July 12, 2018
Issues, Ethical and Otherwise, for Procurement Lawyers and Their Clients
A. Representation Agreements
Lawyers and their clients, both, have the authority and the responsibility to establish the objectives and means of the legal representation. See Comment 1, Rule 1.2 Virginia Rules of Professional Conduct. The scope of any particular representation may, and preferably should be, expressly conveyed as part of the agreed representation terms. Rule 1.2. While generally written representation agreements are not required, they are preferred. Rule 1.5. And, as a practical matter, a written representation agreement is the best way to avoid misunderstanding or later dispute, by either lawyer or client. The lawyer's fee should be established in the written representation agreement, and often gets the most attention of the client. There are no established maximums or minimums for fee agreements; however, a lawyer's fee must be reasonable. Rule 1.5(a).
Reasonability factors are primarily subjective, and include: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill and requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. Rule 1.5(a).
The most typical fee arrangement for construction matters is an hourly fee, but other fee alternatives include contingency fees, blended rates, mixed contingency reduced hourly fees or fixed fees. If part of the fee arrangement includes a contingency component, the contingency fee agreement must state in writing the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether expenses are to be deducted before or after the contingent fee is calculated. Rule 1.5(c). Rule 1.5(c) has other specific limitations regarding when contingency fees are permissible, and for example prohibits contingency fees in criminal cases. Upon conclusion of a contingent representation, the lawyer shall provide the client with a written statement of the matter's outcome and if there is a recovery the remittance to the client, with method of its determination. Rule 1.5(c). Such concluding summaries are not mandated for other fee arrangements, but when used provide a practical way for counsel to memorialize outcomes, fees and other charges, and - just as importantly – the conclusion of representation.
B. Pass-Through Claims
Commonly, construction disputes involve claims of lower tier contractors or suppliers that resulted from an act or omission of a higher tier party to the construction contract with whom the lower tier contractor or supplier does not have a contract. The lower tier contractor or supplier therefore seeks to have the party with whom they contracted "pass-through" the claim to the responsible parties. Such claims create various ethical issues for consideration.
Rightfully so, a lawyer may not represent a client if the representation involves a conflict of interest. Rule 1.7. Rule 1.7 defines a concurrent conflict of interest as existing if either the representation of one client will be directly adverse to another; or if there is significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person, or by a personal interest of the lawyer. Rule 1.7(a).
However, notwithstanding the existence of a concurrent conflict of interest, the lawyer may nevertheless represent a client if each affected client consents after consultation and the lawyer reasonably believes he or she will be able to competently and diligently represent each affected client; the representation is not prohibited by law; the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or proceeding before a tribunal; and the clients' consent is memorialized in writing. Rule 1.7(b).
Various types of transactions involving actual or potential conflicts of interest of lawyers are expressly prohibited. These are enumerated in Rule 1.8. Included among these is Rule 1.8(g), which prohibits a lawyer who represents two or more clients from participating in the making of an aggregate settlement of the claims of or against the clients. Conflicts may also arise with respect to former clients, as addressed in Rule 1.9. These prohibit a lawyer who has formerly represented a client from thereafter representing someone else with materially adverse interests in the same matter without consultation with and consent of the former client. Rule 1.9. The disqualification of one lawyer within a law firm is imputed to the other firm lawyers. Rule 1.10.
Information gained by a lawyer in a "common interest agreement" may be protected from disclosure as confidential. ABA LEO 1613 (Jan. 13, 1995). Similarly, a lawyer who represents one member of a defense "consortium" has been deemed precluded from being adverse to another member of the consortium without consent. ABA LEO 395 (July 24, 1995). According to this latter LEO, even if the lawyer did not have an ethical duty of confidentiality, he may nevertheless have a fiduciary duty disqualifying him. Id.; see also GTE North, Inc. v. Apache Prods. Co., 914 F. Supp. 1575 (N.D. Ill. 1996).
