The Bencher | September/October 2024
From Soup to Nuts: ADR Skills and Knowledge Are Required to Meet Your Ethical Obligations
By Laura A. Kaster, Esquire
The National Conference of Bar Examiners will include negotiation and dispute resolution skills in the NextGen Bar Exam debuting in 2026. This inclusion was driven by input from the legal profession, academia, and others who agreed that the current exam does not adequately measure the minimum competence to practice law and does not test essential skills needed in real practice, including negotiation, research, and client representation.
The entire bar, especially the American Inns of Court, has long recognized that the American Bar Association’s Model Rules of Professional Conduct (MRPC) are not tied exclusively to legal knowledge and that competence as a lawyer requires broader knowledge. This discussion—and an upcoming series of presentations by the Justice Marie L. Garibaldi American Inn of Court in Basking Ridge, New Jersey—will focus on the ethical rules and the interplay of alternative dispute resolution (ADR) knowledge and skills for meeting those rules in the course of representation.
The Importance and Scope of the Client Interview and Initial Examination of a Dispute Are Impacted by ADR Techniques
The initial phase of any legal representation involves the client interview and the initial examination of a dispute. Lawyers must use listening and mirroring techniques from ADR to gather comprehensive information and understand the relationships, both business and personal, between the parties involved. Perspective-taking is also crucial to anticipate the potential views of the opposing side. Your client has worked with the party from whom the client is seeking relief or who is seeking relief from your client. What would your client say the other party is thinking about the underlying facts and about any other issues in the business or personal relationship? Are there other issues? Under MRPC 1.1, lawyers are required to provide competent representation, which includes thoroughly interviewing the client to gather all relevant facts and understand the client’s objectives. Reliance solely on client recitation is often not sufficient. Early fact investigation is necessary and should not be governed by the litigation (discovery) schedule.
In representing a client, MRPC 2.1 mandates that a lawyer exercises independent professional judgment and renders candid advice, considering not only legal but also moral, economic, social, and political factors. What might be the publicity associated with any claim—could it be detrimental to the client? Lawyers must also abide by a client’s decisions concerning the objectives of representation and consult with the client about the means to pursue those objectives, as stated in MRPC 1.2. Moreover, the Federal Rules of Civil Procedure Rule 11 imposes similar obligations upon attorneys who sign pleadings:
(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
State rules have similar requirements.
Fully investigating and then informing the client of potential claims, defenses, and counterclaims is crucial. Additionally, lawyers must act with reasonable diligence and promptness, which includes a thorough factual investigation as required by MRPC 1.3. Further, MRPC 3.1 requires lawyers to make a reasonable inquiry into the facts to ensure there is evidentiary support for any claims or defenses asserted, which should also entail an exploration of potential counterclaims.
Advising on the Path Forward, Including ADR Options
Advising on the path forward, including ADR options, is an ethical obligation for lawyers. According to the MRPC, lawyers have a duty to inform clients about ADR options. Evaluating the value of the case and costs, including potential recovery and litigation costs, is essential in assessing process options and fashioning any litigation alternative. Valuing a case is a skill that needs to be developed and honed. Lawyers must fully inform the client of potential claims, defenses, and counterclaims (MRPC 1.2) and provide holistic assessments, considering non-legal factors as well, such as relational issues like an outsourcing arrangement or a key supplier relationship (MRPC 2.1). Familiarity with processes such as mediation, arbitration, and early neutral evaluation is necessary to provide competent representation (MRPC 1.1).
The Duty to Provide Counsel Beyond Substantive Legal Advice
A critical aspect of ethical representation is the duty to provide counsel that extends beyond substantive legal advice. Lawyers must engage in a comprehensive evaluation that includes valuation of the case, assessment of the impact, and an analysis of costs. This holistic approach ensures that clients are making informed decisions that reflect not only the legal merits of their case but also the practical and financial implications.
Valuation of the Case: Lawyers must be adept at estimating the potential recovery and understanding the value of the case. This includes assessing the likelihood of success and the potential monetary and non-monetary outcomes.
Assessment of Impact: Beyond legal outcomes, lawyers should evaluate how different courses of action might affect the client’s business operations, personal relationships, and overall well-being. This requires considering economic, social, and political factors (MRPC 2.1).
