v. Daham, 329 N.J. Super. 54, 746
A.2d 1034 (App. Div. 2000)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #7:
If you do so, has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
24 (Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #8:
Has an impropriety been committed?
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)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #9:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #10:
If the parents' version of the conversation is
credited by the Court, has an impropriety been
committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
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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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
34
Polling Question #11:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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.
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
37
Polling Question #12:
Has an impropriety been committed?
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).
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
39
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.
(Please switch to Polling.)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Polling Question #13:
Has an impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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?
(Please switch to Polling.)
Polling Question #14:
With this additional information, has an
impropriety been committed?
A. Yes
B. No
C. Maybe
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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Copyright 2016 David Rabinowitz
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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)
Copyright 2016 David Rabinowitz
Negotiation Ethics - Cases
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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
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