Moreover, even if there is no conflict initially, conflicts can later develop. For example, what if during the pass-through prosecution the subcontractor wants to take a position adverse to the prime contractor? What if those positions are not adverse, but are inconsistent? Are such conflicts then still waiveable, or do they create irreconcilable conflicts? Each situation will have unique facts requiring individual analysis respecting those and similar ethical issues. A detailed written agreement seeking to address as many of these as possible is an initial first step. Related recommended reading includes the paper prepared by Jonathan Bondy, Esq. and Davil Pikulin, Esq. for the Twenty First Annual Northeast Surety and Fidelity Claims Conference, September 23rd – 24th, 2010 entitled “Ethical Issues in Tenders of Defense and Joint Defense Agreements.”1
C. Disputes: What’s Good Faith?
Construction disputes are often complex, with multiple parts and multiple theories of relief and claim. Some regulatory and statutory requirements compel certifications of claims, including pass-through claims. See 41 U.S.C. § 605 (Federal Contract Disputes Act); Defense Acquisition Regulation Part 252.243-7002. Generally, these are couched in terms of a "good faith" submission. Regardless, lawyers are bound by what are, in essence, good faith constricts in their advocacy of the construction claim. A lawyer must be candid with the tribunal before whom the lawyer appears. Rule 3.3. Among other things, this precludes the lawyer from knowingly making a false statement of fact or law to the tribunal; requires the lawyer to disclose facts when necessary to avoid assisting a criminal or fraudulent act by the client; requires the lawyer to disclose to the tribunal controlling authority in the subject jurisdiction known to the lawyer to be adverse to the lawyer's client and not disclosed by opposing counsel; and precludes offering evidence the lawyer knows to be false. Rule 3.3(a).
Virginia lawyers also have certain obligations of fairness to opposing parties and their counsel, as enumerated in Rule 3.4. Among these, the lawyer may not: a) obstruct another party's access to evidence (Rule 3.4(a)); b) allude at trial to matters the lawyer does not reasonably believe relevant or supportable (Rule 3.4(f)); c) request a person other than a client to refrain from voluntarily giving relevant information to another party (Rule 3.4(h)); d) present or threaten criminal or disciplinary charges solely to obtain advantage in a civil matter (Rule 3.4(i)); or e) bring an action or assert a position the lawyer knows or believes has the mere effect of harassment or malicious injury to another (Rule 3.4(j)).
D. Inadvertent Disclosures
The modern construction project is a plethora of paperwork and, increasingly, digital files. Similarly, construction disputes become heavy paper files for the lawyers involved, and often there are multiple lawyers and firms involved, including parties to the litigation with multiple lawyers, even on their own team. With all that paper work and all those people, and with the ease of email transmissions, mistakes can happen, including the inadvertent disclosure of information by a party or its lawyer to someone to whom the information was not intended.
No specific rule of conduct in the Ethics Rules deals with inadvertent disclosures of privileged or confidential documents.2 But in LEO 1702 (Nov. 24, 1997), then effective ABA LEO 368 was adopted by the Virginia Bar, placing an obligation upon a lawyer to notify opposing counsel and request disposition of documents once the lawyer recognizes it was inadvertently disclosed. This LEO further precludes the use of such documents, or even reading them at the point the lawyer suspects the inadvertent disclosure. Id. This result is generally the case even if the information comes from a third-party, given the concern with encouraging or rewarding unauthorized third-party disclosure.
However, there is no absolute rule regarding use of disclosed materials. Instead, LEO 1702 references and adopts ABA Formal Opinion 94-382, and that opinion’s principle that use of materials requires a “balancing” approach respecting the competing interests affected because there might be a legitimate claim that the documents have been wrongfully withheld or were received by someone acting under the authority of a whistle blower statute. Use under those circumstances “the character of the documents and the justification for their use transcend the tainted acquisition.”