Analysis of Costs: An essential part of providing competent representation involves a thorough analysis of the costs associated with different legal strategies. This includes direct litigation costs, potential internal costs, and lost opportunity costs. Lawyers must communicate these aspects clearly to ensure clients understand the financial implications of their choices (MRPC 1.4).
Negotiation and Mediation Ethics
Negotiation and mediation ethics are also critical. Lawyers must have sufficient knowledge and competence regarding negotiation procedures and strategies (MRPC 1.1). While zealously advocating for a client’s position, lawyers must also engage in honest dealings (MRPC 3.3, 4.1). The duty of candor requires truthfulness in negotiations and ADR processes, and confidentiality must be maintained unless disclosure is authorized (MRPC 1.6). Identifying and addressing potential conflicts of interest is essential to avoid undermining the integrity of the process (MRPC 1.7, 1.9). While “puffing” may be allowed, its scope is limited and must be well-understood.
In direct negotiations, lawyers must be careful to avoid factual misstatements; with the mediator, there may be a heightened duty of candor. The lawyer must consider and discuss with the client the mediation process and the extent of the client’s direct participation in the process—some clients are expert negotiators. The lawyer must ensure the client understands the risks and benefits and avoid undermining the mediator’s role. Preparation for a mediation is mandatory, and the alternatives and parameters that define success should be part of the attorney-client discussion. Maintaining the integrity of the mediation process is paramount, including respecting the confidentiality of the process.
Keeping Lines of Communication Open and Understanding Settlement
Effective communication and civility are vital in keeping lines of communication open and understanding settlement. Lawyers must promptly inform clients of settlement offers and consult with them about achieving their objectives (MRPC 1.4). Acting with reasonable promptness in exploring settlement possibilities is part of the duty of diligence (MRPC 1.3). Maintaining communication to explore settlement and ensure efficient resolution is crucial, as is using ADR techniques to de-escalate conflicts and maintain professionalism to maximize the client’s options. Lawyers must promptly communicate all settlement offers to the client and clearly communicate risks and alternatives (MRPC 1.4, 1.4.1).
Ethical Rules Impacting Settlement Drafting and Finalization
Drafting and finalizing a settlement agreement involves various ethical rules and requires comprehensive legal knowledge to ensure the agreement is fair, clear, and enforceable. Competence in settlement drafting requires understanding the legal implications of the settlement terms, ensuring clarity in language, and anticipating potential future disputes (MRPC 1.1). ADR solutions such as step clauses or mediation followed by an expedited arbitration should be part of the settlement to prevent another costly dispute. Lawyers must ensure that the settlement aligns with the client’s goals and fully inform the client about the implications of the settlement terms (MRPC 1.2). If fee shifting may be available, the lawyer has to make sure that personal interest in a fee recovery is not infecting consideration of any settlement. Effective communication is crucial when explaining settlement terms, the legal and practical consequences, and ensuring the client understands and consents to the agreement (MRPC 1.4). Confidentiality must be maintained (MRPC 1.6) and potential conflicts of interest identified and addressed (MRPC 1.7-1.9).
Lawyers must possess a thorough understanding of contract law, negotiation techniques, relevant statutes, tax law, and ADR while adhering to ethical rules to provide competent, diligent, and honest representation to their clients. The integration of ADR skills and knowledge into the practice of law is ethically required. The NextGen Bar Exam’s inclusion of these skills highlights their importance in ensuring lawyers meet their ethical obligations and provide superior representation. By mastering ADR techniques, lawyers can enhance their practice and uphold the integrity of the legal profession. The ethical rules create an affirmative duty for lawyers to investigate goals and facts, maintain communication, convey settlement offers, and diligently negotiate potential resolutions while abiding by the client’s decisions after consultation. Becoming knowledgeable about ADR techniques and process choices benefits the clients and also maintains the high standards of professionalism and civility championed by the American Inns of Court.
Laura A. Kaster, Esquire, is a full-time neutral working in the greater New York metropolitan area. She is a past president of the Justice Marie L. Garibaldi American Inn of Court for ADR in Basking Ridge, New Jersey.