This opinion reflects the often competing interests of zealous representation and professionalism. In discussing this, the Committee noted its view that, while a “use whatever you have, no matter how you got it” rule was reflective of marketplace rules, there nevertheless should be a higher standard that prevails in the practice of law. As the Committee notes: “The practice of law is a profession and is the only one not regulated by the Virginia Department of Professional and Occupational Regulation . . . The profession’s unique status entails a heightened adherence to ethical standards that engender respect for and confidence in the integrity of the profession.” This view repeats itself in numerous ethical decisions.
There are two important notes about inadvertent disclosures since LEO 1702’s issuance. First, since the Virginia Bar adopted issued LEO 1702, the ABA has adopted ABA Model Rule 4.4(b), and withdrawn ABA LEO 368 requiring the earlier created "return unread" requirement. As a result, under the new ABA Model Rule no action is required unless the party making the mistake first seeks return of the documents. Virginia has not adopted ABA Model Rule 4.4(b) on that, and LEO 1702 was recently reaffirmed in LEO 1871 with no discussion of this. Second, the Virginia Supreme Court has since adopted discovery rule 4:1(b)(6)(ii) to address inadvertent disclosures during discovery. That rule now provides:
If a party believes that a document or electronically stored information that has already been produced is privileged or its confidentiality is otherwise protected the producing party may notify any other party of such claim and the basis for the claimed privilege or protection. Upon receiving such notice, any party holding a copy of the designated material shall sequester or destroy its copies thereof, and shall not duplicate or disseminate such material pending disposition of the claim of privilege or protection by agreement, or upon motion by any party. If a receiving party has disclosed the information before being notified of the claim of privilege or other protection, that party must take reasonable steps to retrieve the designated material. The producing party must preserve the information until the claim of privilege or other protection is resolved.
LEO 1871 addressed this rule change, noting that Ethics Rule 3.4(d) requires lawyers to obey standing rules of tribunals, and that thus Rule 4:1(b)(6)(ii) requires lawyers to handle inadvertent discovery disclosures in accordance with that rule. But LEO 1871 goes on to note that “[o]utside of the discovery process, the requirements of LEO 1702 fully apply.” Of further note, LEO 1871 appears to interpret the “may” in Rule 4:1 as “shall” when it comes to reporting believed inadvertently received information; dovetailing further with LEO 1702’s analysis.
Similar disclosures issues abound with technology advances, which include previously unavailable means for determining information about electronic documents beyond the face information in them. One such example is the "metadata" in electronic documents. Metadata is the invisible underlying data that often accompanies electronic data, and which can indicate, for example, changes that were made to the document, who made them, etc. Some jurisdictions have concluded that lawyers may not review metadata in documents received from adversaries (see New York LEO 749 (Dec. 14, 2001) and Florida LEO 06-2 (Sept. 15, 2006)), whereas others have disagreed and indicated that lawyers may do so (Maryland LEO 2007-09 (2007) and ABA LEO 442 (Aug. 5, 2006)). Presuming the Virginia Bar maintains the underlying premises of LEO 1702 regarding such technological issues, Virginia should adopt the former approach.
For more information regarding metadata, the ABA has a webpage section devoted to metadata, including ethical aspects, which was last published at: http://www.americanbar.org/groups/departments_offices/legal_technology_resources/res
ources/charts_fyis/metadatachart.html. Included with the ABA’s materials is a very comprehensive review of metadata issues prepared by Joshua J. Poje, J.D. ([email protected]) that, among other things, analyzes the ABA Standing Committee view, and those of jurisdictions that have looked at the issue. One would anticipate this to be an ever evolving issue, and one that will ultimately brought before the Virginia Bar soon.
E. Witness Interviews
Paul Harvey was famous for telling his audiences "The Rest of the Story." Construction litigation is similar in that if a lawyer listens only to her own client, she only learns one side of the story, and rarely learns the whole story, and particularly not the story of the other side to the dispute. Typically, "The Rest of the Story" can only come from non-client witnesses, including those of the other side. However, a lawyer may not communicate directly with someone the lawyer knows to be represented by another lawyer with respect to the matters upon which that other lawyer represents the other person, without the consent of the other lawyer or as authorized by law. Rule 4.2. This is true even if the represented party initiates the contact because the key phrase in Rule 4.2 is “unless the lawyer has the consent of the other lawyer . . . .” (emphasis added); thus placing the privilege so to speak with the opposing lawyer and not the opposing party, presumably to avoid unfair disadvantage of lay persons in dealing with lawyers. The exception to this is if the person is seeking a second opinion or replacement counsel. In that case, communication is allowed. See Rule 4.2, Comment 3. But when communication is not allowed, what does a lawyer do if the represented party contacts the lawyer? As noted above, if the lawyer knows or comes to learn there is representation, the communication is prohibited. Comment 3 to Rule 4.2 notes that the lawyer then is required to immediately” terminate communication. But what does “immediately” mean? Some clarification was recently provided in Zuag v. Virginia State Bar ex rel. Fifth District, 285 Va. 457, 737 S.E.2d. 914 (2013), which held that the obligation to immediately disengage from prohibited communication does not require attorneys to be discourteous or impolite when they do so, and that is was not therefore unethical in that specific case for the lawyer to not have immediately hung up the phone. Sometimes consent can be obtained, but typically opposing counsel would prefer his or her witnesses not talk voluntarily with opposing counsel. By legal authorization, the rule contemplates, for example, the giving of a required notice (i.e., notice of termination, etc.) or pursuant to legal process, and this does not address the "other side of the story" conundrums. Presuming contact is authorized, in dealing with someone who is not represented, the lawyer shall not state or imply that the lawyer is disinterested. Rule 4.3(a). Furthermore, if the lawyer believes the unrepresented person misunderstands the lawyer's role, the lawyer must attempt to correct the misunderstanding. Rule 4.3(b).
Stated more simply, the rule is intended to stop lawyers from taking advantage of an unrepresented party through pressure or appearance of authority, etc. Organizations create unique questions of who is represented. The general rule for current employees is that persons within the corporation's "control group" are deemed represented by the corporation's lawyer for communication purposes. See Comment , Rule 4.2; see also Upjohn v. United States, 449 U.S. 383 (1981). Generally, by control group is meant those persons employed by the corporation that, because of their status or position, have the authority to bind the corporation. Id. However, precedent varies regarding communication with former employees. Comment  to Rule 4.2 expressly states the prohibition regarding ex parte contact does not apply to former employees or agents, even if they were in the control group. This follows LEO #1670 (April 1, 1996), which had concluded that the termination of employment was a “pivotal point” because a corporation can only act through its employees and once terminated, either voluntarily or involuntarily, the exemployee “no longer speaks for the corporation or binds it by his or her acts or admissions.” But this is not set forth in the rule itself, and there is prior cases under former DR 7-103 that precluded ex-employee control ground contact because, although former employees may no longer bind the corporation, liability may nevertheless arise because of the former employee's statement, act or omission. See Armsey v. Medshares Mgt. Servs., Inc., 184 F.R.D. 569 (W.D.Va. 1998) (decided under former DR 7-103). One would anticipate that the Virginia Bar would follow LEO #1670 and Comment  because LEO #1670 took into consideration such earlier precedent as in Armsey; but this remains to be seen. For now, practitioners will need to be mindful of the applicable court or jurisdiction as they decide with whom they can speak when it comes to ex-employees that were or arguably were in the control group of their prior corporation.
F. Settlement Advocacy
Lawyers are advisors, not just advocates. It is for this reason that lawyers are often referred to as "counsel" - or by common dictionary definition one that provides advice and guidance. See e.g., Merriam-Webster’s Online Dictionary, http://www.merriam-webster.com/dictionary/counsel. Therefore, in representing a client the lawyer must exercise independent professional judgment and render candid advice. Rule 2.1. The Virginia Rules of Professional Conduct recognize that this may require advice not only on the law, but also such other considerations as moral, economic, social and political factors that may be relevant to the client's situation. Rule 2.1. This also creates various constricts on the lawyer's advocacy. While lawyers are expected among their duties to argue for their client's cause, their advocacy is not without limitations. For example, a lawyer may not bring or defend a proceeding or assert or controvert an issue therein unless the lawyer has a basis for doing so that is not frivolous. Rule 3.1. But under this rule it is not frivolous to advocate a good faith argument for the extension, modification or reversal of existing law. Rule 3.1. The prior rules of conduct required "zealous" representation of one's client. The current rules utilize the less confrontational adjective "diligent" to describe the representation. Rule 1.3. In Comment 1 to Rule 1.3, the difference is summarized by noting that a "lawyer is not bound to press for every advantage that might be realized for a client". Put differently in common vernacular, lawyers are not required to employ "scorch earth" tactics to advocate their client's cause. Fortunately, most lawyers agree and govern themselves accordingly.
But even those that do agree look at settlement negotiations differently. Is not hiding one's "bottom line" part of the game of advocacy to pay as little or get as much as possible, depending upon one's position in the litigation? The use of deception in settlement negotiations has been often debated, but is not specifically addressed in either the ABA Model Rules or the Virginia Rules. ABA LEO 439 (Apr. 12, 2006) does, however, touch on the issue, noting that the often used settlement tactics of "posturing" or "puffing" are distinguishable from false statements of material fact. But this LEO goes on to note that lawyers must be careful they do not cross the grey line between advocacy and fraud by converting statements of position to "false factual representations", which do violate the ethical constricts.
For those looking for more information regarding ethical issues regarding mediation, there is an excellent discussion of them by John Cooley called “Defining the Ethical Limits of Acceptable Deception in Mediation” that can be obtained, as of these material’s writing, at the mediate.com website and the following web link: http://www.mediate.com/articles/cooley1.cfm. Mr. Cooley references and discusses a number of his views, as well as those of others on the topic, in this article, and the concepts similarly extend more generally to all negotiations, and not just mediation.
Also, as of 2002, the Litigation Section of the American Bar Association promulgated Ethical Guidelines for Settlement Negotiations that address many of these issues, copy of which as of this writing was available at the ABA’s website at the following web link: http://www.americanbar.org/groups/dispute_resolution/resources/Ethics.html. Virginia has not yet adopted anything similar as a specific settlement negotiation guideline.
As can be readily seen from the foregoing, there are many issues, ethical and otherwise, that often come into play for procurement lawyers and their clients. Importantly, sometimes those issues result in competing goals, and unexpected results. From the clients’ perspective it is typically all about the marketplace and associated economics, while for lawyers there are other complications and constricts affecting the clients’ perspective and goals that result from the profession of the practice of law.
Reconciling those conflicts plays an import role in the disputes process, but often creates challenges for lawyers and clients alike that must be addressed.
Easy Installation Company contacts IMA Lawyer, Esquire regarding possible retainer for a construction dispute with Highrise Development Corp. Easy believes Highrise owes $1,000,000 for work and materials furnished for the new Your City Town Center project, which Highrise contracted with Easy to construct. IMA is an experienced trial lawyer, but has never handled this type of construction litigation. However, he office shares with Sue Happy, Esquire, who is an experienced construction litigator. IMA intends to use Sue on the case, but does not intend to tell Easy’s president this as IMA is worried Easy’s president will want to take what looks like a very good case on liability to the All We Do is Construction law firm down the street, which is a boutique firm focusing on construction and public contracts work.
1. Should IMA accept this representation?
2. In making his decision does the basis of his fee agreement matter?
3. Can he take this case on a contingency basis?
4. If so, what should the fee terms be for this type of case?
5. Does IMA need to disclose to Easy his inexperience with construction litigation?
6. Does IMA need to disclose to Easy his intention to involve Sue?
7. Easy’s president works on handshake agreements and has never signed a contract.
Is that an issue for IMA if IMA agrees to take the case and Easy wants to use him?
IMA Lawyer decides to take Easy Construction’s case on a contingency fee basis. As he gets involved in the case, IMA concludes that one-half of the money claimed due from Highrise Development is a delay and disruption claim of Easy’s electrical subcontractor, Light U Up Electric. Light U Up has suggested to Easy that they could both save costs if they both used IMA as their attorney since about one-half of his efforts will be relating to prosecution of Light U Up’s “pass-through” claim anyway.
1. Can IMA represent both Easy and Light U Up?
2. Presuming IMA can, should he?
3. What pitfalls might IMA expect should he take the representation?
IMA Lawyer decides that, after full disclosure of all potential conflicts to and with the consent of both Easy Construction and Light U Up, and their entering into a written passthrough agreement after negotiation of the terms of Light U Up’s corporate counsel, he will represent both Easy Construction and Light U Up. But as he is preparing the case for trial in Virginia Beach Circuit Court, IMA discovers facts indicating that Light U Up’s Project Manager was really on vacation for one month of the period during which Light U Up has requested reimbursement of his time as part of its certified delay claim. When initially confronted, the PM remembered being on vacation, but after IMA noted his concern with the effect on the claim amount, the PM reconsidered and re-remembered that he had been scheduled for vacation, but it had been cancelled at the last minute. IMA believes, but is not certain, that the PM is lying and has left his office to coordinate stories with the Project Superintendent, who was scheduled to meet with IMA later that day to discuss his deposition preparation.
1. In his deposition, the PM testifies he was on the site every day of the month.
Does this create any obligation for IMA?
2. Does the result change with this fact change: The PM only reconsidered his story after IMA took the time to explain to the PM the ramifications of the PM being on vacation and then suggested to the PM, “but, of course, if the information I have on your vacation is wrong and you were really there, we have no problem. Are you sure you were on vacation?”
Sue Happy, Esquire is hired by Ma and Pa Homeowners to seek reimbursement for $10,000 in home repairs they had to make ten years after Nice Guys Finish Last Homebuilders completed their home. Sue realizes the Virginia statute of repose of 5 years has run, but feels Nice Guys will be worried about a jury trial and thinks she can create a viable cause of action to survive a demurrer, roughly considered Virginia’s version of a motion to dismiss. Also, she thinks Nice Guys will likely try and settle to avoid bad publicity because Nice Guys are trying to get City Council to push past the previously established “Green Line” of construction limits in the City. Sue Happy decides to send Nice Guys a demand letter for the $10,000, threatening legal action if the monies are not paid within 5 days, threatening to take the matter to the local Channel 5 Consumer Protection Advocate, who “takes on” consumer causes for consumers feeling they are not getting sufficient response to their concerns, and threatening to report Nice guys to the Virginia Board for Contractors; however, she will not proceed with any of the threats if the money is paid.
1. Is it proper for Sue to try and leverage the circumstances of Nice Guys’ pending variance request?
2. Is it proper for Sue to use the possibility of Board reporting to obtain reimbursement for the repairs? Does it matter whether the construction repairs resulted from a clear building code violation that Nice Guys clearly had to know at the time was violated?
3. If Nice Guys does not succumb to the threats, is it proper for Sue to proceed with legal action even though she knows the limitations period has expired?
Sue M. How, Esquire represents Our Designs are the Best Architects in a law suit filed against Our Designs by the City Airport regarding alleged design errors with the new Airport parking garage, which is sinking for what the Airport’s structural engineering consultant claims is an insufficient foundation design. As part of her retainer agreement with Our Designs, Sue has prepared a written summary of the party depositions that have just completed and her assessment of her concerns and strategies to that point for the upcoming trial. Our Designs is anxious for the report and asks it be faxed. Sue’s regular paralegal is out sick, so Sue asks another paralegal to fax the letter. Inadvertently, however, Sue has typed in the wrong fax number and the fax is sent to the lead attorney for the Airport, Scorched Earth O’Reilly. O’Reilly does not notice the error until reading the first page and then going back to the address block and seeing the letter was not meant for him.
1. Was O’Reilly in error to begin reading the fax?
2. Can O’Reilly continue to read the fax?
3. Can O’Reilly use any of the information he read?
4. Sue finds out but is worried she inadvertently committed malpractice and does not want to inform Our Designs. Is that within her prerogative?
Always Right Construction Manager contracts the mechanical scope of the City’s newest Convention Center to Cool Right Mechanical. Cool Right submits an equitable adjustment request to Always Right seeking compensation for multiple project changes it claims were ordered in the field by Always Right’s Project Executive, Do What I Say. Cool Right’s lawyer understandably concludes Do What I Say’s position on whether he directed the additional work is important. Always Right’s home office is in CA. Suit is not yet pending. Cool Right’s Project Manager has gotten friendly during the two year project with Do What I Say and wants to set up a dinner meeting to discuss the project, and invites the lawyer.
1. Can the lawyer attend the dinner?
2. Can the lawyer discuss the project with Do What I Say if he does attend dinner?
3. Does it matter if the lawyer was not aware Do What I Say was attending the dinner?
4. Does it matter if Do What I Say has retired from Always Right?
Full of It Stan, Esquire represents Hurt My Back, who was injured in a rear end collision by a concrete truck driven by We Pour It Concrete Supply. Hurt claims to have been injured so as to preclude him from working ever again. Full of It has hired an economic analyst to review Hurt’s anticipated earning, who has provided an analysis much more conservative than Full of It anticipated. Instead of $1,000,000 in anticipated lost earning, the analyst has concluded the amount is $250,000. Full of It has also learned that Hurt had a similar injury claim two years ago while on vacation in England, but the person that hit Hurt paid Hurt in cash so there is no formal record We Pour It’s attorney would likely ever find unless he asks the right questions in deposition and Hurt answers truthfully. Full of It decides this is a good case for early mediation and We Pour It’s attorney agrees. During the mediation, Full of It tells the mediator and We Pour It’s attorney the following:
a. "This is a great case for us. We expect to win and win big."
b. "Hurt was really hurt badly and will not be able to work for the rest of his life."
c. "Our analyst has come up with a big number for Hurt’s anticipated lost earnings that we’ll recover from you."
d. "If you don’t settle, the jury’s going to hear how Hurt, who was the picture of health before the accident, is now permanently injured because of getting hit."
e. "How would you like to be sitting in the courtroom when the jury hears about a $1,000,000 claim for lost earnings?"
Are there any issues with him saying any of these? How about if Hurt tells Full of It he wants to settle quickly and will take anything over $10,000. Before the mediation, We Pour It’s attorney makes an offer of $11,000 as part of his pre-mediation presentation to the mediator. Full of It presumes they’ll offer more at mediation, wants the greater contingency, and decides to proceed with the mediation notwithstanding the offer and Hurt’s prior direction.
a. Full of It’s worried that if he tells Hurt of the offer, Hurt will want to take the settlement instead of spending time at the mediation. Does Full of It need to advise Hurt of the offer?
b. Full of It knows Hurt has already authorized settlement for less than We Pour It has offered. Yet at the mediation he tells We Pour It they’re going to have to get realistic if they want to settle. Can he do that?
1 A copy of their paper was previously available on the Internet at the following link:
2 In 2002, the Virginia State Bar Council’s Standing Committee on Legal Ethics proposed changing Rule 4.4 to address the inadvertent receipt of confidential information, but those proposed revisions were not adopted and no specific provisions have since been incorporated into the Ethics Rules addressing such inadvertent receipt. The Virginia Supreme Court did, however, address certain aspects of inadvertent disclosure in the context of discovery, which is addressed later in this paper.